ACP to dispute cost overruns of Canal expansion

It plans to appeal a decision handed down by a Conflict Resolution Board.


The Panama Canal Authority (ACP) has announced it will file an appeal with an international arbitration board over the $233 million in claims submitted by Grupo Unidos por el Canal (GUPC) that have been approved by the Board of Conflict Resolution.

The ACP has deducted 50 percent of that amount from $774 advance it has given GUPC so it can finish the project, which is 85 percent complete. The casting of concrete in the new locks is finished, and the work is now focused on the electromechanical infrastructure and the installation of gates and valves.

The ACP is basing its appeal on a minority decision of one of the three members of the Conflict Resolution Board. In that opinion, member Robert J. Smith disagreed with the contention by GUPC that singificant cost overruns were the fault of the ACP due to its failure to test the quality of basalt available for mixing of concrete on the Pacific side of the project, as claimed by GUPC.

The ACP sent a note of dissent two day ago to the Arbitration Board, which operates under the rules of the International Chamber of Commerce. That is the first step of the process in bringing an appeal to the board.

In his dissent, Smith said that the consortium could not sustain its claims related to the quality of the basalt.

To date, GUPC has submitted claims totaling $2.437 billion. Of that amount, the ACP has recognized $287.9 million, including the $233 million ordered by the Conflict Resolution Board.

There are $1.6 billion in pending claims.

The ACP has already paid GUPC $3.569 billion. The amount of the contract awarded in 2009 to GUPC was $3.118 billion. The excess amount is advances granted by the ACP to allow the work to be finished. The final cost of the project will be determined once the arbitration is finished on the claims filed by the consortium.



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