Saturday, June 27th, 2015 | USD: Buy 528.81 / Sell 541.11
MADRID, January 3, 2014 (AFP) – Spain’s government said Friday it was in talks with Panama and Spanish builder Sacyr to try to resolve a row over a $1.6 billion cost overrun on expansion work on the Panama Canal.
A consortium led by Sacyr has threatened to suspend work on expansion of the canal, which handles five percent of world maritime trade, if the Panama Canal Authority fails to pay for the extra costs.
Panama’s President Ricardo Martinelli warned Thursday he would visit Europe to force the consortium — which includes Italy’s Salini Impregilo, Belgium’s Jan De Nul and Panama’s Constructora Urbana as well as Sacyr — to honour its contract to expand the canal.
Spain’s Public Works Minister Ana Pastor “is in talks with the government of Panama through its ministry for canal affairs as well as Sacyr, which is the Spanish firm in the consortium,” a spokesman for the public works ministry said.
“She is in talks with both sides to find the best solution,” the spokesman added.
News of the suspension threat caused shares in Sacyr to plunge 8.95 percent on Thursday to close at 3.43 euros.
The stock was down 6.18 percent at 3.218 euros in early afternoon trading.
“Panama is a country that is close and friendly towards Spain, and we share the desire and interest to find a solution as soon as possible,” said a spokesman for Spain’s foreign ministry.
In a letter to canal authorities dated December 30, Sacyr gave a 21-day deadline before suspending its $3.2 billion contract (2.3 billion euros) to expand the capacity of the canal, notably by installing a third set of canal locks.
Sacyr made the contents of the letter public on Thursday in a statement to Spanish market regulators.
The project aims to make the 80-kilometre (50-mile) waterway, which handles five percent of global maritime trade, big enough to handle new, mega cargo ships that carry 12,000 containers.
A year ago the consortium expanding the canal, known as Grupo Unidos por el Canal, demanded an extra payment of $1.6 billion from the Panama Canal Authority due to construction delays.
It began work on a third set of locks for the canal in 2009 and expects to complete construction in June 2015, already a nine-month delay over the date set in the contract.
The new locks will accommodate larger ships with a capacity of 12,000 containers — instead of those with 5,000 containers that are now able to navigate the canal.