Widening the Panama Canal will cost more than budgeted due to billions of dollars in overruns by the consortium carrying out the work, the canal’s administrator acknowledged Monday.
Grupo Unidos por el Canal (GUPC), which is overseeing upgrades to the canal’s locks, has incurred overruns totaling $2.39 billion.
So far, one of the items has been approved by a mediating panel, worth $227 million.
So “ultimately yes it will cost us more than we had originally planned,” Canal administrator Jorge Quijano told journalists, during installation of a first Pacific lock-gate.
Widening project manager Ilya Espino said “we know we are going over budget, what we don’t know yet is how far.”
The expansion, already a year behind schedule, had been forecast to cost $5.25 billion.
The project has already been plagued by delays, strikes and bitter disputes over cost overruns with the consortium, which is led by Spanish construction firm Sacyr.
Initially scheduled for completion in 2014, the project’s due date has been pushed back to early 2016.
Work began in 2007 to expand the canal with a third set of locks to enable it to handle the modern mega-freighters that global shipping companies prefer.
An estimated five percent of global maritime trade passes through the canal, whose main users are the United States and China.
Nearby Nicaragua, meanwhile, launched construction last month on a rival canal, a $50 billion project that the Chinese firm behind it plans to complete in five years.
In Nicaragua, both ports and the canal will be designed to handle the modern mega-ships favored by global shipping firms, which can carry up to 25,000 containers.
Even after completion of widening, the century-old waterway in Panama will only be able to handle ships carrying up to 12,000 containers.