{"id":9453,"date":"2014-01-21T13:44:55","date_gmt":"2014-01-21T18:44:55","guid":{"rendered":"http:\/\/panamaadvisoryinternationalgroup.com\/blog\/?p=9453"},"modified":"2014-01-21T13:44:55","modified_gmt":"2014-01-21T18:44:55","slug":"panama-canal-expansion-faces-a-new-challenge","status":"publish","type":"post","link":"https:\/\/panamaadvisoryinternationalgroup.com\/blog\/panama-canal-expansion-faces-a-new-challenge\/","title":{"rendered":"Panama Canal Expansion Faces a New Challenge"},"content":{"rendered":"

\"\"<\/a><\/p>\n

The company in charge of the expansion of the Panama Canal has threatened to suspend work, demanding a multimillion dollar payment for cost overruns which the Panama Canal Authority refuses to pay.<\/p>\n

The Panama Canal, inaugurated August 15, 1914, is one of the most important engineering works in the world and it is the engine that drives Panama\u2019s economy. With increased trade and the size of the ships, it was necessary to think about expanding the waterway. Thus, in a national referendum on April 24, 2006, Panamanians voted in favor of expanding the canal, with an approval margin of 76.8%.<\/p>\n

Panama budgeted the expansion at US $5.25 billion, which included the third set of locks, as well as a number of ports and other interconnections required for the amplification of the new route.<\/p>\n

The contract for building the third set of locks was granted through a bid by GUPC,\u00a0a multinational comprised of Sacyr Vallehermoso of Spain, Impregilo of Italy, Jan De Nul of Belgium, and Constructora Urbana SA (CUSA) of Panama.<\/p>\n

GUPC won with the lowest bid of US $3.1 billion. The bid was lower than the reference established by the Panama Canal Authority (ACP).<\/p>\n

According to wires from the U.S. Embassy in Panama released by Wikileaks, the U.S. company Bechtel (a competitor in the bidding), warned that the bid from Sacyr (GUPC leader) wasn\u2019t enough to even pour the concrete, which would force renegotiation of the contract.<\/p>\n

As prophesized, on January 1, 2014, GUPC demanded a payment of US $1.6 billion and threatened to suspend construction if payment was not received or the contract renegotiated within 20 days.<\/p>\n

The ACP is sticking with the contract and has asked GUPC to do the same and complete construction within the terms already established. The group claims $1.6 billion in overruns and blames the ACP for providing inadequate information and requiring the use of materials not contemplated in the budget, according to El Pa\u00eds. [es]<\/p>\n

The ACP has expressed confidence that it can finish the expansion if the GUPC decides to completely pull out. La Naci\u00f3n [es] reports that the Panama Canal has insured the project for $600 million, which would allow it to finish the project (plus the difference not yet paid to the GUPC).<\/p>\n

The same source says that \u201cSacyr and Impregilos\u2019 methods, allowed in Spain and Italy, of securing contracts at a low price, and then raising them with addendums and presumably unexpected cost overruns, didn\u2019t work this time and they have been unable to invalidate the contract, limiting their claim to $600 million.\u201d<\/p>\n

In an interview with El Pa\u00eds, the administrator for the Canal, Panamanian Jorge Quijano, was upset with the GUPC:<\/p>\n

Panama has given the Spaniards an opportunity to do business at a time when in their country there are no business opportunities. The same goes for the Italians and the Belgians, and look how they pay us back! How do you think the Panamanians feel? They really think that we still wear feathers on our heads; that they can twist our arms because they are big-time construction companies and instill fear by convincing us that we won\u2019t be able to finish the project or that it is going to cost a lot more with another firm. Maybe it will cost a bit more with another partner \u2014 we don\u2019t know that yet. We have a great plan of action under which, we hope we will complete this project without any additional expense.<\/p><\/blockquote>\n

It didn\u2019t take long for reactions on social networks, and they go from those who blame the Spanish company for being unfair, to those who preach the inevitable \u2018I told you so.\u2019<\/p>\n","protected":false},"excerpt":{"rendered":"

The company in charge of the expansion of the Panama Canal has threatened to suspend work, demanding a<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-9453","post","type-post","status-publish","format-standard","hentry","category-news-articles-panama-perpsective"],"yoast_head":"\nPanama Canal Expansion Faces a New Challenge - Blog and Newsletter<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/panamaadvisoryinternationalgroup.com\/blog\/panama-canal-expansion-faces-a-new-challenge\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Panama Canal Expansion Faces a New Challenge\" \/>\n<meta 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