Nicaragua approves Panama Canal alternative

By Chris Sleight and Clarise Ardúz24 June 2013

Nicaraguan president Daniel Ortega with HKND Group chairman Wang Jing

Nicaraguan president Daniel Ortega with HKND Group chairman Wang Jing

The Nicaraguan Congress has approved a law to allow a Chinese company to construct and operate a trans-oceanic canal. The agreement could see Hong Kong Nicaragua Canal Development Investment Co. (HKND Group) construct the US$ 40 billion canal over a ten-year period and then operate it for up to a century.

The law was passed by 61 votes to 25, with one abstention in the face of public protests. The project has not been subject to a public tender and has been criticised as a loss of Nicaraguan sovereignty. Its signing followed a July 2012 ruling by Congress to create the legal regime and government entity to develop the canal. It was followed in September by a Memorandum of understanding with HKND Group, followed in October with a Deed of Cooperation with the company.

The route of the canal has not been finalised, but it would be likely to make use of Lake Nicaragua in the west of the country near the Pacific coast. However, in order to reach this from the Atlantic side, at least a 100 km route would have to be excavated.

Speaking at the signing of the new law, Wang Jing, chairman of privately-held HKND Group said, “The one hundred year old dream of the Nicaraguan people for a Nicaragua grand canal emerges in response to this demand. With the full support from the Government of Nicaragua and the great assistance from friends from all industries and all regions, we are committed to ensure the proper design, construction and operation of the Nicaragua Canal.”

The company said that by 2030, the value of goods being transported through the Nicaraguan and Panama canals could be US$ 1.4 trillion per year.

Alternative schemes

In other news, the Honduran government has signed a memorandum of understanding with China Harbour Engineering Company (CHEC) to build Pacific and Atlantic ports, linked by railway lines as a further inter-oceanic trade link. Sites at Amapala on the Pacific side and Castilla on the Atlantic have been identified, and they would be linked by up to 10 rail lines and an oil pipeline. The cost of the scheme is put at US$ 20 billion.

Guatemala has been looking into a similar scheme for some time, which would see two ports linked by a new 390 km high-speed rail line, with gas and oil pipelines running alongside it.

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