Considering the background of the case, one cannot rejoice unreservedly, but this strange name of “conceptual contract” given to the agreement between Spanish Sacyr led-consortium and the Panama Canal admistration will seemingly allow to finish the infrastructure’s third set of locks.
Panama Canal Authority (PCA in its English acronym) announced on Thursday the achievement of a conceptual agreement that falls within the terms of the contract and which is still under review and pending of signature.
On its part, the United Group for the Canal (GUPC in its Spanish initials), said the “documentation process” of “final conceptual agreement has already started and will conclude with the expected next signature”.
According to this “conceptual” deal, the consortium will inject $100 million and the PCA will anticipate the same amount, which will allow to reach normal pace of works by month of May amd terminate the expansion by the foreseen deadline of December 0f 2015.
Furthermore, the agreement points out the postponement of $780 million payments anticipated by PCA will be extended until year 2018, of course subject to some milestones and conditions to be met by GUPC.
Analysts at Ahorro Corporación considered the conceptual agreement as “positive” for Sacyr, since it first enables the project’s finalisation so that secondly, after elections in Panama, the company can progressively receive between $ 800-900 million of total $1,600 claimed in overuns costs.
At mid February the PCA and GUPC reached an agreement in principle over works at Panama Canal , but some days later the insurance company at Zurich and the Spanish government blocked the final signature. The insurer was not convinced at all about the term of converting the $400 million guarantee into a loan to enable the firm obtain external funds, while Spain’s cabinet did not see clear its assumption additional cost for guarantees.
Hopefully this umpteenth try of understanding between Sacyr and Panama was the real end point to the dispute.