World News

Sunday 13 July 2014

Cash row hits Panama Canal project

Published 02/01/2014|03:07

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The consortium carrying out a historic Panama Canal expansion has threatened to suspend work over a financial row. (AP)

The consortium at the heart of a historic Panama Canal expansion project has threatened to suspend work over financial problems caused by a 1.6 billion-dollar (£970m) cost overrun.

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The group issued a statement giving the Panama Canal Authority 21 days to settle the dispute, saying the authority is responsible for covering the added costs.

Canal administrator Jorge Quijano responded with his own communique, saying the authority would continue to demand the companies "respect the contract that they themselves accept and signed".

He said the purpose of the consortium's warning was "to force the organisation to negotiate outside the terms established in the contract".

Grupo Unidos por el Canal is formed by Spain's Sacyr Vallehermoso, Impregilo of Italy, Jan De Nul of Belgium and Constructora Urbana of Panama. It won the contract to design and build a third set of locks with a 3.2 billion-dollar (£1.9bn) bid in 2009.

Panama has estimated the full expansion programme will cost 5.2 billion dollars (£3.1bn), with the new, wider locks allowing the 50-mile canal to handle ships far larger than those that can now navigate the century-old waterway.

Officials now say the work should be finished by June 2015, with the overall expansion work 72% finished and the locks themselves at 65%.

AP

Press Association

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