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Derechos | Equipo Nizkor
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| Information | | |
Derechos | Equipo Nizkor
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02Jan14
Dispute Threatens Completion of Panama Canal Expansion
A planned expansion of the Panama Canal may be halted because of a dispute between the building consortium and canal authorities over $1.6 billion in extra costs.
In a filing with the Spanish stock market regulator on Thursday, Sacyr, the Spanish builder that is leading the consortium, said that the cost overruns, equal to about half of the value of the original contract, were because of "unforeseen circumstances." It did not offer details.
The builders warned that their construction work would be suspended if the Panama Canal Authority did not agree to pay for the overruns within 21 days, "in line with the contractual terms."
The authority, however, said in a separate statement that it rejected the "pressure" and insisted instead that it would force the builders to cover the costs or invoke "mechanisms from the contract that would allow the work to be completed."
In 2009, the building consortium, called Grupo Unidos por el Canal, won the contract to design and build a third set of locks with a $3.2 billion bid. The contract is at the heart of Panama's ambitious plan to expand the canal to allow far larger vessels to use the 50-mile, almost century-old canal.
Beside Sacyr, the consortium includes the Impregilo Group of Italy, the Jan De Nul Group of Belgium and Constructora Urbana of Panama.
About two-thirds of the work on the Panama Canal has been completed, according to the builders. The latest timetable is to finish the work by June 2015.
On Thursday, shares in Sacyr plunged almost 9 percent as investors worried about whether the dispute could jeopardize a key project for the Spanish company.
Spain has been at the forefront of the euro debt crisis, and Sacyr was one of the builders seriously hurt when the country's construction bubble burst in 2008. At a time when large infrastructure projects have all but dried up in Spain, the award of the Panama project in 2009 was seen as a lifeline for Sacyr.
Despite the deal, Sacyr has struggled to refinance its debt. The debt, in part, is related to its purchase of a 20 percent stake in Repsol, Spain's largest oil company, before the start of the crisis. Sacyr was then forced to sell half of that Repsol stake in 2011 to avoid default.
[Source: By Raphael Minder, International New York Times, Madrid, 02Jan14]
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