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Panama president blames former canal chief for crisis

Panama President Ricardo Martinelli on Monday blamed the Panama Canal's former administrator for the crisis surrounding its massive expansion project -- where work has been halted over a billion-dollar payment dispute.

PANAMA CITY: Panama President Ricardo Martinelli on Monday blamed the Panama Canal's former administrator for the crisis surrounding its massive expansion project -- where work has been halted over a billion-dollar payment dispute.

Martinelli said Alberto Aleman Zubieta was "responsible for what has happened," referring to the row over who will cover US$1.6 billion in cost overruns in the project to enlarge the 80-kilometre waterway linking the Atlantic and Pacific oceans.

Aleman Zubieta, a Panamanian engineer, was in charge of the independent Panama Canal Authority in 2009 when it awarded the largest contract in the expansion project -- worth some US$3.2 billion -- to the GUPC consortium led by Spanish company Sacyr.

The GUPC bid was US$363 million lower than budgeted by the canal authority and well below bids from competing companies.

In an interview on Panamanian television, Martinelli suggested Aleman Zubieta and the canal authority should have anticipated the GUPC was underbidding.

"Everyone here knew the state of the company Sacyr, that it was having financial problems," Martinelli said, dubbing the current situation "the chronicle of a death foretold."

But Aleman Zubieta later fired back that the contract defends "the interests of the canal." He added: "If I am guilty, I feel very proud to be guilty of such things."

The canal authority and the GUPC consortium have locked horns since December over the overruns on widening the canal to accommodate massive cargo ships in the century-old waterway, which handles five per cent of global seaborne trade.

GUPC claims unforeseen geological difficulties have forced them to spend much more on cement than expected. They say that they based their estimates on data provided by the Canal Authority that was incorrect.

The canal expansion is one of the world's most ambitious civil engineering projects and was due to be completed next year -- but the builders have said completion may now be delayed up to five years.

The original canal, built by the United States mostly with workers brought in from the Caribbean, was completed in 1914.

The canal generates US$960 million a year for Panama, nearly 10 per cent of the country's total annual income.

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