MADRID Jan 1 Work on the massive Panama Canal extension project may be suspended after a clash between the builders and the Panamanian authorities about $1.6 billion in cost overruns, according to a statement from the building consortium on Wednesday.
The cost overruns on the $3.2 billion canal extension, one of the world's largest construction contracts, should be met by the Panama Canal Authority (PCA) under the terms of the contract, argued the consortium comprised of Spain's Sacyr, Italy's Impregilo, Belgium's Jan De Nul and Panama's Constructora Urbana, SA.
The overruns were the result of unforeseen events during construction, something which was "normal" in these kind of projects, it said.
The group believes the PCA has "failed in its obligations as set out in the contract as well as in the inexactitude of the information provided to the consortium to carry out the project."
Under the terms agreed, the PCA has another 21 days to comply with the requirements, it added, during which work will continue.
No one at Sacyr was immediately available for further comment.
Problems with the Panama project come at a bad time for Sacyr, whose total net debt stood at 6.9 billion euros at the end of September, more than three times its market capitalisation.