Panama Canal Expansion: Delay Scenarios And Outcomes

Work on the Panama Canal expansion project, due to be launched in 2015, has all but ground to a halt following the breakdown in negotiations between the Panama Canal Authority (ACP) and the Grupo Unidos por El Canal (GUPC) consortium concerning cost overruns. BMI investigates the different scenarios for this project and who stands to benefit and who is disadvantaged by these delays.

The disagreement between GUPC and the ACP stems from the consortium (which includes Spain's Sacyr Vallehermoso, Italy's Impregilo, Belgium's Jan de Nul and Panama's Constructora Urbana) seeking compensation for US$1.6bn in cost overruns. The dispute erupted in December 2013, with Sacyr giving the ACP a month to reach a decision on the overrun payment. During this period, production levels on the project dropped by 75%, and following the breakdown of negotiations on February 5 2014, reports have emerged that almost all construction activity has ceased.

The work being undertaken by GUPC on the Canal expansion project is about 70% complete, but the current delay threatens the launch of the whole project, which is already nine months behind schedule, with a current launch date of June 2015.

Market Reacts To Negotiation Breakdown
Sacyr Share Price (EUR)

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This article is tagged to:
Sector: Infrastructure, Freight Transport, Shipping
Geography: Panama, United States

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