Sacyr to hold talks with Panama on canal cost overrun

Spanish builder Sacyr and Panama have agreed to negotiate a solution to their differences about a cost overrun in the project to widen the Panama Canal without calling a halt to work, Spanish Public Works Minister Ana Pastor said on Monday after meeting with Panamanian President Ricardo Martinelli.

A consortium headed by Sacyr claimed costs had overshot what was initially budgeted by 1.6 billion dollars (some 1.2 billion euros) and had threatened to stop work on the project on January 20 until the issue was addressed.

“The commitment made by the consortium is that all claims will be dealt with within the terms of the contract, [IT SIGNED]and, therefore, we already have a first agreement,” Pastor said. They’re also going to sit down to speak in order to try to resolve all the problems,” the minister added.

Pastor spoke with consortium members before her meeting with Martinelli and will now meet with officials from the Panama Canal Authority.

The Spanish government has insisted on limiting its role to an intermediary between the two sides. “The government is not a party [to the dispute]. It is problem between a contractor and its client,” said Spain’s ambassador to Panama, Jesús Silva. “In no way” would the Spanish government put any money on the table to help resolve the dispute, he added.

Panamanian government sources said the mechanisms for resolving controversies regarding the canal are independent of any political, governmental or diplomatic consideration and are clearly laid out in the legislation, which states that any claims must first be lodged with the Panama Canal Authority (PCA). In the absence of an agreement, the dispute goes to a dispute resolution board and in the final instance to a Florida-based court of international arbitration. The PCA says the consortium has failed to justify the cost overruns.