| PANAMA CITY
PANAMA CITY Jan 4 Flawed geological studies of
the terrain of the Panama Canal by its operator has led to big
cost overruns in the project to expand the waterway, the
building consortium at the center of a dispute with Panama's
government over the plan said on Saturday.
Earlier this week, the consortium led by Spanish builder
Sacyr said the scheme to build a third set of locks
for the canal had incurred additional costs of $1.6 billion, and
demanded Panama foot the bill or work would be suspended.
Panama rejected those arguments, but has hinted it could
negotiate some kind of compromise with the consortium, which
also includes Italy's Salini Impregilo, Belgium's Jan
De Nul and Panama's Constructora Urbana.
Complaints by consortium officials on Saturday about
geological problems provided some of the most detailed
explanations yet on what pushed costs above the projections to
expand one of the world's major maritime cargo routes.
The consortium known as Grupo Unidos por el Canal (GUPC), on
Saturday reiterated that it did not plan to abandon the project,
but would suspend works on Jan. 20 if no deal was reached.
GUPC officials told reporters that when excavations to build
the locks began, they found the geology of the area was more
complex than had been made clear when the project was tendered.
"The main part of (the cost overruns) is due to geological
flaws and is related to problems with the concrete," said Paolo
Moder, a member of the GUPC's board of directors.
After the group began digging in the Pacific zone of the
canal, the basalt they found there was not right for the mix of
concrete they planned for the locks, so they had to bring in
basalt from elsewhere, resulting in higher costs, said Jose
Pelaez, head of the GUPC section building the Atlantic locks.
But the canal authority rejected that mix, and for seven
months the GUPC had to develop other mixes until in the end the
authority finally approved the original one, he added.
He said the geological studies were carried out by the canal
authorities in tandem with international advisors, and formed
the basis for the subsequent tender the consortium won.
"The (Panama Canal Authority) studied these technical
conditions for more than seven years and didn't detect them, and
it's not fair to assign GUPC or any contractor unlimited risks
for something the GUPC only had months to study," Pelaez said.
A team of Spanish government officials is traveling to
Panama this weekend to try to help resolve the dispute over the
massive infrastructure project, which aims to broaden and deepen
existing channels so bigger vessels can sail through.
The canal authority responded to the comments by stating
that the GUPC could present its arguments to the arbitration
authorities set out to resolve disputes under the contract.
Asked whether the companies could seek government aid,
Pelaez said the consortium was "a private group and the actions
undertaken by the government are strictly diplomatic".
The canal expansion, whose total cost is estimated at around
$5.3 billion, is at the center of the Panamanian government's
plans to modernize the Central American country, and President
Ricardo Martinelli is insistent the project must be completed.
Spain is also keen to demonstrate its builders can be relied
on after a slump in the local construction industry plunged the
country into an economic crisis that has dragged on for years.