Panama Canal Authority may pull plug on expansion consortium
This week has seen a dramatic turn for the worse in the Panama Canal expansion project involving the building of a Third set of locks to allow much larger ships to use the canal.
On Thursday the Grupo Unidos por el Canal (GUPC) which is composed of Sacyr Vallehermoso S.A. (Spain – the lead company), Impregilo S.p.A. (Italy), Jan de Nul n.v (Belgium) and Constructora Urbana S.A. (Panama) stopped all work on the project.
The dispute between GUPC and the Panama Canal Authority (ACP) is because of an overrun on works which started in 2009 and involves $1.6 billion of additional costs which the group says the ACP owes them. The original cost for the project was $5.25 billion.
Today Reuters reports Jorge Quijano, head of the Panama Canal Authority, as saying that they are ready to pull the plug on the consortium and find new builders to finish the project. The ACP says that it can find the additional $1.5 billion required to complete the work which is around 70% complete.
The dispute has put an estimated 10,000 jobs at risk. The problem has been made worse by a reported dispute between the members of the GUPC. Sacyr appear to want the work to continue whilst Impregilo is holding out for the additional money. A report in Panama America suggests that Sacyr would be willing to negotiate a deal with the ACP.