Photo: Sacyr Vallehermoso
Spanish construction giant Sacyr, which leads a consortium building a third set of locks for the Panama Canal, expressed optimism that a financing solution can be reached in talks with the waterway’s administrators to keep the expansion project going.
In an interview Friday with Efe in the Panamanian capital, Sacyr Chairman Manuel Manrique vowed that the GUPC consortium would complete the expansion and said intense negotiations were ongoing with the canal authority, or ACP, to avoid a suspension of work on Jan. 20 due to a lack of cash flow.
“As far as I’m concerned, that won’t happen. I don’t spend a single minute of energy searching for any other type of solution (other than finishing the project) and I’ll tell you something: we will get it done. You have to be a little bit optimistic,” Manrique said.
He said GUPC, in which Sacyr and Italy’s Impregilo each hold a 48 percent stake and Belgium-based Jan de Nul and Panama’s CUSA have the remaining interest, and the ACP are seeking contract-based formulas to salvage the third-locks project, which is 65 percent complete.
GUPC said in a statement last week that it would suspend work on the third set of locks Jan. 20 if the ACP did not agree to pay an extra $1.6 billion to cover cost overruns, a demand immediately rejected by the canal authority as an attempt to negotiate “outside the contract.”
The ACP and GUCP met Tuesday at the urging of Spanish Development Minister Ana Pastor, who traveled to Panama as part of Madrid’s efforts to mediate the dispute.
But there was a considerable gulf between the financial proposals the two sides presented after that meeting.
The ACP said it would advance the GUPC $100 million and give the consortium a grace period of two months to repay a previous advance of $83 million, provided the contractors also put up $100 million and withdraw their threat to suspend work.
GUPC proposed that the ACP fork out an additional advance of $400 million while also pledging to contribute $100 million of its own funds to keep the project running.
Meanwhile, a separate proposal from Impregilo caused a stir when it was made public this week.
It called for the ACP to make a settlement payment of $1 billion to ensure completion of the third set of locks at some point during the first half of 2015, although Manrique told Efe the Italian company’s demand predated this week’s talks.
The consortium is facing a “cash flow” problem and is seeking “help” from the canal authority, the Sacyr chairman said.
Referring to GUPC’s plan to seek payment in full for cost overruns via arbitration, Manrique said the difficulty lies in the fact that the conflict-resolution mechanisms established in the contract “take longer than” the project.
“I hope there’s good news prior to Jan. 20. I’m sure we’re going to reach a satisfactory solution. The (Panamanian) people want that, the world wants that, the ACP wants that, we want that,” Manrique told Efe.
The contract for the locks, which is the centerpiece of a $5.25 billion canal expansion, calls for the ACP to pay GUPC a total of $3.12 billion.
So far, the ACP has paid GUPC $2.83 billion, including repayable advances, plus an additional $180 million for cost overruns.
On Thursday, canal administrator Jorge Quijano denounced the threatened suspension as illegal and urged GUPC to continue working.
He also said that under the contract, the canal authority, or ACP, could find “other contractors” to complete the locks if the GUCP can’t or won’t.
But the chairman of the Panama Canal Board of Directors, Roberto Roy, said Friday it was a “mistake” to think the ACP wants to replace the contractor.
“What the Panama Canal wants is compliance with the contract ... I hope, there are still several days left, that the contractors reconsider, since the best thing for them, and not only the Canal, is that they comply with (the terms of) their contract,” Roy told reporters.
Also Friday, Panamanian President Ricardo Martinelli stressed the importance of adhering to the contract and vowed the canal expansion project would be completed “come hail, rain or snow.”