New funding proposal for Panama Canal over-runs
22 January 2014
Grupo Unidos por el Canal (GUPC), the consortium working on the expansion of the Panama Canal, has proposed a co-financing plan to cover the project’s US$ 1.6 billion cost over-runs. The Panama Canal Authority (ACP), the Panamanian government’s client body for the project, is reported to be considering the offer and discussing it with its insurers.
Details of how the cost over-runs might be financed between GUPC and ACP have not been released. However, the proposal appears to have unblocked the stalemate between the two parties which threatened to see work suspended on the scheme, pushing back its 2015 completion date.
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.
