PANAMA/MADRID, (Reuters) – The Panama Canal Authority said yesterday it had reached an initial agreement to resolve a weeks-long dispute over cost overruns on a project to widen the 100-year-old waterway that connects the Atlantic and Pacific oceans.
The builders, led by Spain’s Sacyr, have stopped work on doubling the canal’s capacity while a row rages over $1.6 billion in cost overruns and extra financing for the work that is 70 percent done and due to be finished next year.
Delays could cost Panama millions in lost shipping tolls. For Sacyr – whose partners are Italy’s Salini Impregilo , a Belgian and a Panamanian company – the project brings in a quarter of international revenue.
“We have preliminary agreements, there are still some issues to resolve and we are working in that direction,” the head of the Panama Canal Authority (PCA), Jorge Quijano, said.
He said that did not mean the PCA had abandoned the alternative of handing over the contract to a third party and did not give details about what any agreement would involve.
A spokesman for Sacyr declined to comment.
A source familiar with the situation said no agreement had been signed but a deal could be sealed soon.
An agreement was likely to centre on both sides bearing some of the additional costs and involve more bank loans, a second source with knowledge of talks said.
Shares in Sacyr traded 6.1 percent higher while Salini Impregilo, which has a 48 percent stake in the consortium (GUPC), traded up 3.1 percent.