THE Panama Canal Authority (ACP) has a 'Plan B' if work to build the locks system that will expand the key waterway is suspended from January 19 owing to a dispute with the contractor, which is seeking an extra US$1.6 billion of alleged cost overruns.
Reluctant to provide the additional funding, canal administrator Jorge Quijano is urging the construction consortium Grupo Unidos por el Canal (GUPC) to take advantage of independent arbitration outlined in the original $3.1 billion project contract signed in 2009.
The chief executive of the ACP hopes that GUPC "will see the wisdom" of taking the dispute to the second stage of dispute resolution.
He told journalists in a conference call that if the GUPC consortium does suspend work on the locks system, "there is always a Plan B," but added that "we would rather finish the job with this consortium," reports Lloyd's List.
Mr Quijano dismissed reports that US engineering company Bechtel had been contracted to take over construction work if GUPC suspended work
The Panama Canal boss confirmed that GUPC has received $2 billion in payments for work completed so far, while a further $150 million escalation costs had also been agreed.
The row centres around $1.6 billion in overruns, of which $900 million involves a "disruption claim" from GUPC.
A penalty clause in the contract means that the consortium will have to pay up to $300,000 from October 21, 2014 for every day that the fourth quarter 2015 opening of the widened Panama Canal is delayed, up to a cap of $54 million.
In its letter of claim, GUPC states that the ACP has "failed to fulfil its obligations under the contract, like the inaccuracy of the information provided to the consortium to implement the project."
Mr Quijano denies this allegation and says that the Panama Canal authority has fulfilled its obligations under the contract.
WORLD SHIPPING
08 January 2014 - 00:34
'Plan B' if locks work for Panama Canal halted in funding row
THE Panama Canal Authority (ACP) has a 'Plan B' if work to build the locks system that will expand the key waterway is suspended from January 19 owing to a dispute with the contractor, which is seeking an extra US$1.6 billion of alleged cost overruns.
WORLD SHIPPING
08 January 2014 - 00:34
'Plan B' if locks work for Panama Canal halted in funding row
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