Panama Canal Authority says dispute over funding will not stop canal expansion.
THE Panama Canal Authority (PCA) and Grupo Unidos por el Canal, the design/construction consortium responsible for the bulk of the Panama Canal expansion, remained at odds last week, with the consortium looking to collect additional funds for what it says are cost overruns on the project.
Should the dispute lead to the contractor halting work, as it has threatened, PCA said it would be protected and has the funds and financing to continue the work on its own to ensure that the project is completed — and that mechanisms and guarantees in the contract allow it to do so. The two parties could also end up before a dispute board and then in arbitration should an agreement on the cost differences not be reached.
While considerable work remains, at the end of 2013, the entire Panama Canal expansion project was 72% completed, with design and construction of the third set of locks being 66% completed, according to the canal expansion website, micanaldepanama.com/expansion.
PCA said regardless of how the dispute turns out, it does not anticipate delays. That means the canal would be completed by mid-2015, followed by a series of tests and, finally, opening to traffic in the fourth quarter of 2015.
The PCA board of directors told the Panama Canal Administration that it supports the management of the contract for construction of the third set of locks.
In a Jan. 15 press release signed by PCA chair Roberto Roy, the board of directors reaffirmed its "full support to the management of the administration in all the challenges it has faced during the canal expansion. The current situation, even though delicate, is but another challenge that we are facing together. We trust that will be resolved."
In addition, the members of the board indicated that "the Panama Canal expansion will be completed in the shortest amount of time and at the lowest cost possible, within the terms of the contract."
PCA reached out to the U.S. Grains Council about the dispute over the past two weeks, and the council plans to continue monitoring the situation.
The project will create a new lane of traffic along the canal thanks to the third set of locks, which will double capacity and allow large post-Panamax vessels to transit through the canal.
The Panama Canal has experienced a strong start to the grain shipping season, with dry bulk carriers registering record grain cargoes during the first two months of the current fiscal year. For all cargo, levels recorded in October and November 2013 were the highest since 2011.