As Costs Soar, Who Will Pay For The Panama Canal's Expansion?
For five years, a multi-billion dollar expansion has been underway on the Panama Canal so that ships three times the current size can pass through the vital waterway. The new, wider canal will alter global trade routes and dramatically increase revenue for the Panama's government, primarily from toll charges.
The expansion is more than two-thirds done, but now a funding dispute between the builders and the canal operators threatens to bring construction to a halt.
A mostly European building consortium called GUPC issued an ultimatum saying it would suspend work on the project unless Panama's government ponied up an extra $1.6 billion to help cover cost overruns.
Pedro Alonso, a spokesman for Sacyr, the Spanish company heading the project, says there were many unforeseen problems that forced up the cost.
"For example, the exact quality of the stone, and certain geotechnical things that weren't documented ... the depth of different layers of earth," said Alonso. Those are things beyond the consortium's responsibility and "should be covered by the client," he added.
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