Translation: Not Budging
From the February 6, 2014 issue of Marine Log – “All those post-Panamax ships that shipowners have been ordering may not be able to pass through an expanded Panama Canal as early as projected. There has been a breakdown in negotiations between the Panama Canal Authority (ACP) and Grupo Unidos por el Canal (GUPC), the consortium building the third set of locks key to the canal expansion project. Zurich Insurance, which is providing a $ 600 million security bond for the project, reportedly estimates that expansion will be delayed by 3-5 years without an agreement.
“GUPC says that the unexpected geological conditions and other problems mean that it needs another $ 1.6 billion to complete its contract. Now, essentially, ACP appears to be saying, ‘suck it up and honor your contract’ with GUPC responding, ‘Can’t, no money.’
“GUPC says it continues to ‘seek a solution for funding the completion of the project’ (translation: get more money) but says the ACP broke off negotiations.
“Yesterday, ACP says that it demanded that GUPC resume work on the project as required by the contract and that ‘after two weeks of negotiations, which saw production levels drop to 25%, almost all activity has ceased.’ Canal Administrator Jorge Quijano said that the ACP continues to try to find a solution, but stressed that the contractor must resume normal activity which is especially crucial during the dry season in Panama.
“‘ACP continues to keep the door open for a reasonable resolution within the contract,’ Mr. Quijano said.
“GUPC, which includes Sacyr (Spain), Salini-Impregilo (Italy), Jan De Nul (Belgium) and Constructora Urbana (Panama) said the ACP had broken negotiations and that this puts the Panama Canal expansion and up to 10,000 jobs at immediate risk.
“‘Without an immediate resolution,’ says GUPC, ‘Panama and the ACP face years of disputes before national and international tribunals over their steps to have pushed the project to the brink of failure.’
“GUPC has completed more than 70% of the project despite, it says, hardships and other financial losses …
According to GUPC, “‘The circumstances require a balanced solution, reached in good faith, to re-finance the $ 1.6 billion in costs necessary to complete the project, and separately provide time for international arbitration proceedings to allocate the ultimate liability for those costs under the Contract and applicable law.'” –
[That snickering you hear is from the little girl who was among the earliest critics of this fiasco.
“3-5 years? Are you kidding? Now that lawyers are involved, it’ll take forever!”, she chuckled.]