Photo: Panama Canal
The Panama Canal Authority, or ACP, has submitted a new proposal to the consortium working on the inter-oceanic waterway’s third-locks project, which is currently stalled over a financial dispute.
In a brief statement, the ACP said the proposal would enable the resumption of the project, which is the centerpiece of a $5.25 billion canal expansion that is scheduled to be completed in 2015.
The ACP said its proposal does not increase the contracted price or amount to acceptance of the consortium’s claims but calls for both the canal authority and GUPC, in which Spanish builder Sacyr and Italy’s Impregilo each have 48 percent stakes, to contribute funds to restart the construction work.
Friday’s proposal establishes dates for GUPC to finish the new set of locks and also extends the grace period for the consortium to repay previous cash advances.
The ACP statement, however, did not specify what those dates were.
The canal authority was responding to the latest proposal by GUPC, which also includes Belgium-based Jan de Nul and Panamanian firm CUSA.
In a filing with Spain’s CNMV securities regulator, the consortium said - also without providing details - that its proposal to the ACP on Friday would ensure sufficient funding to complete the locks project and addresses the canal authority’s concerns.
The contract for the locks was awarded to GUPC in 2009 and calls for the canal authority to pay the consortium a total of $3.12 billion.
GUPC, however, formally notified the ACP on Dec. 30 that it would suspend work Jan. 20 if the authority did not agree to pay the contractors $1.6 billion to cover cost overruns.
Although the consortium did not halt work immediately when no agreement was reached, the two sides have been unable to strike a deal and the consortium confirmed in its statement Friday that work on the locks had been temporarily suspended.
The Panama Canal, which was 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.