Jan 3, 2014

More on the Threatened Canal Work Stoppage

Shares of the Spanish company Sacyr plummeted 10% on the Madrid stock exchange today after the company announced its plans to cease work on the Panama Canal expansion unless the Canal Authority resolved a cost overage of 625 million dollars, which supposedly is 50% of the cost of their total job,  and which allegedly didn't figure into the original contract.   According to an article in La Prensa Panama, Sacyr (as part of the GUPC) gave the Panama Canal Authority 21 days to resolve the matter. 

The Panama Canal Authority rejected the pressure applied by the GUPC and responded that if the GUPC didn't complete the work it would put into place foreseen contractual mechanisms to assure completion of the project. 

The expansion is about 70% complete, but the construction of the third set of locks ajudicated to the GUPC for 3.2 billion dollars, is the most important aspect of the canal expansion project.   Work began in 2007 and was originally scheduled for completion in October 2014.   It is approximately a year behind schedule, anticipated to be completed by June of 2015 at a cost of 5.25  billion dollars. 

President Martinelli has indicated he would go to Spain and Italy and demand their governments take moral responsibility for the work completion, because no business should be allowed to impose such irresponsible cost overruns on Panama. The GUPC blames the cost overruns on delays in delivery of equipment and supplies.

Jan 2, 2014

The Sky is Falling!

There's been a lot of puffery, posturing and speculation regarding Law 120 of the financial code, passed Dec. 30th by the National Assembly under questionable tactics.  President Martinelli has somewhat quelled the outrage by reassuring everyone that he will repeal the unpopular articles numbered 2 and 3 declaring that worldwide taxation on national and foreign interests would be implemented by Panama effective 12/31/13.

Then today the Minister of Public Security, Jose Raul Molino, announced that a special cabinet meeting will be held to deal with the inclusion of these articles in the law. Molino said that following the cabinet discussion, the articles would be taken to the National Assembly to be repealed.

"You don't mess with things that from one day to the next transform Panama into whatever country except one of economy and service which has been our distinction for more than 100 years, " he added.   "The person who invented this created an atrocity.  I say this as an attorney independent of my government responsibilities, and I know for a fact that the national government, presided upon by Martinelli, will repeal such norms."

Okayyyyyyyyy, then what?  I can't help but feel that things won't just end there. Perhaps until after the elections, but somewhere down the road, someone is going to figure out a way to get some tax money out of international income.  Just sayin'.

On another note, it looks as if President Martinelli will be traveling to Spain and Italy to lean on their governments to deal with the GUPC (Grupo Unidos Por el Canal).  The GUPC has threatened to stop construction on the third pair of locks because they are projecting a 1.6 billion dollar budget overage which they want Panama to accept and pay.   The GUPC is a consortium lead by Spain's Sacyr, Italy's Impreglio, Belgium's Jan de Nul, and Panama's CUSA.  These organizations are citing the Canal Authority's supposed contract incompletions.  President Martinelli said that in his first year of office he was guaranteed moral support and solidarity by the governments of these nations, and he expects them to stand by their word.
Haven't been following the election campaign news so recently, given everything else, but it appears that thought given to uniting the PRD and Panamenista parties under one opposition force hasn't panned out.  Something to do with Varela needing to be the President that Navarro wasn't onboard with.  Apparently Varela's stint as Vice President in the first years of the Martinelli administration prevents him from holding that office again in a successive term.
Wow.  A lot going on in these first two days of the new year!