UPDATE 1-Sacyr still fighting for Panama Canal expansion -sources

Thu Feb 6, 2014 4:56am EST

By Jose Elías Rodríguez and Danilo Masoni

MADRID Feb 6 (Reuters) - A consortium led by Spanish builder Sacyr is still in contact with the Panama Canal Authority with the aim of restarting talks over a deal to expand the canal, two sources said on Thursday.

The project to expand the Panama Canal, one of the world's most important shipping routes, was in doubt on Wednesday after negotiations between the canal administrator and the Group United for the Canal consortium broke down.

"There is correspondence between both parties, inviting each other to dialogue," a consortium source said on Thursday.

A separate source familiar with the matter said lawyers from the two sides were continuing to work to resolve the situation, even though formally talks had stopped.

The two sides are at odds over who should pay for more than $1.6 billion in cost overruns to build a third set of locks for the canal, the main part of the expansion of the 50-mile (80 km) cargo route that connects the Atlantic and Pacific oceans.

The breakdown of negotiations was the latest setback to a project mired in disputes since the consortium, which also includes Italy's Salini Impregilo and a Belgian and Panamanian firm, won the bid in 2009.

Shares of Sacyr, which lost 7 percent on Wednesday on fears of a failed deal, rose 2.2 percent to 2.69 euros by 0920 GMT. Salini Impregilo's shares were down 0.47 percent at 4.268 euros.

Disagreements over cost overruns had already reached international arbitration and talks between the two sides over how to find the additional cash to finish the project had been extended twice.

Ending the partnership could mean years of delay in widening the 100-year-old waterway.

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Comments (1)
The problem is much more serious than financial or legal.

To retain the 37 meter level of Gatun, at the mouth of the Canal in the Pacific, it is intended build a dam with soil and plastic over two geological faults.

In turn, these faults, for the first time in human history, is believed to control by injecting mortar.

The risk of the experiment is nothing less than half of the city of Panama, which will be razed by a flood equivalent to three years of tropical rain, which is the time it took to fill the Gatun Lake.

Feb 06, 2014 6:33am EST  --  Report as abuse
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