Panama Canal
A visitor is seen as a cargo boat waits to enter the Panama Canal next to the site of the expansion project on the outskirts of Colon City, Panama. Reuters

After more than a month of arguments and threats over the expansion of the Panama Canal, the Autoridad del Canal de Panamá (Panama Canal Authority, or ACP) and construction group Grupo Unidos por el Canal (United for the Canal Group, or GUPC) reached an agreement that gets construction employees back to work in Panama on Thursday -- something they hadn’t done since Feb. 5.

GUPC and ACP, which had been arguing over financing issues since December 2013, finally reached a preliminary agreement whereby ACP will pay part of the amount requested by GUPC in exchange for immediate restart of the work. “As soon as work on the canal is resumed, [ACP] will send GUPC the sum of $36.8 million for December bills, so employees [can] receive their overdue salaries and other obligations with suppliers are met,” read the official statement.

Several independent contractors have yet to be paid, as reported by the spokesperson for Panama’s Sindicato Único de Trabajadores de la Construcción y Similares (Construction Workers Union, or Suntracs). “A significant percentage of workers have gone back to their jobs on Thursday, but not all,” said Norberto Valencia.

However, Suntracs has been satisfied with the progress of the negotiations: “This is the beginning of what we were waiting for,” union leader Héctor Hurtado said.

The deal comes after 44 days of negotiations and disagreements between ACP and GUCP, led by Spanish construction company Sacyr (MCE:SYV) and Italian Salini Impregilo SpA (BIT:SAL). The quarrel began with the demands of the consortium to ACP to pay $1.6 billion more than original estimates for the expansion work, due to unforeseen difficulties in construction and aging equipment.

The negotiations will continue over the remaining extra costs, and both parties have agreed to reach a conclusion by Saturday of next week.

Among issues yet to be decided are the deadlines for different stages of construction and a payment calendar.

GUPC, in its own statement released at the same time, announced its intention to finish the work by the June 2015 deadline. “The reactivation of the work is being carried out to overcome the delays,” it read.

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