President of Panama, Ricardo Martinelli (left), talks next to Spain's Minister of Public Works and Transport, Ana Pastor, during a news conference after a meeting at the Presidential Palace in Panama City, Panama, on Monday.
President of Panama, Ricardo Martinelli (left), talks next to Spain's Minister of Public Works and Transport, Ana Pastor, during a news conference after a meeting at the Presidential Palace in Panama City, Panama, on Monday. Alejandro Bolivar/EPA/Landov
Panama's president on Monday expressed confidence that a multi-billion dollar Panama Canal expansion will get back on track after a European-led consortium threatened to halt construction unless it gets paid for massive cost overruns.
As we reported last week, Spanish builder Sacyr, the leader of a consortium known as Grupo Unidos por el Canal (GUPC), which includes Impreglio of Italy, Belgian firm Jan De Nul and Constructora Urbana of Panama, said the Panama Canal Authority, which runs the waterway, has until January 20 to come "in line with the contractual terms" or it will walk away from the project.
The firm says there have been $1.6 billion in cost overruns in the project to construct a third set of locks that can, for the first time, handle the largest "post-Panamax" ships. The original bid was for $3.2 billion. Construction began in 2009 and is supposed to be completed in June 2015.
On Monday, Panama's President Ricardo Martinelli met with Spain's Public Works Minister Ana Pastor in Panama City.
Pastor said that even though the dispute was between individual companies, "we are here to help them reach agreement."
Martinelli said he was "confident that these meetings will resolve disagreements."
The Panama Canal Authority insists that the work must go ahead dispute cost overruns, saying such added expenses are "normal" in such a large construction project.
The Panama Canal, completed in 1914, now handles about 5 percent of the world trade.
The BBC reports:
"Further north, Nicaragua is planning to build its own canal linking the Atlantic and the Pacific Ocean, with capacity for bigger ships."
"But on Saturday the Nicaraguan government announced work on the $40bn (£25bn) project would not start until 2015, a year later than planned."
"The Chinese company which won the bid says it can finish building the waterway in six years, but critics say it lacks experience."