Progress made in Panama Canal dispute
Protocol signed between GUPC and Panama Canal Authority
A breakthrough has been made in the long-running Panama Canal dispute.
A protocol has been signed between Grupo Unidos por el Canal (GUPC), who are managing the expansion project, and the Panama Canal Authority.
A statement from GUPC revealed talks between the two parties had resulted in the proposed negotiation protocol and a new financing concept.
The statement said: "Through the protocol signed, the parties agreed to continue conversations, at least for now, until 1 February, 2014, aimed to find a long-term solution in the co-financing ensuring the completion of the Panama Canal expansion project.
"The protocol provides for ongoing discussions of solutions, including financing proposal that GUPC put forward. The financing proposal includes among other things involvement by insurer Zurich."
Panama hired the GUPC consortium in 2009 to build a third set of locks in the canal for $3.1bn. The project will allow bigger ships to pass through the canal and is more than two-thirds complete.
When finished, it would allow the Central American nation to quadruple its yearly income of $1bn from toll fees it charges to shipping firms that use the maritime shortcut.
But the consortium, which is 96%-controlled by Spain's Sacyr SA and Italy's Salini Impregilo SpA, threatened in December to halt construction, by the end of last Monday, if it was not paid an extra $1.6bn for cost overruns it says were unavoidable.
The consortium reduced its immediate demand to $400m two weeks ago and last Monday offered another proposal which calls for the builders and Panama to "co-finance" the project, which it said currently sees monthly costs of more than $100m and employs some 10,000 people.
However, the Panama Canal Authority offered a chilly response.
The continued dispute puts further doubt to a scheduled completion date of June 2015.