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GUPC Panama Canal Cost Overrun Claim goes up to USD 5.7 Bln

Grupo Unidos por el Canal (GUPC), a consortium that built the Expanded Panama Canal, has increased its claim related to cost overruns in the expansion of the waterway to USD 5.67 billion,  according to Spanish newspaper El Pais.

The new figure of USD 5.67 billion appears in an annual report issued by ACP in December and represents the maximum amount GUPC will claim.

GUPC, which includes Spain’s Sacyr, Italy’s Salini – Impregilo, Belgium’s Jan De Nul and Panama’s Constructora Urban, SA (CUSA), was awarded the USD 3.2 billion project to expand the canal in 2009. However, the unplanned costs occurred on account of delays  for various reasons such as , labor disputes, the quality of the underlying rock strata and regulatory issues. In fact, GUPC asserts that Panamanian authorities gave it faulty information on the region’s geology, leading it to underestimate the difficulty of the project.

On the otherside of the story, according to the 2010 Wikileaks diplomatic cable release Panamian authorities questioned whether GUPC's bid was realistic and achievable. But now it is the past.

The joint venture has already won arbitration claims for $200 million and $17 million in separate proceedings. A dispute resolution board dismissed a claim for $100 million in August, and GUPC was expected to appeal.

The cost dispute is highly controversial in Panama. GUPC may even face criminal charges in a complaint filed by Panama's National Bar Association: The association's vice president, Juan Carlos Arauz, told media service EFE last year that “we're asking for an investigation into the possible defrauding of the nation's resources” in GUPC's claims.

In 2016, a Dispute Resolution Board (DAB) dismissed a USD 99 million complaint filed by GUPC for cost overruns in the construction of the third set of locks. The DAB, formed to hear disputes arising between the Panama Canal Authority (ACP) and the contractor during the execution of design and construction of the third set of locks, is comprised of members of GUPC and the ACP.

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