Panama leader meets Spain, Italy envoys over canal row

3rd January 2014, Comments 0 comments

Panama's president met Friday with Spanish and Italian diplomats to voice his displeasure over a consortium's threat to halt expansion work on the Panama Canal over a $1.6 billion dispute.

President Ricardo Martinelli held talks with the envoys in his office after the Spanish-led construction group warned it would suspend the project in three weeks if canal authorities fail to pay for massive cost overruns.

"The president is meeting with the (envoys) to explain his concerns," said presidency spokesman Luis Camacho.

Spanish Ambassador Jesus Silva and Italy's charge d'affaires Massimo Tudini attended the meeting along with Panama's Foreign Minister Fernando Nunez and Presidency Minister Roberto Henriquez.

Martinelli said Thursday he would travel to Spain and Italy to tell each government that they have a "more responsibility" to make the Grupo Unidos por el Canal (GUPC) consortium honor its contract.

The project aims to make the 80-kilometer (50-mile) waterway, which handles five percent of global maritime trade, big enough to handle new, mega cargo ships.

The group building the third set of locks along the canal is led by Spanish builder Sacyr and includes Impregilo of Italy, Belgian firm Jan De Nul and Panama's Constructora Urbana.

In Madrid, Spain's Public Works Minister Ana Pastor said her government was in talks with Panama and Sacyr to try to resolve the escalating row.

"Panama is a country that is close and friendly towards Spain, and we share the desire and interest to find a solution as soon as possible," said a Spanish foreign ministry spokesman.

In a letter to canal authorities dated December 30, Sacyr gave a 21-day deadline before suspending its $3.2 billion contract (2.3 billion euros) to expand the capacity of the canal.

The overall cost of the project has been estimated at $5.2 billion.

The consortium began work on a third set of locks for the canal in 2009 and expects to complete construction in June 2015, already a nine-month delay over the date set in the contract.

A year ago, the consortium demanded an extra payment of $1.6 billion from the Panama Canal Authority for "unforeseen" costs.

A Sacyr spokesman said the extra charges were due to "technical matters, questions over cement ingredients, geotechnical matters, geological questions, taxes matters, financial matters, labor issues and weather conditions."

But according to the canal authority, there was a delay of four months shortly after the project began to reverse a GUPC plan to use lower-quality cement.

The new locks will accommodate larger ships with a capacity of 12,000 containers -- instead of those with 5,000 containers that are now able to navigate the canal.

© 2014 AFP

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