PANAMA CITY – A Spanish-led consortium resumed work Thursday to expand the Panama Canal, which handles five percent of global seaborne trade, after an acrimonious two-week stalemate over $1.6 billion in cost overruns.
Grupo Unidos por el Canal (GUPC), which sent its workers back to the construction site in the afternoon, said it hoped the multi-billion-dollar upgrade would be back “in full swing in the shortest possible time.”
Canal administrator Jorge Quijano confirmed that work had resumed, but stressed that “there are still many areas where we disagree,” in what is one of the world’s most ambitious civil engineering projects.
The plan to build larger locks on the 80-kilometer (50-mile) waterway linking the Atlantic and Pacific oceans was stopped earlier this month by the GUPC consortium led by Sacyr of Spain, along with construction companies Italy’s Salini Impregilo, Belgium’s Jan De Nul and Constructora Urbana of Panama.
But all the workers should be back at the site by Friday, union representative Hector Hurtado told AFP. Much of the heavy machinery was still standing at the work site.
GUPC wants Panama to add the sum of the overruns to the initial contract fee of $3.2 billion.
Another concern is whether insurer Zurich, the project’s guarantor, will convert a $400 million surety bond into a loan to help raise a total of $1.5 billion needed to complete the project.
The consortium said that talks were ongoing with the canal authority to sign a memorandum “in the coming days.”
“GUPC continues negotiations to reach a long-term agreement that complies with the contract” and “provides funding for the project to be completed in 2015,” it added.
GUPC says unforeseen geological difficulties forced it to spend much more on cement than expected, and says it based its estimates on incorrect data provided by the Canal Authority.
The canal expansion had been due to be completed this year in time for the 100th anniversary of the fabled canal, but has been put back a year.
The original canal, built by the United States, mostly with workers brought in from the Caribbean, was opened in 1914.