Men sit by the side of the Panama Canal as a ship sails past in Gamboa near Panama City, last month. The expansion project is aimed at accommodating the world’s largest container ships. Arnulfo Franco/AP
Cost overruns are threatening to shut down a multibillion-dollar expansion of the Panama Canal aimed at allowing the world’s largest ships to pass through the short cut between the Caribbean and the Pacific Ocean.
A European consortium funding the project says it won’t continue the work until Panama coughs up the extra cash — which amounts to $1.6 billion over and above an original $3.2 billion bid to build a third set of locks.
Spanish builder Sacyr, the leader of a consortium known as Grupo Unidos por el Canal (GUPC), which includes Impreglio of Italy, Belgian firm Jan De Nul and Constructora Urbana of Panama, has given the Panama Canal Authority 21 days to come “in line with the contractual terms” or it will halt the project.
Panamanian President Ricardo Martinelli says he will personally travel to Italy and Spain to get the dispute settled, saying those nations “have a moral responsibility” to help resolve the dispute and get the project back on course.
“It’s not possible for a company to just announce an enormous amount of cost overruns, when they had already fixed a price,” Martinelli said. “And now they’re coming forward saying that the price has risen.”