Panama Canal stalemate ends
17 March 2014
Work to complete the Panama Canal expansion is set to restart after the Panama Canal Authority (PCA) and contracting consortium GUPC signed a deal to end a stalemate over cost overruns.
The co-financing agreement followed the principles of a preliminary accord reached at the end of February. It will see both GUPC and PCA contribute US$ 100 million each to the project, while GUPC is to arrange a further US$ 400 million in financing from international lenders and project insurer Zurich.
A dispute arose in January when GUPC – which consists of Sacyr, Impregilo, Jan De Nul and CUSA Urban Construction – threatened to suspend work unless it received a further US$ 1.6 billion in funding to cover cost overruns.
Under the new agreement, claims for cost overruns are planned to continue in arbitration proceedings.
Construction of the third set of locks for the Panama Canal is 70% complete and was originally scheduled to finish in June 2015. GUPC said the remaining locks gates would now arrive in Panama from Italy in staggered shipments and completion of the project is planned for the end of 2015.
The PCA awarded the contract to design and build a third set of locks to the GUPC’s US$ 3.2 billion bid in 2009.