Work on the Panama Canal Expansion to Resume This Month
Work stopped on the Panama Canal expansion because contractors went over budget. Before the expansion began, many officials and diplomats expressed concern over the contract because the winning bid was $1 billion lower than the others. However, the contract was awarded to the consortium GUPC, which includes Sacyr Vallehermoso, S.A (Spain), Impregilo, S.p.A. (Italy), Jan de Nul Group (Belgium) and Constructora Urbana, S.A. (CUSA) (Panama). A recent agreement between GUPC and the Panama Canal Authority (PCA) allows builders to use an insurance bond purchased through Zürich to get necessary funds to resume work on the project. The GUPC will pay $100 million U.S. dollars and ACP will advance an additional $100 million. The agreement also provides that the twelve locks necessary to complete the project be delivered to the canal from Italy by December of 2014. Work should resume in March of 2014, and the expansion should be complete by December 2015.
The Panama Canal expansion is important for many reasons, but a primary motive is the project would give the United States a means to ship natural gas and other energy resources to Asia via the east coast instead of the west coast. China hoped to take advantage of the cheap prices of natural gas due to the tremendous supply afforded by the shale drilling projects. Even though low temperatures this winter led to natural gas doubling in price, China still hopes that this resource will soon be open to them.
The United States is the single largest customer of the Panama Canal, and stands to benefit the most with its completion as it opens up a new pathway for larger shipping vessels to move goods into and out of the country. Though the agreement to provide funds for its completion has yet to be signed, all parties are in accord and do not expect further delays. The new agreement did not change the total amount paid for the cost of construction.
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