Panama Canal contractors threaten to suspend work

The consortium constructing the third set of locks for the Panama Canal has warned that work will be suspended unless it receives a further US$ 1.6 billion in funding.

Sacyr, the lead contractor in the Grupo Unidos por el Canal (GUC) consortium, wrote to the Panama Canal Authority (PCA) on 2 January, 2014, giving 21 days to resolve the issue. The PCA awarded the contract to design and build a third set of locks to the GUC’s US$ 3.2 billion bid in 2009.

The consortium said it had submitted claims regarding additional costs resulting from unforeseen circumstances to various authorities including the International Court of Arbitration of the Chamber of Commerce.

Sacyr and the other contractors in the GUC consortium – Impregilo, Jan De Nul and CUSA Urban Construction – said they were keeping an open dialogue with the PCA with the aim of reaching an agreement to end the current contractual imbalance.

PCA rejection

However, Panama Canal administrator Jorge Luis Quijano of the PCA appeared to reject the request. He said that the companies must respect the contract they accepted and signed and accused the consortium of trying “to force the organisation to negotiate outside the terms established in the contract.”

The expansion of the Panama Canal to allow the transit of bigger ships with more capacity began in 2007, and the PCA has estimated that the full project will cost US$ 5.25 billion to complete.

The programme consists in the construction of two new sets of locks – one on the Pacific and one on the Atlantic side of the canal – as well as the widening and deepening of existing navigational channels in Gatun Lake, the deepening of Culebra Cut and the opening of a new, 6.1 km long access channel to connect the Pacific locks and the Culebra Cut.

As of 30 November, 2013, the PCA said the expansion programme was 70.7% complete, with several components completed such as the dredging of the Atlantic and Pacific entrances. It said the construction of the new locks was 64% complete.