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Panama Canal Authority Tries to Revive Project

Feb. 10, 2014
Unexpected challenges have delayed the Canal expansion until the parties involved can agree on cost and time responsibilities.

Cost overruns and contractor disputes are at the heart of the delays in the Panama Canal Expansion project. There have been $1.6 billion in unexpected costs in developing a new traffic lane and a third set of locks that would double the waterway’s capacity. In the midst of cost disputes, the Panama Canal Authority (ACP) sent Grupo Unidos por el Canal, S.A. (GUPC) a counterproposal that will enable the continuation of work in the new locks project.

“While we prepare to take the actions allowed within the contract to reactivate the project,” said Panama Canal Administrator Jorge L. Quijano, “We remain open to the possibility of reaching an agreement and that is why we are making this effort.”

The proposal does not increase the contract price or accept any of the claims, which must be presented following the mechanisms established in the contract. It is based on the parties contributing financial resources to resume work as soon as possible.

This proposal, subject to the revision and approval of the parties, sets specific dates for GUPC’s delivery of the lock gates and the completion of the work. In addition, ACP would extend the moratorium for the repayment of advances to the extent that GUPC meets the required delivery schedule.

The main component of this proposal is that the contractor must meet various milestones during the remainder of the contract.

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