MADRID/PANAMA CITY, (Reuters) – Spain stepped in yesterday to try to resolve a cost dispute over the expansion of Panama’s canal, which has triggered a sell-off in the shares of Sacyr SA, the Spanish builder leading the project.
Spain’s Public Works minister, Ana Pastor, and Sacyr Chairman Manuel Manrique are due to travel to Panama on the weekend, Panama’s president, Ricardo Martinelli, said.
A Spanish-Italian consortium working on the project, which would widen the canal so that ships three times larger than at present could use it, has asked Panama to pay for $1.6 billion in cost overruns on the $3.2 billion plan to build a third set of locks for the canal.
Panama rejected that demand, though it has hinted it could be willing to negotiate with the consortium.
The massive infrastructure development aims to make it easier for example to move cargo between Asia and the eastern coasts of the Americas, potentially reducing the cost of transporting commodities and manufactured goods.
The dispute with the consortium could bring the project to a halt.
But a senior source from the consortium played down the dispute, saying negotiations on cost overruns were normal, albeit seldom played out in the public eye.
“To think a five-year project of the size and complexity of this one will not entail extra costs is absurd,” the senior source said, on condition of anonymity.
The consortium includes Italy’s Salini Impregilo, Belgium’s Jan De Nul and Panama’s Constructora Urbana.
Uncertainty over the outcome has wiped 263 million euros ($358 million) off the market value of Sacyr in two days, while shares in Salini Impregilo were broadly flat.