CONTRACTOR Impregilo is negotiating compensation after the Italian government last month scrapped its contract to build the e3.88bn (£2.53bn) Messina Bridge.
Prime minister Romano Prodi's coalition government dropped plans to build the 3.3km suspension bridge, which would have been the world's longest, when it was elected in May.
A construction consortium led by Impregilo was due to start on site in 2007. Now that the scheme has been cancelled it may be eligible for compensation.
A spokeswoman for state-owned client company Stretto di Messina said that had Impregilo started on site it would have been entitled to 10% of the construction cost, in the region of £260M.
Impregilo won the contract to build the bridge last October but because it was still developing a detailed design it was unclear whether Impregilo would be entitled to cash, she added.
The spokeswoman said that the government was trying to sweeten the blow by offering Impregilo other transport infrastructure work to an equivalent value.
Prodi last month declared that his government would plough cash earmarked for the bridge and approach works into other muchneeded road and rail upgrade work in Sicily and Calabria - the regions that were to have benefited from construction of the bridge.
The spokeswoman said plans to build the Messina Bridge had not been killed off but had been mothballed.