Panama picks up the pace

Under the agreement, which is subject to documentation, review and final signatures by the parties, GUPC will pay US$100m and ACP will advance US$100m to ensure normal work begins this month.

“We have reached a conceptual agreement that protects the interests of the Panama Canal, within the terms of the contract and respecting our position,” said Jorge L Quijano, administrator, ACP. “The agreement is under review and pending signature; however, our commitment to Panama and our customers has been to inform these recent developments.”

This comes at a crucial time in the project, which has caused a number of problems for the ACP. Productivity levels hit a low of 25% following weeks of negotiations over who should pay for the new locks.

While the conceptual agreement falls within the terms of the contract for the design and construction of the locks, it does not include any payment for claims and does not alter the price of the contract.

However, it does cover other issues, including delivery dates, repayment moratorium and other key aspects for the project’s development. The new agreement sees that the Performance Bond for US$400m may only be released to Zurich North America, to obtain financing to complete the work, while the moratorium for the repayment of advances may be extended until 2018, if certain milestones are reached.

The 12 lock gates will be shipped from Italy to Panama by December 2014, and construction of the locks is set to be completed by December 2015.