Cost overruns on the Panama Canal expansion and the refusal of the Panama Canal Authority (PCA) to pay for them as demanded by the contractor, threatens to trigger a work stoppage on January 20, Reuters reports.
In response, the PCA said it might take over the work if the consortium, led by Sacyr SA of Spain and includes Italy's Salini Impregilo SpA, Belgium's Jan De Nul and Constructora Urbana from Panama, makes good its threat to stop work.
Canal authority chief Jorge Quijano told reporters that the remaining work, which could be taken over as early as February, would cost about US$1.5 billion but that the PCA had the funds to continue.
The consortium, Grupo Unidos por el Canal, demands $1.6 billion be paid. PCA rejects this, but said will consider detailed billing.
Contracted to build a third set of locks, the biggest part of the project, the company said it risked losing $574 million in guarantees and advance payments if a dispute over cost overruns is not resolved.
The entire project was expected to cost $5.25 billion, but the overruns could bump that up to nearly $7 billion.
Mr Quijano said the PCA had $600 million in surety bonds with insurer Zurich in North America that could be used to support the project.
But Sacyr said the dispute will not have a significant impact on earnings and is not putting solvency at risk, according to company chairman Manuel Manrique.
"This process, although economically relevant, will not be decisive for the balance sheet; our solvency will not be put at risk," he told a news conference.
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