Clash Over $1.6B Could Sink Panama Canal Project

Neither builders nor Canal Authority want to give up the funds
By Arden Dier,  Newser Staff
Posted Jan 3, 2014 6:17 AM CST
Clash Over $1.6B Could Sink Panama Canal Project
Panama Canal's administrator Jorge Quijano speaks during a press conference in Panama City, Thursday, Jan. 2, 2014.   (AP Photo/Arnulfo Franco)

An ambitious plan to expand the Panama Canal may soon run aground—two-thirds of the way into the project. The $3.2 billion undertaking is supposed to see a third set of locks installed in order to allow larger vessels to pass through the canal by mid-2015. But that price tag has become the issue. The Spanish builder heading the four-nation consortium Grupo Unidos por el Canal that was awarded the project in 2009 now says that due to "unforeseen circumstances," $1.6 billion more will be needed to fund the project, and it wants canal officials to pony up the money.

But the Panama Canal Authority has another idea: Builders can pay the extra costs themselves, the New York Times reports. It maintains that such overruns are a "normal" construction occurrence and that the consortium should foot the bill. And things are getting heated. Panama's president says he'll go so far as to travel to Spain and Italy "to demand these governments take moral responsibility," reports the BBC. Spanish builder Sacyr—a company that's struggled to refinance its debt in the wake of Spain's financial crisis—warned that work would be suspended if the canal authority didn't agree to pay within 21 days. (More Panama Canal stories.)

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