Consortium threatens to stop work on expanding Panama Canal

PANAMA CITY – The Spanish-led consortium expanding the capacity of the Panama Canal has threatened to halt construction due to alleged breaches of contract by the maritime route’s administration, local reports said Wednesday.

But canal administrator Jorge Quijano warned GUPC that the canal authority would use contractual mechanisms to ensure the completion of the $5.3 billion project.

“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,” he said in a statement quoted by broadcast and print media.

A year ago, GUPC demanded an extra payment of $1.6 billion from the ACP due to construction delays.

“The ACP has 21 days to comply with the requirements. But in the meantime, we will continue to work normally,” GUPC said.

Led by Spain’s Sacyr Vallehermoso, the consortium also includes Impregilo of Italy, Belgian firm Jan De Nul and Panama’s Constructora Urbana.

It began work on a third set of locks for the canal in 2009 and expects to complete construction in June 2015, already a nine-month delay over the date set in the contract.

The new locks will accommodate larger ships with a capacity of 12,000 containers – instead of those with 5,000 containers that are now able to navigate the canal.

Shortly after work began, there was a delay of four months because GUPC had planned to use low-quality cement that would have prevented the construction from lasting more than 100 years, according to the canal authority.

Roughly five percent of international commerce passes through the waterway, an 80-kilometer (50-mile) stretch connecting the Atlantic and Pacific Oceans.