Canal construction dispute gets more clouded

THE MUDDY waters of the dispute between the Panama Canal Authority and the consortium building the third set of locks for the canal expansion project got further churned up on Monday, January 6.

The Spanish Court of Auditors has questioned a $200 million guarantee promised by the government that helped the Spanish company Sacyr obtain the contract for the construction of the third set of locks in 2009 reports La Prensa.

That issue is now relevant since GUPC, the consortium led by Sacyr, is threatening to halt work on the project if it is not paid an additional $1.6 billion. The Panama Canal Authority has rejected that claim.
According to media reports, Panama could claim up to $400 million in guarantees provided by Spain and Italy, which are the homes of the two major contractors in the consortium.
The court has now raised questions about the government providing that guarantee, since it may not have followed the law.
The court said: "Although public insurance company CESCE – which set the conditions – must provide support to Spanish companies, it has to respect the contractual legal framework