Construction resumed Thursday afternoon on the Panama Canal expansion after a seven-week billing stand-off with the contractor in charge of building new locks on both entrances brought the megaproject to a halt for several days, both parties said.
Work output had steadily decreased to about a quarter of normal activity since the beginning of the year before stopping altogether when negotiations failed to resolve the dispute and provide a cash injection for the contractor, who ran out of money.
The project delay has garnered international attention because the expansion is highly anticipated by ocean carriers seeking to utilize the new passageway for much larger, more efficient vessels, which analysts say will have major implications for trade flows and infrastructure requirements at ports throughout the hemisphere.
A partial breakthrough was achieved Wednesday when the Panama Canal Authority (ACP) and Grupo Unidos por el Canal, the international construction consortium, agreed on a two-track path that will allow work to proceed while they work separately through legal channels on who is responsible for $1.6 billion in cost overruns.
"The consortium has guaranteed that it will continue working, which was our main objective, so we can move forward and discuss other issues for a longer-term agreement," Canal Administrator Jorge Quijano said in a statement.
The ACP said it will now follow through on its agreement to pay GUPC's $36.8 million December invoice.
The independent Panamanian agency reiterated that the agreement to resume work does not imply it has agreed to reimburse GUPC for the excess costs it accrued. GUPC claims the costs were unexpected due to weather, the ACP's rejection of its first batch of concrete, and other factors.
ACP officials have insisted that GUPC go through proper dispute resolution channels outlined in the contract to document their claims and appeal any rejected claims to an arbitration panel.
Both sides have indicated that the continuation of work beyond a few days or weeks depends on a long-term agreement. GUPC has been seeking hundreds of millions of dollars in advances from the ACP to cover operating costs.
The ACP said negotiations will resume for several days on laying out a definitive schedule for delivery of the lock gates from Italy, the timetable for completion of the project and repayment of previous advances.