Builders led by Spain’s Sacyr SA (SCYR) carried out their threat to suspend work expanding the Panama Canal as they demanded an agreement with the waterway’s management to help finance a $1.6 billion cost overrun.
The GUPC group led by Sacyr said it stopped work as the Panama Canal Authority refused to extend a negotiating framework that was set to expire. An accord to jointly finance costs is the only way for work to continue, the builders said in a statement dated yesterday and filed with Spanish regulators today. The group has submitted a new proposal to the canal authority known as the ACP, it said.
Sacyr and Milan-based Salini Impregilo SpA (SAL) said in December they wanted compensation for $1.6 billion in cost overruns, about half the value of their original contract to build a new set of locks. As the latest deadline for talks expired this week, Sacyr and the ACP gave different accounts as to whether work had been suspended, with the ACP saying it had halted and Sacyr saying it had only slowed.
ACP chief Jorge Quijano has said the project will be finished “with or without” the Sacyr-led group, which he accused of “blackmail.” The project involves building new locks meant to accommodate larger ships traveling from North America to Asia and potentially reducing transport costs for commodities such as liquefied natural gas.
Sacyr’s shares rose 0.4 percent at 11:20 a.m. in Madrid.
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