Panama Canal extension faces halt over cost overruns | Business| Economy and finance news from a German perspective | DW | 02.01.2014
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Panama Canal extension faces halt over cost overruns

A Spanish consortium responsible for the current Panama Canal extension has said it will halt all building work, should authorities on the ground not be ready to accept higher costs. It spoke of a three-week deadline.

A massive $5.3-billion (3.9-billion-euro) Panama Canal extension project might be suspended, if a row over cost overruns was not settled within weeks, the Spanish consortium Grupo Unidos por el Canal (GUPC) warned Thursday.

The leader of the group, Spanish builder Sacyr, said work would halt unless the Panama Canal Authority (ACP) agreed to pay $1.6 billion to cover additional costs for extending the 80-kilometer (50-mile) waterway connecting the Atlantic and the Pacific Oceans.

"GUPC has formally informed the ACP that it will suspend work, if the failures to comply are not put right within the advised period," Sacyr said in a statement, mentioning it had set a 21-day deadline before stopping work on installing a third set of canal locks.

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So far, the authority had shown no signs of willingness to give in to the demands. "No matter what kind of pressure is exercised against the ACP, we maintain our demand that the building consortium respect the contract they agreed to and signed," ACP Administrator Jorge Quijano commented.

Work on the locks started in 2009, with completion scheduled for June 2015 after a nine-month delay over the date set in the contract.

The new locks would accommodate larger ships with a capacity of 12,000 containers instead of those with 5,000 containers that are currently able to navigate the canal. Some 5 percent of world maritime trade passes through the Panama Canal.

hg/msh (AFP, Reuters)

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