EXPANSION of the Panama Canal remains vulnerable to delays arising from troubled labour relations and disputes over cost overruns, said London-based IHS Country Analyst Diego Moya-Ocampos.
"Meeting the December 2015 deadline is likely to prove difficult, and the project is most likely to be concluded and operations started in the first quarter of 2016, but not later," he said.
"Further delays in delivering the project - originally due in October 2014 - would affect the Panamanian economy, as well as shipping companies, US LNG exporters and Western Hemisphere ports," said his study.
"Work is unlikely to stop completely, but escalation of disputes can result in small delays affecting the completion and launch of operations of the canal until the first quarter of 2016." he said.
"Unions may resume strike action if wage demands are not met. The resultant project overspends could also lead to renewed disagreements between the Panamanian government and the project contractor," he study said.
The expansion was budgeted for US$5.25 billion, but costs have since risen to more $7 billion. Claiming the government owed $1.6 billion, the contractor, GUPC, stopped work.
The February 5-20 work stoppage was resolved with an agreement between the canal authority an GUPC contribute $100 million with another $400 million coming as a loan from Zurich insurers.
Panama Canal Authority (ACP) chief executive Jorge Quijano said in June that he expected the canal to open in the first quarter of 2016, perhaps in January of that year, reported American Shipper.
"I am hoping that because we have so much time between now and the end of the project that some of the time can be picked up," he said.
"US producers of liquefied natural gas had also counted on the canal being ready in 2014 to ship directly from Gulf coast ports to markets in Asia," said the study.
"Their investments aimed to benefit from the expanded Panama Canal shortening voyage distances to Asian buyers, therefore reducing LNG transport costs," he said.
"On 1 July, Taiwanese president Ma Ying-jeou complained that delays had already disrupted his country's plans to buy US shale gas," said Mr Moya-Ocampos.
WORLD SHIPPING
20 July 2014 - 16:44
Labour strife, cost overruns likely to plague Panama Canal: IHS
EXPANSION of the Panama Canal remains vulnerable to delays arising from troubled labour relations and disputes over cost overruns, said London-based IHS Country Analyst Diego Moya-Ocampos.
WORLD SHIPPING
20 July 2014 - 16:44
Labour strife, cost overruns likely to plague Panama Canal: IHS
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