Canal Construction Company Records Overruns as Revenue

The Spanish company Sacyr had already counted as actual income amounts the cost overruns that the Panama Canal Authority has refused to pay.

Wednesday, January 8, 2014

An article in Elpais.com reports that "Sacyr has counted its chickens before they've hatched. The consortium led by Spanish construction group has been recording in their accounts the additional costs incurred in the execution of the works to expand the Panama Canal as income, even though such items are not recognized by the Authority of the Panama Canal (ACP). Sacyr has confirmed the use of this accounting method, validated by the auditor, in response to a request from the National Securities Market Commission (CNMV) regarding their accounts. Although the construction group submitted its response to the supervisor last week, it conveyed an image of normalcy that gave no indication that they were about to suspend the most important work that is currently being executed."

"... Investors sanctioned the announcement on Thursday that Grupo Unidos por el Canal (GUPC), the consortium led by Sacyr with 48%, has given notice to paralyze the redevelopment of the canal which it will carry out if Panama does not addresses their claims or reach an agreement within 21 days. Sacyr's share value fell by 18.7%, but ultimately closed the session with a fall of 8.95%. The possible suspension of works is a blow to the construction group's image, as it involves the risk of lawsuits and loss of the deposit paid by the consortium and also casts huge doubts on the possibility of completing the mega project with a profit margin."



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More on this topic

Canal Expansion: Agreement to Finish Work Confirmed

February 2014

The agreement between the Panama Canal Authority and the consortium GUPC has been framed within the conditions of the original contract and rules out paying for cost overruns which are outside of the contract.

The Third Set of Locks project will be completed within the terms of the contract, as the Panama Canal Authority has demanded since the beginning.

Canal Expansion: Differences Between Companies in the Consortium GUPC

January 2014

The Spanish Sacyr has distanced itself from its Italian partner Impregilo, indicating its intention to continue the works, negotiating cost overruns within the scope of the original contract with the ACP.

In light of the statement by the president of Sacyr, Jorge Luis Quijano, the administrator of the Panama Canal, said of the statement by Manuel Manrique, that the intentions expressed have not been communicated to the Canal Authority in writing.

Canal Expansion: Builders Ran Out of Money?

January 2014

The facts seem to bear out what was said in 2009 -according to WikiLeaks- by the U.S. ambassador, who described Sacyr as "a bankrupt company sustained only by the Spanish government."

The dialogue regarding the cost overruns in the construction of the canal expansion project between the Panama Canal Authority (ACP) and the consortium Grupo Unidos por el Canal (GUPC)-initiated by the intervention of the Spanish Minister of Development- has been interrupted, and it is not longer the Spanish group Sacyr the spokeshead but instead it is now the other majority company in the Consortium, Italy's Impregilo, which is asking - via the media- for $1 billion from the ACP, while keeping up its threat to stop the work.

Canal Expansion: Constructor's Counterproposal

January 2014

In a counterproposal to the $100 million offered by ACP, the consortium constructor is calling for an advance of $400 million and a long-term agreement.

The proposal by the Panama Canal Authority (ACP) to make a joint contribution of $283 million and avoid suspension of the construction of the third set of locks has not convinced the representatives of Grupo Unidos por el Canal (GUPC).

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