February 12, 2014 / 12:00 AM / in 4 years

Panama Canal says talks ongoing with consortium to resume project

By Lomi Kriel
    PANAMA CITY, Feb 11 (Reuters) - The Panama Canal's
administrator said on Tuesday it was holding ongoing talks with
a building consortium led by Spain's Sacyr aimed at jumpstarting
a stalled project to expand the waterway, which ran aground amid
a dispute over massive cost overruns.
    The Panama Canal Authority said in a statement that the
talks were focused on resuming construction work on the
multi-billion dollar project, which the consortium halted last
week, a timetable of deadlines for work to be completed and
fresh financing from the parties.
    Nearly 6 percent of global trade passes through the
century-old canal.
    Talks are also centered on extending a moratorium on
repayments of advances made to the consortium, as well as the
date of delivery of massive doors for a new set of locks being
    The companies working to widen the Panama Canal and the
waterway's administrator on Friday each made new proposals aimed
at reviving the major public works project. 
    "We remain open to all the options contemplated in the
contract, taking each step in a calm and measured way," canal
administrator Jorge Quijano said in a statement.
    The overall canal expansion project was originally slated to
cost about $5.25 billion, but the overruns could increase that
to nearly $7 billion.
    It was not immediately clear whether the two sides were
converging toward a deal. The canal authority has vowed to
complete construction in 2015, with or without the consortium,
and has warned it could rescind the contract and find another
company to complete the remainder of the project.The Panama Canal Authority and the consortium, led by
Spanish builder Sacyr, have been locked in a bitter
feud over costs for weeks that threatens a prolonged, expensive
    The consortium, which bid $3.12 billion for its contract to
build a new set of locks, wants the Canal to pay for $1.6
billion in cost overruns, and the two sides are seeking ways to
keep finances flowing in the meantime.
    Disputes over the expansion of the Canal began soon after
the consortium won the bid. At the time, officials and diplomats
expressed concerns over the consortium's ability to complete the
project since its bid was $1 billion lower than that of the
nearest competitor.
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