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Panama Canal claims 'no merit' to stop expansion works

Panama Canal claims 'no merit' to stop expansion works
The Panama Canal Authority (ACP) says that the notice of suspension of works by contractor Grupo Unidos por el Canal (GUPC) lacks legal basis and is not clear.

The notice of suspension of works on the expansion of the Panama Canal was sent by GUPC on 30 December. The consortium, led by Spanish builder Sacyr said that it had incurred additional costs of $1.6bn and demanded the ACP to pay the overrun costs or it would stop the construction 20 January.

On Sunday ACP said that in a letter date 13 December 2013, it requested that GUPC respond within seven days over faults and threats to suspend work. No response was received.

Some of the concerns ACP had included: the reduction in the contractor’s personnel; the lack of progress with the three Borinquen Dams; the significantly delays in the delivery of the lock gates;  the contractor’s apparent intention to slow down performance of the works to match the progress under the PAC4 contract; the lack of progress in the rectification of defective works and, generally, the contractor’s failure to progress the works in accordance with its contractual obligations.

Although the consortium refers to various interpretations of Panamanian law in its 30 December letter, the ACP said there is nothing in Panamanian law or in the contract signed that gives the contractor any grounds for suspension of the works.  The ACP reaffirmed that the contract was agreed to and should be fulfilled according to the rules and regulations of the Panama Canal.

The ACP also warned that the consortium cited a wrongful application of Sub-Clause 16.1 of the contract since this clause provides only the right to suspend the work when the employer has failed to issue payment to the contractor. ACP claimed it pays GUPC 15 days and not 56 days as stated in the contract. Such notice of intent to suspend works is not valid, the ACP said.

ACP Administrator Jorge Quijano said earlier that the ACP has a “plan B” but he did not provide details.

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