Consortium says Panama Canal work resumed

Machinery sits idle at the construction site of the Panama Canal expansion project in Gatun, Panama, Thursday, Feb. 20, 2014. The canal expansion project remained idle after the administrator of the Panama Canal said Wednesday that work would resume Thursday after it was halted over a disagreement with a contractor on cost overruns. (AP Photo/Arnulfo Franco) | Zoom

PANAMA CITY (AP) - A European-led consortium said Thursday that work has resumed on a major expansion of the Panama Canal, following a two-week shutdown caused by a dispute over who is to pay for $1.6 billion in cost overruns.

The consortium led by Spain's Sacyr said it is following startup procedures that will allow full-scale work to resume "as soon as possible."

But there was little visible activity along the canal on Wednesday, and President Ricardo Martinelli told local media "there appears to be some internal differences between the various contractors," which include companies from various countries.

Jorge Luis Quijano, the administrator of the Panama Canal, said work would resume Thursday on the $5.25 billion expansion project that will allow extra-large tankers and container ships to use the canal and cut travel time between Asia and the eastern U.S.

However, the central issue in the dispute still must be worked out.

"The consortium has guaranteed that it will continue working, which was our main objective so we can move forward and discuss other issues for a longer-term agreement." Quijano said.

The consortium blames poor planning for the cost overruns. Panama says the company is responsible for any unforeseen costs.

"This preliminary agreement to resume works does not imply a negotiation on the alleged cost overruns claimed by the contractor," the canal administration, known as the ACP, said in a statement. "ACP reiterates that these claims must be processed through the mechanisms within the contract."

The consortium said it "maintains open talks with the ACP, with the aim of signing a memorandum in the coming days."

Panama hopes to have the expansion project finished by the end of 2015.

(Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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