Rhetoric subsides in effort to resolve Panama Canal dispute
The international consortium building a new set of massive locks for ocean-going vessels through the Panama Canal said talks to resolve $1.6 billion in disputed cost overruns will continue through Feb. 1.
Representatives for Grupo Unidos por el Canal, as previously reported, met Tuesday in Panama City with Panama Canal Authority officials and made a second proposal for jointly financing the remaining work while the disputed claims go through arbitration. The group issued another statement Thursday saying the two sides had also agreed on a new protocol for negotiations and to extend talks through Feb. 1.
On Dec. 30, GUPC had threatened to suspend work Jan. 21 if its demands for reimbursement were not met, saying the Canal authority had ignored its request for what it claimed were unforeseen costs. The group recently softened its ultimatum, saying that it maintained the option after that date to stop work if progress toward a resolution wasn't made.
But the Panama Canal Authority is insisting GUPC abide by the contract and its dispute resolution mechanisms and says it could opt to cancel the contract for non-performance in the coming days and pick a substitute contractor if GUPC doesn't pick up the pace. The consortium has failed to pay many subcontractors and has reduced the workforce at the work sites on the Pacific and Atlantic sides of the Canal in recent weeks because of cash flow issues.
The locks are the largest component of the $5.2 billion Canal expansion, which is more than nine months behind its original completion date of Oct. 2014.
Officials now say the Pacific locks will be completed in June 2015, which will be followed by several weeks of mechanical testing and trial runs. The wider locks are now scheduled to open business in the fourth quarter of 2015, but many maritime industry officials would not be surprised to see the schedule slip into 2016 given the current standoff and the complexity of the project.
Port and container line executives that gathered in Tampa, Fla., for an American Association of Port Authorities' conference on trade said the delays will not have any impact on their strategies for deploying the next-generation of super-size vessels. Many carriers have dynamic routing plans that they frequently update, and no planning for deployment of new vessels takes place that far in advance.
AAPA President Kurt Nagle said U.S. ports that are behind in deepening harbors and adding landside capacity for the cargo surge from larger vessels could see the delays as an opportunity to catch up on capital projects.
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