Panama Canal Authority denies payment delays behind expansion postponement

PANAMA CITY, December 22nd, 2015  (EFE) The Panama Canal Authority, or ACP, said Monday it was up-to-date with its payments to the consortium building a third set of locks for the inter-oceanic waterway, the centerpiece of a multi-billion-dollar expansion project, denying a statement to the contrary by the contractor.

The Panamanian government agency that manages and operates the canal said in a statement that “it has punctually fulfilled its payment obligations” to the GUPC consortium “throughout the more than six-year contractual relationship.”

The GUPC, led by Spanish construction company Sacyr Vallehermoso and also comprising Italy’s Salini Impregilo, Belgium’s Jan de Nul and Panama’s CUSA, on Sunday accused the ACP of continued payment delays in breach of the contract and said those issues were postponing the completion of the project.

“The conclusion of the work largely depends on the ACP since, as owner of the work, (it) should prioritize the solution of the administrative and financial issues, always under the contract,” the consortium said.

“As it has been from the beginning of the project, ACP continues to delay any payment awarded under the contract, limiting the progress of the project,” it added.

But the ACP said Monday that “payments are based on the progress of construction” and noting that before the disbursements can be made the contractor must furnish proof of completion of the different stages not only in the field but also through documentary evidence.

The ACP said it had 56 days to make payment once all the conditions have been fulfilled, but that it has regularly paid the GUPC in less than 30 days.

ACP head Jorge Quijano said Friday that his agency was still planning for the inauguration of the third set of locks to occur during the second quarter of 2016 and no later than June.

The inauguration of the expanded waterway was initially scheduled for October 2014 but has been postponed due to, among other reasons, work stoppages, a contractual dispute between the ACP and the GUPC and cracks in one of the new lock heads on the Pacific side.

The 80-kilometer (50-mile) canal, which was under U.S. control from 1904 until Dec. 31, 1999, currently handles nearly 6 percent of global trade.

Administrators launched the expansion project in 2007, including construction of a third set of locks that will enable the waterway to accommodate “post-Panamax” ships.

Those modern ships – used by the energy, and particularly the liquefied natural gas, industry – hold up to 12,000 20-foot-long containers and are three times bigger than what the canal can currently handle.

With the new set of locks, the canal will be able to handle up to 600 million tons of cargo annually, double its current capacity.

The expansion, whose initial cost was $5.25 billion, is 96 percent complete.