PANAMA: Sacyr chairman Manuel Manrique talks to resolve a billion-dollar cashflow deadlock in Panama Canal expansion project is making progress

Record ID: 177061

  • Title: PANAMA: Sacyr chairman Manuel Manrique talks to resolve a billion-dollar cashflow deadlock in Panama Canal expansion project is making progress
  • Date: 11th January 2014
  • Summary: PANAMA CITY, PANAMA (JANUARY 10, 2013) (REUTERS) PANAMA SKYLINE PANAMA FLAG PANAMA SKYSCRAPER (SOUNDBITE) (Spanish) SACYR CHAIRMAN, MANUEL MANRIQUE, SAYING: "The problem is that the time it takes with this arbitration is longer than the project." REPORTER ASKS: IT'S SAID THAT IT'LL BE THREE MONTHS? "No, four years on and the process continues. There is a lack of cashflow
  • Embargoed: 26th January 2014 12:00
  • Keywords:
  • Location: Panama
  • Country: Panama
  • Topics: Business,Industry
  • Reuters ID: LVA3MOQCYC85VNN5W5LS8H49ZWDD
  • Story Text: Sacyr, the Spanish building company leading a consortium to expand the Panama Canal, said on Friday (January 10) it was making progress in talks with the waterway's operator over financing to avoid a damaging work stoppage on the multi-billion dollar project.
    Visiting Panama, Sacyr Chairman Manuel Manrique played down an acrimonious spat over cost overruns, in which the group demanded more money from the canal administrator to continue work on a third set of locks for the canal.
    Manrique told Reuters that parties are working towards a solution to the ambitious project's cashflow problem.
    "The problem is that the time it takes with this arbitration is longer than the project."
    Asked if it will take three months, Manrique said: "No, four years on and the process continues. There is a lack of cashflow which needs to be solved within the contract. Arriving at the end may be difficult but we're doing it and we will get there."
    The consortium made up of Sacyr and Italian builder Salini Impregilo are processing a legal claim for 1.6 billion USD in cost overruns via arbitration.
    Earlier this month, the consortium threatened to halt work from January 20 unless the Panama Canal Authority footed the bill.
    But Manrique said progress is being made in talks with Panama Canal officials.
    "I hope not, in reality the letter didn't say that we would stop our work but we had 21 days to continue with the negotiations we are continuing with, which we are progressing on day by day," he added.
    The canal authority and consortium have both floated financing proposals. But it was not immediately clear how they would ensure cashflow in the short term to keep afloat the plan to expand one of the world's most important cargo routes.
    Earlier this week, the Panama Canal rejected a consortium proposal that it pay 1 billion USD to continue work on expanding the waterway. Under a separate plan, the consortium has proposed that the canal authority pay out a 400 million USD cash advance.
    Playing down differences, Manrique said all sides will come together for a solution.
    "The only thing that needs to be learnt is that in a joint venture between four companies there are always difference opinions, different ways of seeing the problems and how to solve them. This is normal. But in the end we come together like the people of Panama who I see are proud of their canal," he said.
    The Panama Canal Authority said this week it was ready to bring in a third party to finish the expansion if no deal was reached with the consortium on financing.
    Halting construction on the project would be a setback for companies eager to move larger vessels through the century-old waterway such as liquefied natural gas (LNG) producers who want to ship exports from the U.S. Gulf coast to Asian markets.
    Work began on the expansion in 2007 to create a new lane of traffic along the canal and double its capacity. The overall project is 72 percent complete.
    Last week, the consortium, which also features Belgium's Jan De Nul and Panama's Constructora Urbana, said it had faced the added costs due to unforeseen setbacks in the 3.2 billion USD section of the project to build the new locks.
    Sacyr won the canal contract in 2009 with an offer considerably below the main rival bids and also below the 3.48 billion USD reference set by the canal authority.
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