Panama Canal Expansion Faces Setback
by Mike Godfrey, Lowtax.net, Washington
06 January, 2014
The Government of Panama hopes to secure support from authorities in Spain and Italy to ensure that a Spanish-led consortium, charged with building a third set of locks at the Panama Canal, completes its portion of the canal expansion project on budget.
The Spanish-led consortium, Grupo Unidos por el Canal (GUPC), has threatened to down tools within 21 days unless Panama stumps up an additional USD1.6bn to complete the project. The contract, awarded in 2009, was originally projected to cost USD3.2bn but funds have reportedly run dry. The figure under dispute is substantial compared with the USD5.3bn total cost of the expansion project.
The consortium, through a filing from leading consortium partner Sacyr, announced: "GUPC has formally informed the Panama Canal Authority that it will suspend work if the failures to comply are not put right within the advised period."
In a statement, first reported by local media, Panama Canal Administrator Jorge Quijano replied that: "No matter what kind of pressure is exercised against the ACP (Panama Canal Authority), we maintain our demand that Grupo Unidos por el Canal respect the contract that they agreed to and signed."
Panama's President Ricardo Martinelli has publicly announced that he is to lean on the governments of Italy and Spain to urge them to uphold their "moral responsibility" to compel the firms to complete the project.
The start of the spat signals another delay for the waterway's expansion, the completion of which has already been pushed back from October 2014 to the middle of 2015.
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