Past week the President of Panama, Juan Carlos Varela, announced that the Panama Canal Expansion project will be inaugurated in mid-May 2016, which means more delays before the grand opening.
According to the initial contract the works should have been completed in October 2014. That makes it about 420 days in delay already. As calculated by the Panama Canal Administration each day of the delay rounds up to $1 million in over-expenditures. The late inauguration in May would mean $550 million of accumulated costs increase over the initial budget.
The master plan for the Expansion project initially stated that the construction budget between 2007 to 2014 would be $6.026 billion, while expected income from the canal would amount to $30.705 billion for the eleven years of operations with the third set of locks between 2015 and 2025.
However, one naturally has to recognize the effects of slowing economy and ongoing global crisis which will eventually alter the Master Plan for the Expansion.
Presently the Panama Canal discusses cost overruns related issues with the contractor, which already has been paid $250 million. A series of mutual accusations in recent days worries business leaders in different sectors of economy in Panama, who fear there will be further delays on the project.
“Delay in the beginning of operations of expanded Canal is the result of several conflicts between Panama Canal Authority and the consortium. Now we see that it again threatens to affect negatively the image of the Canal and Panama as a country”, stated Carlos Fernandez, the president of Chamber of Commerce, Industry and Agriculture.
It is widely admitted that such delay will amount to millions in losses for Panama Canal and as a result to National Treasury along with the negative effects on world trade, ports, shipping companies and other participants.
