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Panama Canal, GUPC in talks to avert expansion works stoppage

Panama Canal, GUPC in talks to avert expansion works stoppage
Panama Canal officials met on Tuesday with insurer Zurich America and representatives of the consortium building the third set of locks to find a solution to the dispute initiated by Grupo Unidos Por el Canal (GUPC) that had threatened to halt the works.

Panama Canal Authority (ACP) Administrator Jorge Quijano said that he had received a letter from GUPC postponing the original deadline of 20 January to stop the construction to 31 January if the ACP did not accept to pay overrun costs of $1.6bn.

Quijano said that there were a proposal which could bring solution to the dispute without mentioning the terms of offer. However the “proposal could provide a long-term solution”, said Quijano.  “Insurer Zurich America has shown interest to participate in the solution [of the dispute],” he said. Another meeting is tentatively planned for Monday 27 January.

Zurich America keeps the two guarantees one of $400m and another of $50m required by the contract between the ACP and the consortium.

Last Monday, GUPC said that if the ACP would accept co-financing some of the over costs it could complete the construction of the third set of locks by 2015.

“We have complied with everything we should do,” Quijano said. “All the accords, if any, must follow the terms of the contract,” he added.  The consortium, according to Canal officials who toured the project last Sunday, has slowed down the works to 25%-30% having reduced the work force by thousands of workers.  

Canal insiders expect that a final decision could be made by next week. This time of the year, which is the dry season in Panama, is particularly critical since it allows construction works to go faster than during the rainy season that runs from April-May to December.