Nicaragua on Monday announced the start of work on a US$50 billion shipping canal, an infrastructure project backed by China that aims to rival Panama’s waterway and revitalize the economy of the second-poorest country in the Americas.
The groundbreaking was largely symbolic, since the work that began is for a road designed to accommodate the machinery needed to build a port for the canal on the Central American country’s Pacific coast.
The Nicaraguan government says the proposed 278km canal, due to be operational by about 2020, would raise annual economic growth to more than 10 percent.
The canal could also give China a major foothold in Central America, a region long dominated by the US, which completed the Panama Canal a century ago.
Construction of the new waterway is to be run by Hong Kong-based HK Nicaragua Canal Development Investment Co, which is controlled by Wang Jing (王靖), a little-known Chinese telecom mogul well-connected to China’s political elite.
Flanked by Nicaraguan President Daniel Ortega, a former Marxist guerrilla leader, Wang said the tender for the preliminary design of the project would be offered by the end of the first quarter of next year, by which time an environmental impact study would also be finished.
By the end of the third quarter, excavation work is to begin, with a tender for the design of the locks due by the end of the year, he said.
More than a year since it was first announced, the project faces widespread skepticism, with questions still open about who will provide financing, how seriously it will affect Lake Nicaragua and how much land will be expropriated for it.
“Given how much this will cost, it’s hard to take a stance on whether it will happen or not until there is a signal whether that money is available or not,” said Greg Miller of consultancy firm IHS Maritime.
In the Americas, only Haiti is poorer than Nicaragua.
Earlier, Nicaraguan presidential spokesman Paul Oquist said that feasibility studies, including a McKinsey report experts say will define interest in financing the canal, had been delayed by changes to the route and would be ready by April.
Oquist said the “core financing” would come from public and private Chinese money, without giving a percentage.
However, he added that Managua is also seeking international funding and rejected the idea that China will bankroll the project worth about four times Nicaragua’s GDP.
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