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Latino Daily News

Thursday January 9, 2014

Contractors Working on Panama Canal Seek $400 Million Advance

Contractors Working on Panama Canal Seek $400 Million Advance

Photo: Sacyr Vallehermoso

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The Spanish-led consortium working on the $5.25 billion expansion of the Panama Canal proposed to the waterway administration that it provide it with an advance of $400 million to avoid a suspension of work this month.

Spanish construction giant Sacyr Vallehermoso and its partners in the GUPC consortium - Italy’s Impregilo, Belgium-based Jan de Nul and Panamanian firm CUSA - also offered to put up $100 million of their money as a “definitive solution” to the conflict threatening to halt work on the project starting on Jan. 20.

GUPC in 2009 obtained the $3.12 billion contract to construct a third set of locks, the centerpiece of the canal expansion.

The Panama Canal Authority, or ACP, has said that it has already disbursed $2.83 billion including a total of $600 million in advance payments.

The consortium said last Wednesday that it would suspend work in three weeks if the ACP did not agree to pay an additional $1.6 billion to cover cost overruns.

Representatives of the ACP and GUCP met Tuesday, a day after Spanish Development Minister Ana Pastor, who traveled to Panama to mediate the dispute, persuaded the parties to agree to a framework for resolving their differences.

In a communique, the GUCP called the proposal presented by the ACP during Tuesday’s session “a partial solution.”

The ACP expressed its willingness to advance a payment of $100 million and authorize a moratorium of two months on the payment of another $83 million it had advanced earlier to the GUPC, provided the consortium also put up $100 million and withdrew its threat to suspend work.

Canal administrator Jorge Quijano set forth other conditions for making the advance, including that the entire $283 million would be used to pay subcontractors and materials providers with an eye toward guaranteeing continuity in the project over the next “two to four months.”

In remarks to journalists after the meeting, Quijano acknowledged that the GUPC “is seeking more of a long-term solution.”

The GUPC said on Tuesday that the construction of the third set of locks is more than two-thirds complete.

Pastor said Tuesday that she was confident that there will be a solution to the conflict.

“That’s what my visit was for and therefore we’re together with the secretary of state for Ibero-America (Jesus Manuel Gracia) in trying to help as much as we can and so the parties - the Panama Canal Authority, which is independent, and the consortium of companies - may seek solutions,” she told reporters after a luncheon at the Spanish Embassy with Panamanian President Ricardo Martinelli.

The minister declined to discuss the details of the respective opening proposals from the ACP and GUPC.

“We’re leaving that to the parties. Let them continue working, and we have nothing further to say,” Pastor said.

Martinelli, meanwhile, thanked Pastor for her mediation efforts and affirmed that he is “absolutely sure” that an agreement will be reached.

The Panama Canal, designed in 1904 for ships with a 267-meter (875-foot) length and 28-meter (92-foot) beam, is too small to handle modern ships that are three times as big, making a third set of locks essential.

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