Panama Canal dispute moves forward

The Panama Canal Authority (ACP) and contractor consortium Grupo Unidos por el Canal (GUPC) have agreed a negotiation protocol aimed at producing an agreement for the completion of the Panama Canal expansion project.

GUPC had previously threatened to suspend work on the project over US$ 1.6 billion in what it claimed were unpaid fees for cost over-runs. The two parties have agreed to keep negotiations open until 1 February, with a view to finding a way of financing the unexpected work. The financing proposals will also involve the project’s insurer, Zurich.,

The cost over-runs stem from extra work required on the project due to unexpected ground conditions. The nature of the problem and the costs associated with them are not in dispute, the question is which party is liable to pay them.

The issue flared-up on December 30 when GUPC issued an ultimatum, saying it would suspend work in 21 days (January 20) unless the ACP paid the additional costs. The issue is currently under review by an international arbitration panel, and GUPC did not subsequently suspend work as threatened.

Various groups have attempted to mediate since then, including Spanish public works minister Ana Pastor and European Commissioner for industry & enterprise, Antonio Tajani.

The GUPC consortium comprises four contractors – Sacyr of Spain, Salini Impregilo of Italy, Jan De Nul of Belgium and Constructora Urbana of Panama.