The Canadian Press - ONLINE EDITION

Panama rejects builders' proposal to co-finance $1.6B cost overruns on canal expansion

  • Print

PANAMA CITY - The Spanish-led consortium working on expanding the Panama Canal said Monday it has proposed that the canal authority help co-finance $1.6 billion in cost overruns on the huge project. The Panama Canal Authority rejected the idea.

The United for the Canal construction group led by Spain's Sacyr Vallehermoso has threatened to halt the biggest part of expansion project if the financial dispute isn't resolved, although it said Sunday that a stoppage was "not a scenario being considered at this moment."

In a statement Monday, the consortium said co-financing of the unforeseen costs with the authority would allow it "to continue the work, which directly employs nearly 10,000 people, and it would achieve the completion of the project by 2015."

The consortium also said it welcomed an offer by the European Union to mediate the dispute.

But the canal authority also turned down the EU's proposal. The contract for completing the third set of locks already includes mechanisms to resolve disputes and none involve third parties, the authority said in an email responding to questions from The Associated Press.

The canal authority has said the contract allows the consortium to stop work only if the agreed monthly payments by the authority are not disbursed, which has not happened.

The project, now three-fourths complete, would double the capacity of the 50-mile (80-kilometre) canal, which carries 5 per cent to 6 per cent of world commerce.

Officials have said that work on the expansion has declined 70 per cent since November and that hundreds of workers were let go because of the slow pace of the megaproject.

The consortium blames the cost overruns largely on problems with the studies carried out by the Panamanian authority before work began. It says geological obstacles encountered while excavating have prevented it from getting the basalt needed to make the massive amounts of concrete required for the expansion.

Many experts say the root of the conflict lies in the consortium's underestimation of the project's costs when it won the canal expansion contract in 2009 by submitting by far the lowest bid: $3.1 billion for its portion of the job, $1 billion less than a bid led by the U.S. construction giant Bechtel.

U.S. ports have invested billions in dredging, raising bridges and renovating docking infrastructure to accommodate the new generation of larger ships that could pass through the expanded canal.

___

Associated Press writer Raf Casert in Brussels contributed to this report.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Kevin Cheveldayoff

View more like this

Photo Store Gallery

  • Horses enjoy a beautiful September morning east of Neepawa, Manitoba  - Standup Photo– Sept 04, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • Marc Gallant/Winnipeg Free Press. Local- Korea Veterans Association stained glass window at Deer Lodge Centre. Dedication with Minister of Veterans Affairs Dr. Rey Pagtakhan. March 12, 2003.

View More Gallery Photos

Poll

Do you think Manitoba needs stronger regulations for temporary workers?

View Results

View Related Story

Ads by Google