A row over an extension to the Panama Canal has escalated after a Spanish-led consortium threatened to down tools in three weeks unless cost overruns were paid – a claim totalling over a billion euros.

But the Panamanian president has refused to back down and says the leaders of Spain and Italy have a moral duty to help resolve the conflict, based on promises they made to him as he took office in 2009.

Ricardo Martinelli told reporters: “I am going to go to Spain and Italy to demand that each government (intervenes), because a company cannot come up with a huge amount of money for overrun costs in an extension project. It’s work for humankind which they gave a cost for and now they can’t come with the story that they’re raising the cost.”

The aim is to widen and deepen existing channels so bigger vessels can sail through, increasing revenues for the Central American nation.

A spokesman for Spanish firm Sacyr said part of the cost overrun was due to some building materials not being of sufficient quality and that the Panama Canal Authority provided “inexact” information for the project.