Expansion of Panama Canal route at impasse

exPaNsiON of the Panama canal, one of the world’s most important shipping routes, was in doubt yesterday after talks between the canal administrator and a spanish-led building consortium fell apart and work ground to a halt.

Group United for the canal, a consortium led by spanish builder sacyr, said in a statement the government’s canal authority had broken off talks on who will pay some $1.6 billion (£980 million) needed to complete the ambitious project.

The Panama canal authority’s head, Jorge Quijano, said it had held general talks with other companies about work still pending on the expansion, but was open to talks with the consortium. He said work at the expansion site had stopped.

Mr Quijano told a news conference the consortium had been “inflexible” and that the project would be completed in 2015 “with or without” it.

He said the canal was evaluating its next steps, but a deal was still possible.

The failure of the talks was the latest setback to a project mired in disputes since the consortium, which also includes italy’s salini impregilo as well as Belgian and Panamanian firms, won a bid to double the capacity of the near 50-mile transoceanic route.

Disagreements over cost overruns have reached international arbitration and talks between the two sides over how to find the additional cash to finish the project have been extended twice.

The project was originally expected to cost about £3.2bn, but the overruns could raise it to near £4.3bn.

in its statement, GUPc – the spanish acronym by which the consortium is known – said the suspension of discussions meant the expansion and with it up to 10,000 jobs were at risk.

any delay in the project would be a setback for companies eager to move larger ships through the canal.