Post date: Jan 14, 2014 9:40:57 PM
The Panama Canal Authority (PCA) says it might take over a key part of the waterway's expansion but adds they are still hopeful the consortium in charge of the project will find a solution.
PANAMA CITY, PANAMA (REUTERS) - The Panama Canal Authority (PCA) said on Tuesday (January 14) 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 suspends work.
Canal Authority 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, threatened to suspend work on by Jan. 20 unless the PCA paid $1.6 billion in cost overruns. The authority has rejected that demand, but said it is willing to consider detailed claims.
The consortium won the contract to build a third set of locks for the canal, the biggest part of the expansion project, in 2009. He added that the Canal could take over the project after any work suspension lasting about 15 days.
"We have to act immediately to make sure that the project isn't suspended for an excessive time. If this happens, there would have to be a work suspension lasting about 15 days. At that point we are talking about the possibility that we could take over the project," said Quijano.
The consortium, which is lead by Sacyr SA of Spain, includes Italy's Salini Impregilo SpA, Belgium's Jan De Nul and Constructora Urbana from Panama.
Quijano added they were still hopeful, Sacyr would find a solution.
"The deadline came a few days ago. I think it was 10 days, I can't remember, from us sending a letter asking for the situation to be corrected. They didn't. They have not responded to our request. So, the temperature is going up with this relationship. But we are hopeful, based on what the Sacyr executive said yesterday, that they are looking for a solution."
The century-old canal is one of the world's most important shipping routes. The entire project was expected to cost about $5.25 billion, but the overruns could bump that up to nearly $7 billion.
Quijano previously said the PCA had $600 million in surety bonds with insurer Zurich in North America that could be used to support the project.