Panama canal expansion row hits deadline day

A view of the construction site of the Panama Canal Expansion project on the Atlantic side on the outskirts of Colon City, on Jan 15, 2014. Work was expected to continue Monday on a mega-project to expand the Panama canal - a key waterway for wo
A view of the construction site of the Panama Canal Expansion project on the Atlantic side on the outskirts of Colon City, on Jan 15, 2014. Work was expected to continue Monday on a mega-project to expand the Panama canal - a key waterway for world trade - despite a threat to suspend operations over a bitter financial row. -- PHOTO: REUTERS

PANAMA CITY (AFP) - Work was expected to continue Monday on a mega-project to expand the Panama canal - a key waterway for world trade - despite a threat to suspend operations over a bitter financial row.

The Grupo Unidos por el Canal (GUPC) consortium, led by Spanish builder Sacyr, had said it might stop work by Monday unless Panama paid for US$1.6 billion (S$2.04 billion) in "unforeseen" costs.

However, the consortium said Sunday in a statement that there was "no reason to make any change tomorrow in the status of the construction," arguing that GUPC could cease work at any time as it deemed necessary.

Ahead of the apparent deadline, canal administrator Jorge Quijano had said that contact with the consortium continued over the weekend but that so far no deal had been struck, despite dialogue and mediation efforts by Spanish and Panamanian authorities.

He stressed that construction would go ahead with or without GUPC.

GUPC, which includes Impreglio of Italy, Belgium's Jan de Nul and Constructora Urbana of Panama, has agreed to negotiate with the canal authority within the contract.

The overall canal upgrade is costing US$5.2 billion, including GUPC's US$3.2 billion contract to build a third set of locks for the century-old canal, which currently welcomes ships that carry up to 5,000 containers.

Already facing delays, the project aims to make the 80-kilometer waterway, which handles five percent of global maritime trade, big enough to handle new cargo ships that can carry 12,000 containers.

In the current dispute, GUPC says it ran into costly overruns because the canal authority gave the builders the wrong information regarding the area's geology.

The expansion work on the canal began in 2009 with the goal of being done by 2014 to coincide with the waterway's 100th birthday, but completion was pushed back to 2015 after a first disagreement between the canal authority and GUPC over cement quality.