Manuel Benitez, deputy administrator of the Panama Canal Authority (ACP), said Monday he is still hopeful that an agreement can be reached between the canal authority and the contractor group building a new set of locks.
Grupo Unidos por el Canal has said it will leave the project if it is not paid back for what it says are $1.6 billion in cost overruns. On Jan. 7, ACP said it would advance the group $100 million and extend an $83 million loan by two months if GUPC commits a further $100 million to the project. The money would be earmarked to pay subcontractors, who have been working without compensation, according to the ACP.
“These works are so advanced that I really don’t see that it would be easy for the contractor to walk away from a project of that visibility,” Benitez said Monday at a press conference after his keynote address at the Georgia Foreign Trade Conference.
“I still have a lot of expectation that they will finish this work,” he added.
On Sunday, the ACP issued a statement saying that talks with GUPC and insurer Zurich North America would continue through Feb. 4, the latest deadline set by GUPC to resolve matters since it threatened on Dec. 30 to suspend work.
GUPC's members include Spanish construction firm Sacyr Vallehermoso, S.A. and Salini Impregilo, S.p.A of Italy.
Benitez first expressed his feeling that the contractor wouldn’t walk off the job on Jan. 21 during the SMC3 JumpStart 2014 conference in Atlanta
. ACP officials have insisted that GUPC's claims lack merit, but that they are willing to take responsibility if the expenses are properly submitted through the dispute resolution process stipulated in the contract.
Construction for the past month has moved forward at between 25 percent and 30 percent of the previous rate, Benitez said. The lock project is more than 65 percent finished and officials are projecting a late 2015 date for the locks to be available to ocean carriers. But the contract dispute increases the possibility the project, originally scheduled to be completed in October, will be delayed further.
“Work is going on at a slow pace, however we are engaged in conversations to try to solve the situation,” he said.
Switching to a substitute contractor, Benitez has said previously, would only push back work by a couple of months at most and would allow the canal authority to finish the project within the projected timeline. Others, including Impregilo and members of an independent dispute resolution board for the canal, have said a change in contractors could delay construction up to three years.
“We always have Plan B. We always have our options open,” he said. “If we cannot reach an agreement with this contractor, we will have to exercise our Plan B.”
Benitez expressed confidence that cargo carriers that switched routes during the expansion project will start using the Panama Canal once construction is complete. Vessels journeying through the Suez Canal won't stay with that route once the Panama Canal expansion is open, he said.
“I am absolutely confident we will gain back that market share for one simple reason,” Benitez said. “Our route is shorter.”
He also minimized the proposed project by Chinese investors to build a canal through Nicaragua, saying it would cost double the $40 billion figure that has been floated in the press.
As for the current contract situation, a satisfactory solution seems imminent, Benitez said.
“I would really like to let the conversation complete,” he said, “and find a solution between both parties.”