PANAMA CITY, (Reuters) – The Panama Canal Authority said on Friday it expects to sign a financing deal next week to finish work on expanding the waterway and end a dispute over cost overruns that has held up the multibillion-dollar project.
Following bitter wrangling with the Spanish-led building consortium since the start of the year, the authority announced a preliminary deal Thursday night. Canal Administrator Jorge Quijano said he expected the agreement to be signed on Thursday.
The deal with the construction group led by Spanish builder Sacyr and Italy’s Salini Impregilo foresees work finishing by December 2015 and would require the canal and the consortium to immediately each inject $100 million.
Both sides have agreed to continue disputing the $1.6 billion in extra costs through international arbitration. In the meantime, the deal gives the consortium immediate cash to resume work.
The expanded waterway connecting the Atlantic and Pacific oceans was originally due to open this year, but disputes over the funding and delays have pushed that deadline back.
Mistrust over the process still lingers, and canal chief Quijano was far from jubilant as he discussed the accord with reporters in a conference call from Panama City.
“I’m always very cautious because the relationship has not been very good with this contractor, I must admit,” he said.
“We will very closely supervise whatever is happening in the field. All of the monies … will go directly into the project. It cannot be siphoned out to the shareholders,” he added.
