PANAMA CITY -- A dispute over $1.6 billion in cost overruns on construction to widen the Panama Canal has been resolved, the parties said today, ensuring completion of the massive project.
The Panama Canal Authority and the consortium Grupo Unidos por el Canal (GUPC) announced "a final agreement in principle" after intense talks to resolve a two-month-long standoff.
"The plan here is that we would enter into commercial operations in January 2016," said Jorge Quijano, the canal administrator. Under the original schedule, the canal expansion was supposed to have been ready this year.
The agreement offers co-financing of the construction, while awaiting the result of arbitration to assign final responsibility for the cost overruns, the consortium said.
In their deal, both sides agreed to make an immediate payment of $100 million to the project, a cash infusion that will permit "the normal rhythm of work" to resume, the canal authority said.
The accord also extends until 2018 a moratorium on payment of a $784 million loan which the canal authority had advanced to GUPC.
Likewise, Quijano hailed the accord as one which "protects the interests of the Panama Canal within the terms of the contract, and [respects] our mutual positions."
GUPC had been in dispute with the canal authority in part over geological difficulties which obliged the builders to spend much more on cement than expected.
GUPC said it based its estimates on incorrect data provided by the Canal Authority.
The 50-mile-long canal, completed by U.S. interests in 1914 to offer a shorter, safer route between the Atlantic and Pacific, is used by 13,000 to 14,000 ships each year.
In 1999, ownership of the canal reverted from the United States to Panama.
The project to add a third set of locks to the canal had originally been due to be completed next year.
But the project was running nine months late at the end of 2013, and has slowed further this year.
Copyright Agence France-Presse, 2014