Development

Panama Canal Expansion Project Work Stoppage, by the Panama Canal Authority

File Type: Free Content, Article
Release Date: February 2014
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ship in Panama canal

Work on the $5.3 billion Panama Canal expansion project halted last Wednesday (February 5) after negotiations between the Panama Canal Authority and the consortium expanding the canal broke down over extensive cost overruns. The construction group, Grupo Unido por el Canal (GUPC), which is led by Spain’s Sacyr SA, said it is owed $1.6 billion, while the Panama Canal Authority said that demand amounted to blackmail. Without an agreement, the expansion’s timely completion is at risk.

Panama Canal Authority Administrator Jorge Quijano told a news conference that the stoppage will give authorities time to analyze how to proceed on the project to widen the canal, adding that "I don't even want to suggest that the next steps will be easy or risk-free." The project, which began in 2009 and is about 75 percent complete, will double the canal’s capacity and have a major impact on international trade. The expansion is scheduled to be completed in 2015, and many believe it still could deliver on time.

Any delay could have a significant effect on ports up and down the U.S. East Coast. Many, including Miami, have spent billions of dollars to prepare to accommodate the larger post-Panamax ships in mid-2015. If the delay extends into the coming months, the carrying cost on the interest of “the billions of dollars of bonds floated by local, state and federal agencies to pay for all of these United States port improvements during the last 3 years could run into the hundreds of millions of dollars alone,” reports World News Channel.