Sacyr consortium asks for $400 million to continue Panama Canal project

The consortium led by Spanish builder Sacyr that has been contracted to widen the Panama Canal has asked the administrator of the waterway for an advance of 400 million dollars (293 million euros) in order to be able to continue work on the project, while the two sides try to resolve a dispute over cost overruns that the group estimates at 1.6 billion dollars (some 1.2 billion euros).

The consortium agreed to put forward 100 million dollars, in addition to the 183 million dollars pledged by the Panama Canal Authority (PCA), to ensure that work continues.

The consortium, known as Grupo Unidos por el Canal (GUPC), also includes Italy’s Impregilo, the Belgian firm Jan De Nul and the Panamanian company CUSA. GUPC had threatened to cease work on the project on January 20 if the dispute is not resolved by then.

The waterway is vital to the Panamanian economy. “The Panama Canal cannot see this work brought to a halt,” the head of the PCA, Jorge Quijano, said Tuesday. Work on the project is due to be completed in 2015.

“The two sides agree to go to arbitration to resolve the contract claims,” Bloomberg quoted GUPC as saying in an emailed statement sent Tuesday. “The GUPC and Panama Canal Authority are studying ways to reach an agreement on cash flow problems.”