Partial Accord Reached in Panama Canal Expansion Dispute

panama canal construction colon
A view of the construction site of the Panama Canal Expansion project on the Atlantic side on the outskirts of Colon City, Panama. Picture taken on January 15, 2014. (c) REUTERS/Carlos Jasso

By Eric Sabo and Emma Ross-Thomas

Feb. 12 (Bloomberg) — The Panama Canal Authority said it reached a partial agreement with builders led by Sacyr SA to end a dispute, even as it continues to seek alternatives to finish the waterway’s expansion. Sacyr rose as much as 8 percent.

A preliminary agreement on some of the builders’ demands has been reached and talks continue, a representative for the canal authority, who asked not to be named in line with policy, said in a telephone interview. Jorge Quijano, head of the authority known as ACP, said talks would probably end this week, as he continues to consider options to get the suspended project finished.

“We will find a solution one way or the other soon,” Quijano told reporters in Panama City in comments broadcast on channel 2 TV today.

The group of builders including Madrid-based Sacyr suspended work to expand the canal last week, making good on a threat issued in December, as they demanded help from the waterway’s management to finance a $1.6 billion cost overrun. The excess costs amount to about half the initial budget to build the new set of locks, which will allow the canal to accommodate larger ships, helping reduce transport costs for commodities such as liquefied natural gas.

Shares in Sacyr rose as much as 8 percent, the most since Jan. 6, and traded 6.1 percent higher at 4:18 p.m. in Madrid. Milan-based Salini Impregilo SpA rose 3.2 percent.

A Sacyr official declined to comment on the Canal Authority’s announcement.

Copyright 2014 Bloomberg.