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Panama Canal expansion contractor downs tools

Work on the US$5.2bn (£3.1bn) Panama canal expansion came to a halt yesterday after negotiations between the canal authority and the contractor over cost overruns broke down.

Contractor Grupo Unidos Por el Canal (GUPC) had previously set 4 February as the deadline to reach an agreement about the £991M in overruns it claims to have incurred.

It claims the overruns were a result of faulty information on the project provided by the client, Panama Canal Authority (ACP). ACP insists the claims must be handled by a three-step arbitration process laid out in the contract.

GUPC officials turned workers away yesterday morning telling them to return home.

In a letter to ACP Administrator Jorge Quijano, GUPC officials “invited the ACP to abandon its unreasonably rigid position and join GUPC in reaching a solution”. Quijano responded stating that ACP was willing to continue negotiations but that there was a “great divide” between the two parties in the negotiations.

“Right now we can save the work and finish in 2015,” he said. “But we have to work rapidly.”

Quijano said ACP has the authority to rescind the contract with GUPC “at any moment”.
He said the authority has the financial resources to complete the project and it was prepared to go to “Plan B” to finish the works if necessary using another contractor.

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