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Consortium Threatens To Pull Plug On Panama Canal Expansion

Men sit by the side of the Panama Canal as a ship sails past in Gamboa near Panama City, last month. The expansion project is aimed at accommodating the world's largest container ships.
Arnulfo Franco
/
AP
Men sit by the side of the Panama Canal as a ship sails past in Gamboa near Panama City, last month. The expansion project is aimed at accommodating the world's largest container ships.

Cost overruns are threatening to shut down a multibillion-dollar expansion of the Panama Canal aimed at allowing the world's largest ships to pass through the short cut between the Caribbean and the Pacific Ocean.

A European consortium funding the project says it won't continue the work until Panama coughs up the extra cash — which amounts to $1.6 billion over and above an original $3.2 billion bid to build a third set of locks.

Spanish builder Sacyr, the leader of a consortium known as Grupo Unidos por el Canal (GUPC), which includes Impreglio of Italy, Belgian firm Jan De Nul and Constructora Urbana of Panama, has given the Panama Canal Authority 21 days to come "in line with the contractual terms" or it will halt the project.

Panamanian President Ricardo Martinelli says he will personally travel to Italy and Spain to get the dispute settled, saying those nations "have a moral responsibility" to help resolve the dispute and get the project back on course.

"It's not possible for a company to just announce an enormous amount of cost overruns, when they had already fixed a price," Martinelli said. "And now they're coming forward saying that the price has risen."

The New York Times reports:

"In 2009, ... Grupo Unidos por el Canal, won the contract to design and build a third set of locks with a $3.2 billion bid. The contract is at the heart of Panama's ambitious plan to expand the canal to allow far larger vessels to use the 50-mile, almost century-old canal. ...

"About two-thirds of the work on the Panama Canal has been completed, according to the builders. The latest timetable is to finish the work by June 2015."

The BBC says:

"The majority of the work involves building a third set of locks that can accommodate ships that can carry 12,000 containers.

"At the moment the biggest ships that can navigate the canal carry 5,000 containers."

Copyright 2021 NPR. To see more, visit https://www.npr.org.

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Scott Neuman is a reporter and editor, working mainly on breaking news for NPR's digital and radio platforms.