Spanish firm Sacyr denies halting work on Panama Canal Published duration 5 February 2014

media caption Spanish builders Sacyr denied claims by the Panama Canal Authority that work at the site had been halted, as Will Grant reports

The Spanish building company leading the expansion project on the Panama Canal has denied that work at the waterway has been halted.

The president of Sacyr, Manuel Manrique, said no date had been set for construction work to stop.

The Panama Canal Authority and the building companies involved are engaged in a dispute over who should foot $1.6bn (£1bn) in extra costs.

The Panama Canal is one of the world's most important shipping routes.

The consortium says 10,000 jobs are at risk, but the canal's authority says it will not "yield to blackmail".

Earlier today, the Panama Canal Authority (ACP) announced that talks with the Spanish-led consortium behind the project had broken down.

The Canal Authority also said that work had been halted at the site.

Mr Manrique admitted that work may eventually stop, if the building companies run out of cash, but said no such decision had been taken by the consortium.

"There is still room for negotiation with the ACP," Mr Manrique told the Spanish radio network Cadena Ser.

"This project, like many big projects, has unforeseen costs. We want an arbitration court to decide who will pay for that," he added.

The consortium is made up of Spain's Sacyr, Impregilo of Italy, Belgian firm Jan De Nul and Constructora Urbana, a Panamanian firm.

image copyright AP image caption The Panama Canal links the Atlantic Ocean to the Pacific Ocean

'Inflexible'

Canal Administrator Jorge Quijano accused the consortium of being "inflexible" in its negotiations.

He did not rule out that a deal could still be reached, but said the window of opportunity was getting narrower "by the minute".

The Panama Canal Authority had earlier broken off talks, accusing the consortium of breaching its contract.

The contract involves building a new larger set of locks to accommodate ships carrying up to 12,000 containers. At the moment the biggest ships that can navigate the canal carry 5,000 containers.

Sacyr blames the Panama Canal Authority for the breakdown in talks, saying it had failed to respond to the consortium's latest proposal to settle the dispute.

"Without an immediate solution, we face years of disputes in national and international tribunals," Sacyr said in a statement.

image copyright Reuters image caption Construction work on the expansion started in 2009 and is due to be finished in June 2015

The secretary general of the International Chamber of Shipping told the BBC that "any delay will have an impact on the industry".

Peter Hinchliffe said: "Even at this stage, plans to look at the capacity dimensions of ships and routing are already going ahead, so we are very concerned."

Work began on the expansion in 2009.

Construction was due to be completed in June 2015, nine months behind schedule, with the overall cost of the project estimated at $5.2bn.

Any delay might be expected to cost Panama millions of dollars in lost revenue from toll charges.

The canal, inaugurated in 1914, links the Atlantic Ocean to the Pacific.