Panama Canal Construction Disputes Are Still Unresolved
Nearly $3.5 billion in contractor claims need adjudication.
As contractor claims wind through arbitration, more than 100 ships have transited the new canal locks since project completion in late June.
PHOTOS COURTESY OF ACP
Two months after the $5.4-billion third lane of the Panama Canal opened, more than 100 ships have made passage. Despite one vessel that bumped a lock wall a few weeks after opening, operations are running smoothly, say canal officials.
More turbulent is the ongoing dispute over nearly $3.5 billion in contractor claims by Grupo Unidos por el Canal (GUPC), a four-firm construction consortium that includes Salini Impregilo as a 38.4% stakeholder. To date, $1.5 billion has been resolved by a dispute adjudication board (DAB), with $335 million awarded to GUPC, says Ilya Espino de Marotta, executive vice president of the Panama Canal Authority (ACP).
Of the most recent claims processed by DAB, two claims totaling just under $8 million were awarded in GUPC’s favor, and one claim worth $97 million was ruled in favor of the ACP. The DAB is scheduled to rule on a $355-million claim over the lock gates in March.
The claims can be appealed by either side to a final arbitration council in Miami, a process expected to drag out for more than two years. One such appeal features $234 million awarded to GUPC last year by the DAB due to the site’s poor-quality basalt—a key ingredient in the concrete mix. GUPC seeks an additional $345 million. Final arbitration is scheduled for January 2019.
Salini Impregilo officials would not comment on how the dispute resolution will impact the firm’s bottom line. However, regardless of the economic result, the project will stand as a landmark for the firms involved, says Salini Impregilo’s Giuseppe Quarta, who served as GUPC’s CEO for the past two years. “What we have achieved from a technical and management point of view on that project is something that is a treasure for the companies,” he says.
Having contractor partners distributes risk and reduces Salini Impregilo’s exposure on the project. “Working as a consortium is the nature of our business,” he adds.
Since the canal’s opening, Quarta has relocated to the U.S. as executive vice president for Lane Construction, where he will lead its large-project division. He also continues in his existing role as president of Salini Impregilo subsidiary S.A. Healy Co. “It is a very exciting time for the company,” he says.
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