Panama Canal proposes joint financing to end cost row

Mon Jan 6, 2014 6:33pm EST
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By Lomi Kriel and Elida Moreno

PANAMA CITY (Reuters) - The head of the Panama Canal on Monday proposed that it and a Spanish-led consortium expanding the major maritime cargo artery plug a financing gap between them, and said the sides had agreed to talks on Tuesday to defuse a row over huge cost overruns.

The governments of Spain and Panama distanced themselves from the dispute, saying it should be resolved by the Panama Canal Authority and the consortium led by Spanish construction company Sacyr SCYR.MC.

Halting work on the $5.25 billion project to widen and deepen the canal would be a setback for companies eager to increase cargo volumes passing through the century-old waterway, especially the first-ever liquefied natural gas (LNG) exports from the U.S. Gulf coast to Asian markets as well as other bulk commodity shipments.

"We are talking about some additional funding that they would have to put up and we could also provide," Jorge Quijano, the head of the Panama Canal Authority which administers the waterway, told reporters after meeting with visiting Spanish public works minister, Ana Pastor, who is mediating.

"We have set out what we can do to contribute, as long as they also contribute," he added.

There was no immediate word from building consortium Grupo Unidos por el Canal (GUPC) on the proposal.

Earlier on Monday, Spain's ambassador to Panama, Jesus Silva, said earlier his government would provide no financial help to Sacyr in sorting out the row overshadowing one of the world's most important maritime cargo routes.

Last week, Panamanian President Ricardo Martinelli accused the consortium of "great irresponsibility" when it threatened to suspend work on January 20 if the Panama Canal Authority did not pay for big cost overruns.   Continued...

Panama Canal Administrator Jorge Quijano speaks after a private meeting with Spain's Public Works Minister Ana Pastor, in Panama City January 6, 2014. REUTERS/Carlos Jasso