- POSTED: 07 Feb 2014 22:05
A Spanish-led consortium said Friday it has halted work on expanding the Panama Canal, which handles five per cent of world sea trade, in a row about cost overruns.
MADRID: A Spanish-led consortium said Friday it has halted work on expanding the Panama Canal, which handles five per cent of world sea trade, in a row about cost overruns.
The multi-billion-dollar project to build extra locks on the 80-kilometre (50-mile) waterway linking the Atlantic and Pacific Oceans ground to a halt because of a dispute over who will pay for $1.6 billion (1.2 billion euros) in overruns.
"While awaiting an agreement to enable the finalisation of construction, work has been suspended on the project," said a statement by the GUPC consortium, led by Spanish construction group Sacyr.
The project to widen the canal so massive cargo ships can pass through it -- one of the biggest civil engineering operations in the world -- was due to be completed next year.
But GUPC has said completion may be delayed by up to five years, as each side has accused the other of breaking the deal.
The European Union's industry commissioner, Antonio Tajani, who has mediated the dispute, warned that the interruption of the dig would be "bad news" for the world economy.
The consortium accused the Panama Canal Authority of breaking off negotiations. It says the authority failed in obligations to pay a $50 million bill and to help pay workers and subcontractors.
GUPC had offered to split the cost of finishing the dig with the canal authority and then let arbitrators decide who pays for the overrun.
It said late Thursday it had submitted a further new proposal to settle the dispute.
"The GUPC continues as always to seek an agreement on co-financing in line with the contracts and relevant legislation, with the aim of a joint and immediate resolution," the consortium said.
The canal authority had claimed on Wednesday that the builders had already stopped work, but Sacyr denied that at the time, insisting it was seeking to avoid a shutdown.
The canal is being widened to permit the passage of ships carrying up to 12,000 containers, twice the current limit.
But the disputed contract to build a third set of locks, due initially to be completed this year, was already running nine months late and since the beginning of this year work has slowed down further.
GUPC is in dispute with the canal authority in part over geological difficulties which have obliged the builders to spend much more on cement than expected.
The canal, completed in 1914 to offer a short cut and safer journey for maritime traffic, is used by 13,000-14,000 ships each year.