Nicaragua ponders £26bn Panama Canal rival

Nicaraguan President Daniel Ortega. Picture: Getty

Proponents have said it could capture 4.5 per cent of world maritime freight traffic and double the per-capita gross domestic product of Nicaragua, one of the poorest countries in Latin America.

The canal has won the backing of president Daniel Ortega, whose Sandinista Front controls the national legislature with 63 out of 92 members.

Many outside observers and Ortega opponents point out that nearly every key detail of the project remains a mystery, from the sources of its funding to Nicaragua’s share of the profits to the route it would take between the Caribbean and the Pacific. Many have been asking whether Central America needs two canals.

On Monday night, the Nicaraguan congress’s infrastructure committee voted unanimously in favour of the project, with four opposition legislators on the 12-member body abstaining. Committee president Jenny Martinez said the bill was sent to the national assembly, which is expected to approve it tomorrow.

Feasibility studies have indicated six potential routes across Nicaragua, many connecting with Lake Nicaragua in the western half of the country, but the legislation approved on Monday does not specify which one would be dug.

“Since there is no defined path, we can’t measure the degree of seriousness of this project,” said opposition member Javier Vallejos. “This is like putting the cart before the horse.”

Mr Ortega also has not presented an economic feasibility study or an environmental impact study for the project. He said last month that it would start in Bluefields Bay on the Caribbean coast, go through the centre of the country and into Lake Nicaragua and stop at the southern Pacific coast.

The project would include digging about 130 miles of waterway, and proponents say it could create 40,000 jobs over the 11 years estimated for completion.

The government plans to grant the Chinese HK Nicaragua Canal Development Investment Company a concession for an initial 50 years, with the possibility of extending it another 50.

Jaime Incer, an environmentalist and adviser to the presidency, said authorities should be defining a specific route for the canal before approving a concession.

“There are at least six proposed routes and five of them include Lake Nicaragua, but there is nothing definite, that’s all part of the unknown,” he said.

Deputy foreign minister Manuel Coronel, who is chairman of the country’s Grand Canal Authority, said that he had no doubt the Chinese company would carry out the project.

“It’s a very serious company, very responsible and recognised,” Mr Coronel said. “To doubt [the company] is to oppose the project for political rather than realistic issues.”

The Hong Kong-registered company has said that it is willing to fully study the technological, economic, environmental and social impact of the project.

Under the deal, the Chinese company would pay Nicaragua $10m annually during the first decade of the canal’s operation, then pay it a share of canal revenues. After completing the concession, the Chinese company would have to turn over to Nicaragua all buildings and other canal infrastructure.