The Panama Canal Authority will be making changes to the composition of consortia in tenders for construction works in order to prevent millions in losses because of claims made by subcontractors.
Conflicts between contracted parties who design and those who carrying out the works, and the lack of clarity in the responsibilities of each of the companies during the Panama Canal expansion motivated the adjustments to be made to future tender specifications.
The Italian company Salino Impregilo, as an investor and not as member of the construction consortium, is claiming the Panamanian government for a $2.2 billion payment for alleged loss of ROI and compensatory damages.
At a time when the third set of locks is 91% complete, the Italian company Salino Impregilo is arguing that "... as a result of the alleged violations (agreement on the Promotion and Protection of Investments signed in 2009 between the two countries) the company suffered in their role as "Investor" - additional costs in 2000 estimated 2.2 billion dollars.
The Dispute Resolution Board has ruled that the ACP should recognize $233 million in cost overruns to the contractor giving Grupo Unidos por el Canal an extension of 176 days for the delivery of the works.
From a statement issued by the Panama Canal Authority:
The Dispute Resolution Board has issued its decision which recognizes the payment of a fraction of the amounts claimed by the Contractor Grupo Unidos por el Canal (GUPCSA), in respect of alleged cost overruns on the construction of the third set of locks in the Canal enlargement program.
Grupo Unidos por el Canal has obtained financing to complete the construction of the third set of locks and requested an extension of 18 days, meaning that the work should be ready in January 2016 and not in December 2015.
The Panama Canal Authority announced that with the bond obtained by Grupo Unidos por el Canal, the construction consortium will be able to complete the construction of the third set of locks, but added that GUPC has filed a new claim, this time for $24 million as a result the effects of a workers' strike which occurred in April and May this year.
The Canal Authority and the consortium Grupo Unidos por el Canal have reached agreements to complete work on the third set of locks.
From a press release issued by the Panama Canal Authority (ACP):
The Panama Canal Authority (ACP) and the contractor Groups Unidos por el Canal (GUPC) signed the contract on Friday formalizing the agreements reached last March to complete the Third Set of Locks construction project.
The companies in Grupo Unidos por el Canal "would like it if each of the consortium members could make a claim directly with the Canal authority and not through GUPC, in the case it files for bankruptcy."
The announcement was made by the administrator of the Panama Canal Authority (ACP), Jorge Luis Quijano, which comes at a time when the there is a remergence of the issue of claims for increased costs that led to the stoppage of the works during the past year.
An agreement has been made to grant an extension of 651 days for the delivery of the work on the Pacific inlet, changing the termination date of the contract to May 31, 2015.
From a statement issued by the Panama Canal Authority:
Panama City, July 23, 2014. - The Panama Canal Authority (ACP) has issued and delivered to the supervision authorities the XXXI Quarterly Report on Progress with Contracts in the Expansion Program, in compliance with Law 28 of 17 July 2006.
The date of completion of the works will still be the end of 2015, with attempts being made to make up for lost work days during the recent general strike of construction.
Despite the progress made in the project to date, the challenge for the canal administration and for for Consortium Grupo Unidos por el Canal, in charge of the work, will be to meet the deadline, after work was paralyzed for another two months.
Wiith the signature this week from the insurer Zurich and Constructora Urbana S.A. (CUSA), a member of GUPC, the agreement announced on February 27 becomes official.
From a statement by the Panama Canal Authority (ACP):
The agreement between the Panama Canal Authority (ACP) and Grupo Unidos por el Canal (GUPC) for terminating the project of the Third Set of Locks will go into effect after it is has been signed by all parties.
The Canal Authority and contractors from the Sacyr consortium, Impregilo and Jan de Nul signed the agreement reached to resume the works.
The Board of Directors of the Panama Canal Authority have authorized the signing of a contract with the consortium Grupo Unidos por el Canal, as agreed between the parties on 27 February.
From a press release issued by the Panama Canal Authority:
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.
Although work has been restarted, there are still differences at the negotiating table that make the final agreement uncertain.
Just yesterday afternoon more activity could be seen in the works of the Canal expansion, as the administrator of the Panama Canal, Jorge Luis Quijano said it was "a good restart of works."
"... Although the Panama Canal Authority (ACP) and Grupo Unidos por el Canal (GUPC) reached a partial agreement on Wednesday which included the revival of works on the third set of locks, differences remain, both at the negotiating table as well as internally in the consortium.
The Canal Authority and the consortium have agreed to resume the works, but delivery times and other key aspects still need to be defined.
Grupo Unidos por el Canal has pledged to restart, on February 20, the construction of the Third Set of Locks. As soon as the works are restarted the ACP will remit $36.8 million related to payments billed by the consortium last December.
The Canal Authority has reported that the preliminary agreements reached days ago have failed to materialize.
The ACP considered this week "critical" in making a decision whether to restart the project restarting as soon as possible.
From a press release issued by the Panama Canal Authority:
Panama City, February 18, 2014. - The Panama Canal Authority (ACP) reports that despite its efforts to agree with Grupo Unidos por el Canal (GUPC) to reviving the works on the Third Set of Locks, the positions between the parties remain far apart.
The possibility of a joint injection of $200 million agreed between the parties now depends on the insurer Zurich to contribute $400 million as a deposit.
The Panama Canal Authority (ACP) and Grupo Unidos por el Canal (GUPC) have reached a tentative agreement that includes the co-injection of $200 million, the payment by GUPC of a bill that is due, and extending the term of repayment of funds advanced by the ACP.