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GUPC proposes to ACP the co-financing of the unexpected costs in the contract

GUPC proposes to ACP the co-financing of the unexpected costs in the contract for the expansion of the Panama Canal

With 10 thousand people at work, the expansion of the Canal will be operational in 2015, and will become a source of great revenue for Panama.

Monday, 20 of January 2014. The expansion of the Panama Canal is a strategic project for the world’s economy and global security. Maritime traffic throughout the world is anticipating the opening of the passage for larger ships during the first half of 2015.

GUPC’s proposal consist in co-financing the unexpected costs in order to continue the works and to maintain the work force of about 10 thousand people employed, thereby achieving the completion of the project in 2015 and producing several billions in terms of revenue for Panama.

GUPC stands united and has always taken unitary decisions; it is not asking for extra profits but for the co-financing of the unforeseen costs pending the decision of the international arbitration. In this way, the resources financed by the Canal Authority are fully covered by bank guarantees and insurance obtained by the consortium pending the outcome and final decision of the arbitrators on the responsibilities of these extra costs.

The works, which have a cost of over 100 million dollars a month have today reached 70% completion and technically speaking, nothing prevents us from reaching the finishing line. The only impediment is the difficult financial situation which has arisen due to the additional costs which occurred during the execution of the works, for which GUPC has requested relief.

It is important to underline that these costs are extensively documented and verified by ACP who has always been informed of the situation through an “open book “procedure. Moreover, these additional costs are audited by a specific audit carried out by independent experts. Ultimately, there is no question about the existence of these unexpected costs, but only about who should pay for them, the contractor or the client.

Failure to reach an agreement on co-financing of the unexpected costs will result in a serious delay and it will mean that the works will not be finished in 2015 causing damages to all parties involved.

Instead, an agreement will allow for completion in 2015, as well as an immediate generation of wealth for all Panamanians and significant benefits to all those who, trusting in the Canal expansion as soon as possible, have already made huge investments.

The consortium accepts and see positively the mediation of the European Union and European Commissioner Tajani to reach a satisfactory solution and extends the notice given to a possible suspension of work.

GUPC trusts in the intervention of the institutions involved so that the works can proceed according to the contract and the law until completion in the interest of the country and of all Panamanians.

About GUPC

Grupo Unidos por el Canal, S.A. (GUPC SA) is the contractor for the design and construction of the Third Set of Locks - Main Project of Panama Canal Expansion Program.

The group´s technical capability and knowledge in infraestructure projects in several countries of the world ensure that these projects will be conducted with the highest quality standards and in the agreed time.

GUPC is formed by Sacyr of Spain, Salini-Impregilo of Italy, Jan De Nul of Belgium and Constructora Urbana, SA (CUSA) of Panama.

 

GUPC sends to ACP (Panama Canal Authority) a notice letter about the suspension of the third set of locks works because of breach of contract

Given the lack of response from the ACP and the monitoring of conversations initiated, Grupo Unidos por el Canal (GUPC) has send a notice letter to the ACP expressing the suspension of the works, according to the sub clause 16.1 about the contract conditions for the third set locks works. ACP has 21 days to meet the requirements requested, meanwhile Panama Canal expansion works will continue normally.

The letter reiterates that ACP "is aware of the repeated attempts of the contractor to have a high level meeting with the intention of discussing in a fair and appropriate manner the big financial problems that are affecting the project under the Panamanian law," because till this day the matter has been handled by U.S. law firms hired by the Panama Canal Authority. Also we reiterate that despite agreements reached between the two parties, the Administrator has decided not to honor such agreements. Therefore, GUPC reiterates that cannot carry a work projecting 1,600 million dollars in cost overruns which are the employer responsibility, always under the contract and Panamanian Laws and although GUPC has sent different specific proposal, ACP has refused to discuss them so far.

In the letter GUPC states that Jorge Quijano Administration has failed to fulfill its obligations under the contract, like the inaccuracy of the information provided to the consortium to implement the project; this was recognized by the Panama Canal Administration.

GUPC understands that the Panama Canal Administrator has failed to fulfill the rules and regulations established by the ACP in the contract such as forcing the contractor to relinquish some of their rights. But above all, it has failed to maintain and restore the financial equilibrium with GUPC by unforeseen events that have occurred in the work, something that happens regularly in projects of this size.

GUPC again denies any pressure against the ACP and has always been willing to work within the contract and the laws of Panama with the ACP to find a negotiated solution to finish the work in less time and cost possible. Meanwhile, the administration has done everything in its power to avoid resolving the various disputes and claims. It is important to remember that the first step to resolve disputes was to reach an agreement between the parties, always following the contract.

