Panama canal agreement reached: completion in December 2015

The agreement is largely in line with a preliminary agreement announced 27 February.

Under the contract, GUPC will complete the work in December 2015, with staggered delivery of the 12 remaining gates from Italy ending no later than February 2015. In the preliminary agreement, the gates were due for delivery ahead of December 2014.

GUPC will provide $100m and the ACP will advance a guaranteed $100m to allow work to resume at full pace, with further funds freed up by an extension of the moratorium on repayment of funds advanced by the ACP to GUPC up to 2018, subject to compliance with milestones and other conditions.

The ACP has collected the signatures of the GUPC companies: Imgregilo, Sacyr Vallehermoso and Jan de Nul, and awaits the signatures of CUSA, and of guarantors Zurich. The agreement will enter into force when all representatives have signed the accord.

Last December, the consortium began to slow down the work, reaching just 25% pace by January, and threating to stop all construction works if the ACP did not pay $1.6bn in cost overruns. On 5 February GUPC carried out its threat to stop all works. Works resumed on 21 February on the condition that the two sides began negotiating the terms of a "long-term agreement".

Works on the sites of the construction of the third set of locks, on both Atlantic and Pacific side, were at 25%-30% completion. With the signing of this long-term agreement, work should resume at full pace to take advantage of Panama's dry season.

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