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Saturday, December 20 2014 @ 12:15 PM EST

ACP Responds With A New Proposal

Canal ExpansionThe Panama Canal Authority (ACP) responded to the latest approach in the press made by the Grupo Unidos por el Canal (GUPC), with a counter offer to continue the construction of the third set of locks, which has been paralyzed for three days.

" As we prepare to take the actions permitted under the contract to reactivate work on the project, we remain open to the possibility of reaching an agreement, and for that we are making this effort," said the administrator of the Panama Canal, Jorge Luis Quijano, in a press release.

According to the ACP, the proposal sent to the consortium does not increase the original contract price of $3.118 billion, nor does it accept or admit any claim (for cost overruns), which, if given, most follow the contract process (to be resolved).

(In the counter-offer) it is also understood that the parties will have to provide additional financial resources so that work on the project can be restarted as soon as possible, but no dates or details of the procedures were offered.

The offer, subject to review and approval by the parties, establishes specific dates for the delivery of the gates, by GUPC, and for the final completion of the work.

The two sets of locks (one on the Pacific side and one on the Atlantic side of the Panama Canal) require a total of 16 lock gates. Of these, four have already been transported to Panama. The remaining 12 are in Italy. Eight are still in different phases of the manufacturing process, and four have been completed and are ready.

The ACP also proposed to further extend the repayment period for the $748 million that the ACP paid in advance to the consortium, "to the extent that GUPC meets the required delivery dates."

Executives from the multilateral financial institutions who provided $2.3 billion dollars for the expansion program visited the ACP and toured the work site during the day yesterday.

The government of the United States, which administered the Panama Canal between 1914 and 1999, also urged the ACP and the GUPC consortium yesterday to reconcile the differences that have disrupted construction of the third set of locks.

"We hope for a rapid resolution of the current work stoppage, and the full resumption of activity in the expansion of the Canal," said a State Department spokesman, quoted by the DPA news agency. (Prensa)

Editor's Comment: The ACP is doing two things at once. They are getting ready to either take over the project or hand it to someone else to finish, while at the same time they have to listen to the GUPC continue to chatter and whine. So they tossed out this "new" counter proposal, which in fact does not contain anything all that new or different. The fundamental facts on the ground remain the same. The GUPC won the contract through a low-ball bid, and they fully intended to try to jack the ACP for the necessary $1.6 billion dollars from day one. The ACP knew what they were doing, and is sticking to their guns by simply saying no, and forcing the GUPC to complete the project as required by the terms of the contract. The GUPC simply can't do that (the money isn't there) so they will walk away. That opens the door for the ACP to sue them for the additional costs of completing the project, the $1.6 billion dollars lacking in GUPC's lowball bid. This all sort of boils down to little more than a game of high stakes chicken - with the Panama Canal in the middle. Not to worry though, because it will be built, albeit with some delay.

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ACP Responds With A New Proposal
Authored by: cayrick on Saturday, February 08 2014 @ 06:28 PM EST

GUPC were not the most technically competent or best financed bidder by a long shot. They made a lowball bid, knowing, that, if they were successful they could later put a gun to the ACP's head or threaten a work stoppage to get additional funds. This is a sleazy business model, but that is how many deals are done in lesser developed countries. ACP on it's part, knowingly accepted a bid far below that of experienced and highly competent and efficient project managers like Bechtel. ACP knew of Sacyr's weak financial situation before awarding the contract. There were lots of alarm bells ringing, plenty of risk, yet, still, the ACP bit and accepted this bid. The question that has never been answered is "why".
Only the ACP, National Government and GUPC know the answer. This situation has a foul smell. GUPC knows where all the skeletons are buried. Expect that GUPC will remain in the game, but some face saving gesture will be made to make it fly politically, and keep the lid on Pandora's Box.