Construction group threatens to delay Panama Canal expansion

PortMiami officials Thursday expressed hope that a contract dispute that threatens to further delay expansion of the Panama Canal can be resolved quickly so its completion will coincide with port renovations now underway in Miami.

“PortMiami is on track to complete a number of major infrastructure improvements in sync with the much-anticipated opening of the expanded Panama Canal in 2015,” said PortMiami Director Bill Johnson in an e-mail statement. “I am hopeful that the dispute can be resolved expeditiously.”

The PortMiami overhaul is closely linked to the widening of the canal because Miami wants to position itself as the first port of call on the U.S. East Coast for mega container ships expected to begin using the canal once expansion is completed.

The news that canal widening and construction of a third set of locks could be delayed anew hit New Year’s Day when the Spanish company Sacyr Vallehermoso, which leads the multinational consortium expanding the waterway, said it would halt work in 21 days if the Panama Canal Authority does not cover $1.6 billion in cost overruns. That’s about half of the consortium’s initial bid for the project.

The Panama Canal Authority has rejected the consortium’s demands, saying it is just an effort by the group to negotiate its disputes outside the terms established in its contract with the canal authority. Some Panamanian officials have indicated they could take over the project.

Even before the cost-overrun controversy, the canal authority had acknowledged a further delay in completion of the $5.25 billion canal expansion, which will accommodate ships that are currently too long, too wide, and too heavy to use the canal.

In its third-quarter report, the canal authority said it had been informed by the consortium, Grupo Unidos por el Canal, that the new locks on the Atlantic side of the canal would be delivered March 31, 2015 and those on the Pacific side on June 30.

Because testing of the new locks is expected to take about three months, that would push the grand opening of the canal expansion to commercial traffic until late 2015, rather than mid-year 2015 as had been anticipated.

That’s the latest in a series of delays. Panamanian authorities had initially hoped the project to retrofit the canal would be completed by August 15, 2014 when it celebrates the centennial of the opening of the canal. But the contract calls for completion of construction by October 2014 with penalties established for delays.

Overall, the canal authority said the expansion is about 72 percent complete.

Glitches in the delivery of the new locks and slower-than-expected “electromechanical work” are responsible for some of the delays, according to the shipping website Ship & Bunker. Heavy rains, a few strikes, and consortium problems in getting the correct concrete mix for the massive new locks also have set the work back.

Work on the Atlantic side of the canal is further along than on the Pacific side because the consortium was able to use part of an excavation that the United States began in 1939 to expand the canal in order to move battleships between the Atlantic and Pacific. That plan was abandoned in 1942.

Florida Gov. Rick Scott gave a kick-start to Miami’s plans to be big-ship ready when the state contributed $112.5 million to the $220 million port dredging project. The goal is to deepen the shipping channel from 42 feet to 50-52 feet in order to accommodate the giant cargo ships.

“Dredging is now well underway and we are scheduled for a mid-2015 completion date,” said Johnson. “Let’s hope the canal can also stay on schedule.”

Besides dredging the cargo harbor, PortMiami’s renovation also includes a $1 billion tunnel and a new rail service to carry containers from the docks to cargo distribution hubs in Hialeah and Jacksonville.

The tunnel is scheduled to be “substantially” completed in May. The dockside rail service began in October.

On Thursday, Panamanian President Ricardo Martinelli said he expected the consortium to complete the work “without any setbacks, because these cost overruns are irresponsible” and that he planned to travel to Italy and Spain to seek the help of those governments in resolving the dispute

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