Panama Canal Expansion Threatened by Cost Overruns of $1.6B

Image: Panama Canal Expansion Threatened by Cost Overruns of $1.6B

Friday, 03 Jan 2014 03:12 PM

By Michael Mullins

  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink
A Panama Canal expansion is being threatened by cost overruns of $1.6 billion, which the European consortium responsible for completing the project is demanding from the Panama government before moving forward with it.

On Thursday, Sacyr, the Spanish builder leading the Grupo Unidos por el Canal consortium, informed the Spanish stock market regulator that due to "unforeseen circumstances," about one half of the original $3.2 billion contract would have to be paid before the project could be completed. Sacyr did not offer any further details, The New York Times reported.

Urgent: Do You Approve Or Disapprove of President Obama's Job Performance? Vote Now in Urgent Poll

If the additional $1.6 billion was not agreed to by the Panama Canal Authority within 21 days, the consortium said it reserved the right to suspend construction on the canal "in line with the contractual terms."

In response to the ultimatum, the Panama Canal Authority rejected the added "pressure" and warned that it would invoke "mechanisms from the contract that would allow the work to be completed" so as to compel the builders to cover the additional costs themselves.

Panamanian President Ricardo Martinelli recently weighed in on the dispute, saying that he will personally travel to Italy and Spain, the nations from which the primary builders are from, to resolve the matter, NPR reported.

"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."

Martinelli added that both Italy and Spain "have a moral responsibility" to help resolve the dispute, NPR noted.

The contract was awarded to the Grupo Unidos por el Canal consortium in 2009, after which work began almost immediately on the 48-mile long waterway that connects the Pacific Ocean with the Atlantic Ocean via the Caribbean.

The expansion primarily involved the construction of a third set of locks that would enable significantly larger vessels carrying upwards of 12,000 containers to navigate through the nearly century-old canal, the BBC reported.

Presently, the largest ships that can navigate the Panama Canal carry 5,000 containers.

As a result of the filing, Sacyr saw its shares plunge almost 9 percent on Thursday as investors worried how the dispute would impact the Spanish company, The New York Times noted.

If the project were to move forward without any significant delays, the builders estimate it would be completed by June 2015.

Editor's Note: ObamaCare Is Here. Are You Prepared?

Related Stories:

© 2014 Newsmax. All rights reserved.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Send me more news as it happens.
 
 
Get me on The Wire
Send me more news as it happens.
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
You May Also Like

Cambodia HIV Outbreak: 100-Plus People Diagnosed; Investigation Sought

Friday, 19 Dec 2014 18:50 PM

More than 100 HIV infections in a single Cambodian village have spurred the country's prime minister to ask for an inves . . .

Slender Man Case: Two Girls Competent to Stand Trial in Stabbing

Friday, 19 Dec 2014 18:26 PM

Two girls who allegedly stabbed a 12-year-old friend over the online game Slender Man are competent to stand trial for a . . .

Kate Upton Sexiest Woman Alive; Model Apologizes to Teen Brother

Friday, 19 Dec 2014 17:52 PM

Model Kate Upton was selected as People magazine's first Sexiest Woman Alive, a month after Chris Hemsworth received the . . .

Top Stories

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved