Trouble at the Panama Canal: Your Money or Your Locks
THE $5.25 billion expansion of the Panama Canal is one of the world’s great infrastructure projects, aimed at enabling giant mega-tankers to pass through the 100-year-old waterway between the Atlantic and the Pacific. So a threat by an international consortium, led by Spain’s Sacyr, to halt construction work on January 20th if the Panama Canal Authority (PCA) doesn’t pay it $1.6 billion for cost overruns, is serious. The amount it is claiming is fully half the $3.2 billion it bid in 2009 for its part of the project.
Jorge Quijano, administrator of the PCA, told The Economist that the authority would not pay the money because cost increases were accounted for in the contract. He says he is prepared to go through a three-stage dispute-settlement process, culminating at the International Chamber of Commerce in Miami if necessary, that could take at least six months. “It won’t be easy,” he acknowledges.