Update: Delays Threaten Panama Canal Expansion

January 9, 2014
Panama Canal (Update: 9 a.m. EST) -- An initial attempt by the Panama Canal Authority to continue expansion works on the canal has been rejected by contractors asking for payment of $1.6 billion of cost overruns.

According to the Financial Times, the Panama Canal Authority (ACP) offered $100 million to get the Grupos Unidos por el Canal (GUPC) contractors back to work, but stipulated that the group must contribute the same amount and withdraw their threat to suspend the project.

The GUPC has agreed to contribute $100 million, but asked the ACP to increase their contribution to $400 million in a counter offer. The ACP has yet to respond, according to the report.
(10:05 a.m. EST, January 2) -- Cruise passengers hoping to transit the Panama Canal on newer and larger ships will have to wait until at least April 2015 -- and possibly even longer -- due to delays affecting its expansion.

On January 2, a Spanish-led consortium threatened to suspend work on the $3.2 billion project in three weeks' time unless the Panama authorities agree to compensate it for $1.6 billion of cost overruns. However, the Panama Canal Authority said it would not pay any more than what was contractually agreed with the consortium -- throwing the completion of the project into doubt.

The widening of the Canal was due to coincide with its centenary this year, allowing post-Panamax ships -- those larger than the existing locks -- to pass through. Currently only ships that are a maximum of 965 feet long and 106 feet wide (beam) can pass through, meaning just the smaller and often older classes of cruise ships can make the transit.

The new set of locks -- known as 'Panamax' -- will allow ships of 1,400 feet in length, 180 feet in beam and 60 feet in depth to pass through. This would in theory allow the largest cruise ships in the world -- Royal Caribbean's Oasis of the Seas and Allure of the Seas -- to make the transit. However, they would not be able to pass under the Bridge of the Americas, which is on the Pacific side of the Canal and allows a clearance of 201 feet at high tide. The ships are 232 feet high.

Cruise lines are watching developments closely. Princess Cruises currently operates two ships through the canal -- Island Princess and Coral Princess -- both Coral-class ships, the line's smallest and oldest. A Princess spokeswoman said: "We are monitoring the progress and evaluating opportunities for moving our fleet around once the Canal is completed."

Celebrity Cruises' newest ships -- the Solstice-class vessels -- are 1,041 feet long, too big to currently make the transit. However, Celebrity Millennium and Celebrity Infinity are 964 feet -- just small enough to pass through.

Currently, only Carnival's oldest and smallest ships -- the Fantasy and Spirit class -- can transit the Canal. A Carnival spokeswoman said: "The issue with the Panama Canal after the expansion is not the length of our larger ships. The air draft to pass under the Bridge of the Americas is not sufficient for our larger ships -- therefore we still can't use it."

A new visitor center the Panama Canal Expansion Observation Center, has been completed. It is based in Colon, on the Caribbean side, and overlooks the new locks. A statement from the Panama Tourist Board said: "Construction of the new Pacific access is already completed, and the building of a new set of locks and deepening/widening of the Corte Culebra is well advanced. The new set of locks is expected to be operating by April 2015."

The delay does not affect the planned events to celebrate the Centenary of the Canal, which includes the Centenary Gala on August 15 -- the day it was completed.

--by Adam Coulter, U.K. Editor