Panama Canal hits out at GUPC as talks end, lock works stop

ACP’s Quijano told reporters Wednesday that the consortium “has maintained an inflexible position” leading to the breakdown of the talks. The deadline to reach agreement passed on Tuesday at midnight.

Quijano said that after two weeks of talks with GUPC, the consortium in charge of the construction of the third set of locks, the two sides could not reach an agreement.

"GUPC has maintained an uncompromising position," he said. He added they had tried to get the ACP to agree on cost overruns, outside what was stipulated in the original contract.

On 30 December last year GUPC said it would stop work on the lock gates on 20 January unless the dispute was settled, but continued at a 25% work rate past the deadline as talks to end the dispute continued.

Following the break down in talks on Tuesday GUPC officially stopped the works and workers were stopped from coming on site Wednesday morning.

Despite this Quijano said that the ACP keeps the door open to new approaches. He added that GUPC insisted it wanted to continue to negotiate out of the contract between both parties.

In a note sent by Sacyr to Spain’s National Securities Market Commission (CNMV) after the expiry of Tuesday night's deadline, GUPC, formed by Spain’s Sacyr Vallehermoso, Italy’s Salini Impregilo, Beligum Jan de Nul and Panama’s CUSA, announced  that the ACP has broken off negotiations, although the consortium "is looking for a funding solution" to complete the works in 2015.

The break down of the negotiations puts "at imminent risk" the expansion of the Panama Canal and 10,000 jobs, according to a consortium, which emphasised that "without an immediate solution," the parties "face years of disputes to court about the steps that have led the project to the brink of failure."

Sources close to GUPC noted earlier that, during the negotiations, the insurer Zurich American had expressed its intention not to release the collateral bonds if the dispute is not resolved.

The controversy between the ACP and GUPC began 30 December when GUPC sent a notice of cessation of works in 21 days if the ACP did not recognise $1.6bn in cost overruns.