Panama Canal upgrade remains at standstill amid $1.6 bn cash gap

Panama Canal upgrade remains at standstill amid $1.6 bn cash gap

 

Panama City (AFP)

 

Work on expanding the Panama Canal is unlikely to resume Saturday as local officials face negotiations with foreign builders after the project was halted in a dispute over cost overruns.

 

The multi-billion-dollar plan to build larger locks on the 80-kilometer (50-mile) waterway linking the Atlantic and Pacific Oceans stopped Friday in a row over who will pay an additional $1.6 billion (1.2 billion euros) bill.

 

The independent Panama Canal Authority (ACP) and GUPC consortium -- a group of international builders headed by Spain's Sacry Vallehermoso -- exchanged proposals throughout the day, but without a deal.

 

"We keep open the possibility of reaching an agreement, and we are making an effort towards that goal," said ACP chief Jorge Quijano.

 

According to the builders, "talks with the ACP are ongoing and are expected to continue next week."

 

Bankers financing the 3.2 billion contract (2.3 billion euros) to expand the canal visited the worksite on Friday.

 

The project is designed to widen the canal so that massive cargo ships can pass through.

 

It is one of the world's most ambitious biggest civil engineering projects and was due to be completed next year.

 

The builders have said completion may be delayed by up to five years.

 

The consortium has accused the Panama Canal Authority of breaking off negotiations.

 

It says the authority failed in obligations to pay a $50 million bill and to help pay workers and subcontractors.

 

GUPC had offered to split the cost of finishing the dig with the Canal Authority and then let arbitrators decide who pays for the overrun.

 

The Panamanians suggest a deal could be reached if the builders commit to specific dates for stages of the job to be ready.

 

There would also be a ban on further cost overruns.

 

The GUPC claims unforseen 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 was incorrect.

 

The consortium of builders includes Italy's Impreglio, Jan de Nul from Belgium, and Panama's Constructora Urbana.

 

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

 

It offers a shortcut and safer journey for maritime traffic, is used by 13,000-14,000 ships each year, handling five percent of world sea trade.

 

The canal generates $960 million a year for Panama, nearly 10 percent of the country's total annual income

 

(Agence France-Presse, 8 Saturday February 2014 The Roman)

 

http://www.afp.com/en/news/topstories/panama-canal-upgrade-remains-standstill-amid-16-bn-cash-gap

 

Spain-led venture halts work on Panama canal over $1.6 bn overrun

Spain-led venture halts work on Panama canal over $1.6 bn overrun

 

[caption id="attachment_12031" align="alignnone" width="400"] (View of halted expansion works at Panama Canal locks, in Cocoli, near Panama City, on 5 Wednesday February 2014 The Roman (AFP, Rodrigo Arangua))[/caption]

 

By Katell Abiven (AFP)

 

Madrid — A Spanish-led consortium said Friday it has halted work on expanding the Panama canal, which handles five percent of world sea trade, in a row about cost overruns.

 

The multi-billion-dollar project to build extra locks on the 80-kilometre (50-mile) waterway linking the Atlantic and Pacific Oceans ground to a halt because of a dispute over who will pay for $1.6 billion (1.2 billion euros) in overruns.

 

"While awaiting an agreement to enable the finalisation of construction, work has been suspended on the project," said a statement by the GUPC consortium, led by Spanish construction group Sacyr.

 

The project to widen the canal so massive cargo ships can pass through it -- one of the biggest civil engineering operations in the world -- was due to be completed next year.

 

But GUPC has said completion may be delayed by up to five years, as each side has accused the other of breaking the deal.

 

The European Union's industry commissioner, Antonio Tajani, who has mediated the dispute, warned that the interruption of the dig would be "bad news" for the world economy.

 

The consortium accused the Panama Canal Authority of breaking off negotiations.

 

It says the authority failed in obligations to pay a $50 million bill and to help pay workers and subcontractors.

 

GUPC had offered to split the cost of finishing the dig with the canal authority and then let arbitrators decide who pays for the overrun.

 

It said late Thursday it had submitted a further new proposal to settle the dispute.

 

"The GUPC continues as always to seek an agreement on co-financing in line with the contracts and relevant legislation, with the aim of a joint and immediate resolution," the consortium said.

 

The canal authority had claimed on Wednesday that the builders had already stopped work, but Sacyr denied that at the time, insisting it was seeking to avoid a shutdown.

 

The canal is being widened to permit the passage of ships carrying up to 12,000 containers, twice the current limit.

 

But the disputed contract to build a third set of locks, due initially to be completed this year, was already running nine months late and since the beginning of this year work has slowed down further.

 

GUPC is in dispute with the canal authority in part over geological difficulties which have obliged the builders to spend much more on cement than expected.

 

The canal, completed in 1914 to offer a short cut and safer journey for maritime traffic, is used by 13,000-14,000 ships each year.

 

Copyright © 2014 AFP. All rights reserved.

 

(Agence France-Presse, 7 Friday February 2014 The Roman)