Panama Canal Authority offers cash advance to Europe consortium The Panama Canal Authority has offered a cash advance to a European consortium threatening to suspend a $3.2bn contract to expand the globally strategic shipping route, but the contractors led by Spainish builder Sacyr rejected the offer as too low. Jorge Quijano, head of the Panama Canal Authority (ACP), said he was prepared to advance $100m to ease the cash crunch, provided the contractors withdrew their threat to suspend the project and contribute the same amount. However, he said time was running out and that it was working on contingency plans to keep the project on track. The contractors, known as Grupos Unidos por el Canal, agreed to contribute $100m, but are pushing for the ACP to stump up $400m to help meet what they say are $1.6bn in cost overruns that have thrown the massive project into doubt. There was no immediate response from the ACP to the contractors" stance. Mr Quijano had acknowledged earlier after a meeting with the consortium, which also includes Impregilo of Italy and Jan De Nul of Belgium, that the advance, plus a two-month extension to the repayment schedule for a previous $83m advance, "isn't a total solution to the problem." GUPC had, he said, already "significantly" slowed the pace of work on an already delayed expansion to the century-old shipping route that is set to cost $5.2bn overall and is slated for opening in July 2015. It will allow giant vessels to transit - key to US for increasing shipments of liquefied natural gas to Asia more quickly and cheaply. The expansion is 72 per cent complete overall, ACP said, while construction of the new locks is 65 per cent complete. Mr Quijano has acknowledged that the Panama Canal has lost business to the Suez Canal during the expansion, although he declined to say how much. The dispute prompted Ana Pastor, Spanish public works minister, to fly to Panama in an attempt to defuse tensions, but both governments are officially keeping out of the row. No one was available for comment at GUPC, which is claiming $1.6bn in cost overruns blames the ACP for what it brands and is blaming the ACP for conducting faulty terrain studies. It has already taken one of its claims, for $585m, to an independent dispute resolution board - the second of three instances established under the canal extension contract - but no date for a hearing has yet been set. Mr Quijano said the ACP - which rejects the claims and has itself already had to shoulder about $180m in unexpected costs, including higher diesel and steel prices - did not have another contractor lined up to finish the expansion. "What we can't do is just sit here," he said. We are continuing to prepare for an eventuality that we hope does not happen . . . the timeframe is short. No one at ACP could confirm exactly how much time was available to resolve the spat without derailing the expansion timetable. However, Mr Quijano said this week: "I'd say this month things will go one way or another. We cannot be constantly in this position. Expansion of the Panama Canal is crucial to the shipping lane's continued importance amid the threat of rival routes, notably a maverick $40bn Chinese plan to carve a channel through Nicaragua. Sacyr has called the project "one of the largest and most important civil engineering projects ever carried out" and potentially has a lot to lose as the contract provides it with 14 per cent of revenues. The row has rekindled suspicions - that flared via leaked diplomatic cables in 2010, analysed by El País - that Sacyr had long been expected to try to improve the terms of its contract. The Sacyr-led group beat out Bechtel of the US to win the Panama deal.