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The Panama Canal is played between three and five years late

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Work on the Panama Canal expansion continued low rate yesterday, after the expiry of the notice to the consortium Grupo Unidos por el Canal (GUPC) gave to stop work. The consortium led by Sacyr still hopes to find solutions in the coming weeks to finish the work and co-finance the extra features, estimated at about 1,200 million. The alternative would be slow and expensive. A confidential document of the Dispute Resolution Board (DAB, for its acronym in English), the mediator between the parties Panamanian body warns that, if breach of contract, the work would end in 2015 is not as planned but more probably between 2018 and 2020, according to sources of that body.

This body admits that the problem of lack of funding is real and not some kind of coercion contractor to achieve additional benefits. However, the board ruled in favor of Panama by two votes to one in the first of the big issues in dispute, cost overruns in the construction of the cofferdam or temporary dam. The DAB, an anticipated in the contract to settle claims as a national referee considers that the continuation of the work by the consortium is the most economical alternative to continue the works and advocates for the liquidity needed to avoid delays and costs.

Precisely GUPC warned in a statement last night that the lack of an agreement on the financing will result in "the works will not finish on time and will be a serious delay, the prejudice to all parties." Instead, an agreement would end the work in 2015, " which would mean immediate wealth generation for all Panamanians and bring significant benefits to all those who, relying on the Canal Expansion on schedule, and significant investments have been made "according to the note.

The threat of paralysis is somehow converte threat delays "The works, which cost more than $ 100 million per month, now have an advance of nearly 70 % and technically nothing prevents that achievable. schedule submitted there is only one thing that can affect the project: the difficult financial situation that is because of the unforeseen costs that have been generated, and the consequent application of economic recognition thereof incurred in the work and presented by GUPC "says the consortium.

Co-finance the costs Although several alternatives have been groped, finally offered the consortium yesterday after a meeting of its board of directors is co unforeseen costs to fulfill the contract within the current schedule. " GUPC (...) is not asking for extra benefits, only the co-financing while awaiting the decision on the same international arbitration " though without specifying what part of that financing would be in each part.

The consortium said that the funds supplied the Panama Canal Authority (ACP) would be protected until the arbitrators determine who should bear the cost overruns, as they have bank guarantees and insurance. GUPC stresses that cost overruns are documented and verified by the ACP: "There is no discussion about the existence of these unexpected costs, all that 's who discussed the need to pay, if the contractor or the client," he says in his note on consortium, which says " is attached unit and has always taken decisions." Try to step out so the information on the differences between its members: Sacyr of Spain; Salini - Impregilo of Italy, Jan De Nul of Belgium and Construction Urbana SA (CUSA) of Panama.

The consortium and the Canal and negotiated a deal in December under the mediation of the insurer Zurich, concluding that GUPC was the cheapest and most efficient option to complete the work, a point that both parties accepted. The draft agreement, which ultimately rejected the ACP when the consortium believed that was almost closed, anticipated disbursements Canal as a conditional so the DAB or international arbitration claims decided on advancement. The refusal of the ACP to sign the pact caused the notice of suspension, according to sources of the conflict. Now GUPC " extending the notice " undated.

The position of the insurer After the failed attempt at mediation December and the outbreak of the conflict, Zurich again addressed Jorge Quijano, Canal Administrator for subrayarle ways that fit within the ACP contract to fund the remaining work. Zurich believes unproductive embroiled in a legal battle and calls for a pact.

The insurer must deal initially to pay bail in the event of default by the Contractor, but in turn has reinsured the risk with national insurance firms export (Cesce, in the part that corresponds to Sacyr).

For now, see Zurich premature to consider the payment of the guarantee. Such security is part of the money to the Canal had to fund the works in case of rupture with the consortium. Zurich, however, think that there are too many legal bangs open and would need to wait to resolve arbitration.

Therefore, as the DAB, the insurer believes that the best would be a negotiated solution. In his analysis of the situation, experts from Zurich dismounted ACP arguments according to which there is no mechanism within the contract that allow the Canal finance the work without waiting for arbitration.

Zurich considered to be an agreement between the parties to close some claims and remember the rules of the International Chamber of Commerce (ICC) which is governed by the arbitration contemplated mediation as previous alternative. In addition, there are claims in the first instance, on the Canal has full disposal capacity without sending them or the DAB or to international arbitration, which are the second and third instance. A full or partial agreement on these claims in a negotiation in good faith allow a financial respite to continue the works. In addition, the insurer does not see legal obstacles to the forward funding for ACP Canal whose final settlement is subject to the mechanisms of dispute resolution, as now proposed by the consortium. Zurich laments the intransigence of the ACP to accept proposals to unblock the conflict.

For now, the position of the Spanish Sacyr, as consortium leader, going to try to shorten the conflict resolution bilaterally resolve some minor complaints, probing alternative financing (EU funds, local banks, contributions from partners...) ACP and expect something more flexible position, so as to facilitate if funding remains the reckoning postponed the resolution of conflicts.

" The Panama Canal expansion is a strategic play for both the economy and to global security. Global maritime traffic all eagerly awaiting the completion of this project will allow ships to cross the canal again expanded in 2015," said yesterday the consortium as a note. Margin trading is days or weeks. Without agreement, the Panama Canal expansion may be delayed for months or years.

 Tags: Canal, five, late, Panama, played

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