Panama Canal Authority and Sacyr reach “in principle” deal to restart work

The GUPC consortium led by Spanish builder Sacyr and the Panama Canal Authority (PAC) have reached an “in principle agreement on a number of issues” regarding the renewal of work on the widening of the waterway, which has been at a standstill for eight days because of a lack of liquidity and a dispute over cost overruns.

Despite the progress in negotiations, PAC’s administrator, Jorge Quijano, said before an appearance in Panama’s National Assembly that “there are issues that remain to be resolved,” adding that the two sides “are working in that direction.” Quijano said a full agreement would have to involve one of the main insurers for the project: Switzerland’s Zurich. “We know that there is the best of wills on their part to do so, but in order to seal a deal they will need to come on board,” he said.

Sacyr declined to respond to Quijano’s comments. Despite the absence of a final deal with the PCA, the company’s share price closed Wednesday up 4.7 percent.

The two sides renewed talks on Monday and since then there has been an exchange of offers and counteroffers in telephone conversations with the leaders of Sacyr and consortium partners, Italy’s Impregilo and Jan de Nul of Belgium, from which “agreements on a number of issues” have emerged. The fourth consortium member is Panamanian company CUSA.

PCA has said it wants the consortium to guarantee the delivery date of the remaining lock-gates for the project and set a new calendar for the completion of the project and a timeframe for the return of advance payments made to the consortium.

Quijano said that despite bridging differences with Sacyr, the PCA did not rule out alternatives ways of finishing the project, with the authority itself possibly taking on the task, although he acknowledged that this would delay the opening of the extension even further. “We’re not afraid to take over the work ourselves; we know we can do it and the technical confidence and economic ability to do so […] but that would also mean considerable additional delays than if the GUPC finishes the project,” he said.

He later told the National Assembly that even in the case of a full accord with GUPC, the work would not be finished before December 2015.