Panama reports some progress in canal dispute

April 24, 2014

PANAMA CITY — Panama has reached partial agreements with construction companies that halted work to expand the Panama Canal in a dispute over a huge cost overrun, its administrator said Wednesday.

Agreements in principle have been reached on some issues although others remain outstanding. But the Panama Canal Authority will not negotiate forever and does not rule out resuming the mega-project on its own in a week if a final accord is not reached, administrator Jorge Quijano told reporters.

He spoke after holding videoconference talks Tuesday with executives of the Spanish-led consortium hired to expand the canal linking the Atlantic and Pacific so it can handle larger ships.

Despite the progress, “that does not mean we have given up on the other alternative, which is to take charge of the project ourselves,” Quijano said.

He gave no details of what points the two sides had agreed on and what the remaining sticking points were.

“Our patience has limits and we really feel this has to end in a week at the most,” Quijano said.

Work to expand the canal was suspended last week by the GUPC consortium made up of construction companies Sacyr of Spain, Italy’s Salini-Impreglio, Belgium’s Jan de Nul and Constructora Urbana of Panama.

The dispute is over $1.6 billion in cost overruns in the project, the main part of which is to equip the canal with a third set of locks.

GUPC wants Panama to add that sum to the initial contract fee of $3.2 billion.

The century-old waterway handles five percent of global seaborne trade.

GUPC claims unforeseen geological difficulties have forced them to spend much more on cement than expected. They say that they based their estimates on data provided by the Canal Authority that were incorrect.

The canal expansion is one of the world’s most ambitious civil engineering projects and was due to be completed this year.

But the builders have said completion may now be delayed up to five years.

The original canal, built by the United States mostly with workers brought in from the Caribbean, was opened in 1914.

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