Consortium resumes work on Panama Canal expansion

Thu Feb 20, 2014 9:40pm EST
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By Lomi Kriel and Sonya Dowsett

PANAMA CITY/MADRID (Reuters) - A Spanish-led consortium resumed expansion work on the Panama Canal on Thursday, raising hopes the two sides will finally draw a line under an acrimonious stand-off over massive cost overruns.

As workers returned to the construction site after a stoppage lasting more than two weeks, a source close to the consortium led by Spanish builder Sacyr and Italy's Salini Impregilo said it had resolved internal disagreements over the key issue of financing.

"The restarting of the works is being done in a way that will enable it to reach full pace in the shortest time possible," the consortium said in a statement. A source close to negotiations between the consortium and the Panama Canal Authority confirmed that work had resumed.

Panama Canal administrator Jorge Quijano said: "We believe that with the discussion we had last night and the comments made, we can find a path out of this." There are still problems to be sorted out, he said, but the agreement with the consortium should allow work to get going.

Work had been due to restart earlier on Thursday.

The canal authority said late on Wednesday it had agreed with the consortium to iron out a host of remaining issues, including the delivery dates of massive lock gates being built in Europe, over the next three days.

Sources with knowledge of the negotiations said a final deal on pending issues would be signed within three days.

The parties have agreed to deal with the core of the dispute, $1.6 billion in cost overruns that the consortium wants the Panama Canal to pay for, via arbitration.   Continued...

Panama Canal administrator Jorge Quijano delivers a statement outside the Panama Canal administration building in Panama City February 20, 2014. REUTERS/Carlos Jasso