Tuesday, January 7, 2014

Panamá: Update--Spanish Government, PCA Work Out Plan to Proceed with Canal Expansion

According to The Latin American Tribune, the Panama Canal Authority (PCA) and the Spanish-led consortium, GUPC, working on the $5.25 billion expansion of the Central American nation’s inter-oceanic waterway agreed Monday (January 6) on a framework for talks to avert an interruption of the project.

The PCA and the GUPC consortium on Tuesday (January 7) will hold a technical meeting to discuss the sums that each party will have to contribute.

Spanish construction giant, Sacyr Vallehermoso and its partners in the GUPC consortium – Italy’s Impregilo, Belgium-based Jan de Nul and Panamanian firm CUSA – said last Wednesday (January 1) that they would suspend work in three weeks if the PCA did not agree to pay an additional $1.6 billion to cover cost overruns.

Yet, the extraordinary contribution now under discussion seeks to provide solvency for the consortium over the “next two or three months,” which is the time it will take the Dispute Arbitration Board to resolve the demand for $585 million presented by the GUPC in 2012.

COMMENT: The PCA acknowledged that Monday’s agreement “does not mean” the GUPC’s threat to suspend work Jan. 20 is off the table.

The administrator spoke to reporters after holding a meeting with Spanish Development Minister Ana Pastor, who traveled to Panamá to mediate between GUPC and the PCA.

“What Minister Ana Pastor has achieved is to bring them (the consortium) back where we want, which is to negotiate in keeping with the contract,” Quijano said.

Pastor announced earlier Monday the consortium’s commitment to have all economic demands it may have negotiated “by way of the contract.”

Minister Pastor made the announcement after a meeting with Panamanian President Ricardo Martinelli, who expressed his conviction that “as a product of the meetings that are taking place” between the PCA and the GUPC “they are going to resolve any conflict ... in accordance with the contract.”

GUPC began work on the third set of locks in 2007 and expects to complete construction in June 2015, nine months later than the date set in the contract.