By Lomi Kriel
PANAMA CITY Jan 14 The Panama Canal Authority
(PCA) said on Tuesday it might take over a key part of the
waterway's expansion if the consortium in charge of the project
makes good on a threat to suspend work.
PCA chief Jorge Quijano told reporters the remaining work,
which could be taken over as early as February, would cost about
$1.5 billion. He added the PCA has the means to cover the sum.
The consortium, known as Grupo Unidos por el Canal (GUPC),
threatened to suspend work by Jan. 20 unless the PCA paid $1.6
billion in cost overruns. The authority has rejected that demand
and asked GUPC to withdraw the threat of suspension, but Quijano
said the consortium has yet to reply.
The canal authority has said it is willing to consider
detailed claims through arbitration.
The consortium won the contract to build a third set of
locks for the century-old canal, the biggest part of the
expansion project, in 2009.
"We have to act immediately to make sure that the project
isn't suspended for an excessive time," said Quijano.
He added that PCA could take over the project after any work
suspension lasting about 15 days.
"At that point we are talking about the possibility that we
could take over the project," he said.
Quijano said he expects to make a decision Monday or Tuesday
of next week, depending on what action is taken by GUPC.
The consortium, which is led by Sacyr SA of Spain,
includes Italy's Salini Impregilo SpA, Belgium's Jan
De Nul and Constructora Urbana from Panama.
Sacyr's chairman, Manuel Manrique, said at a Monday press
conference in Madrid that the dispute will not have a
significant impact on the company's earnings and is not putting
its solvency at risk. He said he expects that the consortium
will finish the project.
The canal is one of the world's most important shipping
routes. The entire project was due to cost about $5.25 billion,
but the overruns could bump that up to nearly $7 billion.
Quijano has previously said that the PCA had $600 million in
surety bonds with insurer Zurich in North America that could be
used to support the project.
"Right now, we're in a position to have access to the
necessary funds to be able to keep pushing forward in a
definitive manner with the help of Zurich," said Quijano.
He added that a meeting with representatives from the PCA,
GUPC and Zurich had been scheduled for Jan. 13, but GUPC
postponed the meeting for a week until after the suspension
could take effect.
The PCA has proposed a $283 million joint financing package
to resolve the row. But that proposal is less attractive for the
firms because it requires them to put up fresh cash while the
authority would simply advance funds it would have paid anyway.
GUPC has asked the PCA for a $400 million advance,
while Salini Impregilo proposed the authority pay $1 billion.
Quijano has said such payments are "impossible."