By contrast, the attitude of the administration was always ignore these requirements and force GUPC take such claims to Dispute Adjudication Board which means an investment of time for the Consortium and additional money. But also, when the DAB (Dispute Adjudication Board) has proceeded in its reconciliation, ACP has rescinded those decisions, which shows more inconsistency in its obligations established in the contract and Panamanian law.

For all these reasons, GUPC has the right to deliver the notice letter in accordance with Panamanian law. Moreover, the Civil Code of Panama establishes that in case of deprivation both parts should equitably rectify the terms of the contract to get a fair balance. If the recovery is not done, the employer is able to determine the end of the contract.

However, GUPC is expecting in the next 21 days that the Panama Canal Authority meets the requirements presented by the Consortium in order to continue the work, which would be the alternative with lower cost and in the shortest possible run time. Meanwhile, GUPC will continue with their work and regrets having to resort to the media to clarify the actual situation of project management and not the evolution of the works themselves. --------

About GUPC

Grupos Unidos por el Canal, S.A (GUPC S.A) is the contractor in charge of the design and construction of the third set of locks – the main project of the Panama Canal Expansion.

GUPC is formed by Sacyr from Spain, Impregilo from Italy, Jan De Nul from Belgium and Constructora Urbana, S.A (CUSA) from Panama.

   

Estado del Proyecto del Diseño y Construcción del Tercer Juego de Esclusas

Sigue presentación fechada 4 de enero de 2014, sobre "Estado del Proyecto del Diseño y Construcción del Tercer Juego de Esclusas".

Para ver la presentación haga click en el siguiente enlace: Ver presentación.

   

GUPC presents proposal to ACP to solve the financing of the project

GUPC PRESENTS PROPOSAL TO ACP (PANAMA CANAL AUTHORITY) GIVING A LONG-TERM SOLUTION TO SOLVE THE FINANCING OF THE PANAMA CANAL THIRD SET OF LOCKS.

GUPC and ACP have held a meeting in which they are studying ways to reach an agreement to solve the cashflow problems of the Panama Canal third set of locks. The two sides agree going to arbitration proceedings under the contract to resolve claims.

GUPC, in a responsible way and aware of the project importance, has submitted a proposal seeking a final solution, always under the contract and Panamanian Laws which has agreed to inject 100 million and has requested the ACP an advance of 400 million, in addition of extending the current cash advance moratorium until the end of the arbitration period, among other things.

ACP has put on the table a proposal for a partial solution to the conflict in a short-term with economic contributions from GUPC and cash advances plus moratoria from ACP. GUPC also presented various financial alternatives to improve the proposal submitted by ACP, and that could be carried to the completion of the work in order to continue the project normally. Today the third set of locks has more than 66% of construction complete. Among other possibilities that should be explored, one of them is to make expedite the claims process.

GUPC is committed to the ACP in continuing the dialogue to move from a short-term proposal to a long term one allowing completion of the work.

   

Traslado de Barras de Acero Gatún - Cocolí

El contratista Grupo Unidos por el Canal, S.A. (GUPCSA), informa al público en general que debido a los trabajos del proyecto: Diseño y Construcción del Tercer Juego de Esclusas – Sector Pacífico, estará realizando el traslado de barras de acero desde el área del Proyecto de Esclusas en el Atlántico, Gatún, hasta el área del proyecto en el Pacífico, Cocolí, del martes 24 de diciembre de 2013 al viernes 24 de enero de 2014.

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Traslado de Vigas Sector Pacífico

El Contratista Grupo Unidos por el Canal, S.A. (GUPCSA), informa al público en general que debido a los trabajos del proyecto: Diseño y Construcción del Tercer Juego de Esclusas – Sector Pacífico, se estará realizando el traslado de vigas requeridas para el proyecto de ampliación, desde el Puerto de
Manzanillo en el Atlántico, hasta el área del proyecto en Cocolí, en el Pacífico, el lunes 23 de diciembre del 2013.

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Traslado de piezas para las Compuertas

El Contratista Grupo Unidos por el Canal, S.A. (GUPCSA), informa al público en general que debido a los trabajos del proyecto: Diseño y Construcción del Tercer Juego de Esclusas – Sectores Atlántico y Pacífico, se estará realizando el traslado de piezas sobredimensionadas requeridas para la colocación de las compuertas, desde el Puerto de Manzanillo en el Atlántico, hasta el área del proyecto Pacífico en Cocolí, el sábado 30 de noviembre del 2013. Del martes 3 al viernes 6 de diciembre del 2013 se estará realizando el traslado de piezas adicionales desde el área del proyecto Pacífico, en Cocolí hasta el área del proyecto Atlántico, en Gatún.

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