Panama Canal Authority, Contractor Broker Tentative Compromise on Project Completion
The Panama Canal Authority (ACP) and the consortium commissioned to complete the canal expansion project, Grupo Unidos por el Canal. S.A. (GUPC), brokered a “conceptual” agreement on Feb. 27 for long-term completion of the third set of locks, said ACP and GUPC in separate statements. The $1.6 billion cost overrun dispute has hampered expansion work for weeks. The apparent compromise comes roughly a week after the two sides reached temporary compromise, and GUPC formally resumed construction on the locks project (see 14022111).
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"The agreement is under review and pending signature; however, our commitment to Panama and our customers has been to inform these recent developments,” said ACP Administrator Jorge Quijano. "The Third Set of Locks will be completed within the terms of the contract, as requested from the very first day." The agreement requires project completion by December 2015. The canal currently provides passage for vessels that can carry up to 5,000 twenty-foot equivalent units (TEUs), but the expansion will make Post-Panamax vessels able to transit with up to 13,000 TEUs, the ACP says. GUPC will pay $100 million, ACP will “advance” $100 million to regain normal construction pace in March, along with other financial arrangements, said the ACP statement.
“The agreement, which lies within the framework of the contract and Panamanian law as GUPC has always stressed during the negotiation process, was reached last night and will be ratified shortly after review of documents, which is already underway,” said GUPC on Feb. 28 in an emailed statement. “The signatures of both parties is expected in the next few days.” GUPC is led by the Spanish building firm Sacyr of Spain, and also includes Salini-Impregilo of Italy, Jan De Nul of Belgium and Constructora Urbana, SA of Panama.