Panama Canal Authority drops negotiations over cost dispute

The Panama Canal Authority (ACP) has ended negotiations to resolve a financial spat over the US$5.25bn canal expansion project, Spanish construction firm Sacyr said in a statement.

Grupo Unidos por el Canal (GUPC​) - a consortium led by Sacyr and Italy'sImpregilo​​, as well as Belgian firm Jan De Nul​and Panama's Constructora Urbana- warned in the statement that without the deal, 10,000 jobs are put at risk, and the canal expansion could be delayed due to years of pending dispute in international courts.

Last month, GUPC said it would halt work on the expansion unless ACP met US$1.6bn in cost overruns.

"The international consortium ... continues searching for a financial solution to complete the project and works by 2015, despite the Panama Canal Authority ending negotiations," Sacyr said in the statement.

BNamericas could not reach ACP immediately for comments.

Earlier this week, Sacyr's head of Latin American operations hinted that an agreement was imminent, after both parties repeatedly postponed the deadline to clinch a deal that would secure financing to continue expansion works.

The authority has declined to provide the US$1.6bn in cost overruns claimed by GUPC and agreed to pay just US$283mn.

Sacyr has said the project is 70% complete, but that it has met "unexpected conditions and additional costs" which have increased its budget.

ACP, GUPC and insurer Zurichwere in talks last week, with the latest proposal said to consist of a US$400mn contribution from Zurich and US$100mn each from GUPC and ACP.

Sacyr shares fell 6.7% to 3.61 euros in afternoon trading in Madrid following the announcement.

BNamericas is hosting the LatAm Ports & Logistics Summit in Panama City on March 26-27. Click here to download the agenda.