MADRID (Reuters) - The companies working to widen the Panama Canal have made a new proposal to resolve a row over cost overruns on the multi-billion dollar project, the consortium said on Friday.
Grupo Unidos Por El Canal (GUPC), led by Spanish builder Sacyr (SCYR.MC), said it was pushing for a settlement with the Panama Canal Authority (PCA) to resume the work, which would double the capacity of the century-old waterway.
Delays to a 2015 completion deadline could cost Panama’s government millions of dollars in toll revenue.
“GUPC ... has delivered a new proposal that takes into account the concerns of ACP while providing the funding necessary to finish the third set of locks,” GUPC said in a statement.
It declined to comment on the details of the proposal it sent on Thursday to the PCA. GUPC has said it needs $1.6 billion to complete the project.
The PCA’s head, Jorge Quijano, told Reuters in an interview on Thursday that the Canal was ready to pull the plug on the contract unless a deal is reached quickly.
He said he had held general talks with other companies about the work pending on the expansion, but declined to name them.
The widened canal would allow bigger ships to ferry cargo such as grains, chemical products and vehicles between the Atlantic and the Pacific oceans.
If the talks fail, the Canal could ask insurer Zurich North America ZURN.VX to terminate the contract with GUPC, which also includes Italy’s Salini Impregilo (SALI.MI), Jan De Nul from Belgium and Panama’s Constructura Urbana (CUSA), a canal official familiar with the process said.
A major sticking point up to now has been the consortium’s request for an extension to a moratorium on repaying the canal authority a $784 million advance until the end of arbitration.
GUPC wants to delay the repayment to free up funds to finish the project. The PCA says it will extend the moratorium until 2015.
“That’s enough for them to carry on with the work and complete the work,” Quijano said on Thursday. “We cannot pay for all of GUPC’s deficiencies and ... bad decisions made along the line.”
Reporting by Julien Toyer and Sonya Dowsett; additional reporting to Jose Rodriguez; editing by Tom Pfeiffer