Panama tries to calm global concerns over canal expansion impasse

Panama expects a tidal wave of financial problems and potential lawsuits over the possibility that its canal expansion may be disrupted after a consortium led by Spanish builder Sacyr Vallehermoso threatened to halt work on the project.

The Panama Canal Authority (PCA) issued statements to the maritime community that while discussions with the GUPC consortium over budget discrepancies continue, the “successful” completion of the project “is assured to offer a new era of opportunities” for international maritime trade.

The government of President Ricardo Martinelli knows that the world’s biggest maritime transport industries and ports authorities around the globe are keeping close eyes on the conflict between the Sacyr-led consortium and canal officials.

Meeting in Panama City on Monday, Spanish Public Works Minister Ana Pastor and Martinelli agreed that necessary talks to reach a solution could be held without having to stop work on widening the canal. The GUPC consortium last month threatened to stop the project on January 20 unless it was paid $1.6 billion (around 1.2 billion euros) in overrunning costs.

In the United States, several coastal cities along the Gulf and Eastern Seaboard have expanded and modernized their ports in anticipation of the increase in cargo that is expected to be carried by wider ships through an expanded canal when the project is finally completed in June 2015. Work on the expansion began in 2009.

“An enormous amount of ships with larger capacities are being built to be able to pass through the canal, and dredging is already taking place at ports so they can receive these vessels,” Martinelli said Monday.

GUPC – which comprises Sacyr Vallehermoso of Spain and Impregilo of Italy as majority partners, and Jan De Nul of Belgium and Constructora Urbana of Panama as minor partners – won the contract to expand the canal in 2009 after submitting a $3.11 billion bid.

On Tuesday, GUPC and PCA officials met to iron out their differences over their cost differences.

Meanwhile, PCA officials have embarked on an international offensive to assure their clients that the canal will be inaugurated on schedule.

"Our clients are the number-one priority and we are working to resolve the situation in the best possible way, under the legal framework of the contract, to guarantee that the expansion program will be finished," said PCA administrator Jorge Quijano in a statement released on Monday.

Work on the expansion is about 72 percent completed while the installation of a third set of locks is 65 percent finished.