Nicaragua gives Chinese investors 50-year-contract to build canal

Lack of studies and guarantees raise suspicions among Ortega’s critics

The Nicaraguan government has granted a $40-billion contract to a Hong Kong firm to construct and manage an ambitious project to construct a canal that will slice across the Central American nation.

President Daniel Ortega has sent a bill to the Sandinista-controlled National Assembly that authorizes HK Nicaragua Canal Development Investment Co. to build the canal connecting the Pacific with the Caribbean. It will manage it for 50 years with the option to renew the contract for another 50 years.

"I feel that after so many centuries of fighting for this canal to become a reality, at last we approach this historic moment for the welfare of the Nicaraguan people," said a smiling Ortega last Wednesday night, during an official ceremony in which he received the credentials of the ambassadors of Saudi Arabia, Kuwait, Canada, Brazil and Switzerland.

During the event, Ortega did not mince his words and made board hints toward the Saudi and Brazilian ambassadors to bring their countries on board for the Great Interoceanic Canal project.

"I'm sure Brazil is going to be interested in the project," said the former Sandinista guerrilla to Brazilian Ambassador Luis Felipe Mendonza, who promised to deliver details of the project to President Dilma Rousseff.

The bill Ortega sent Wednesday to the National Assembly could be approved this Tuesday. According to the 44-page document, the canal will have two deep-water ports, one on the Caribbean coast and the other on the Pacific side; an oil pipeline connecting the two coasts; a "dry channel" formed by railways to transport goods from coast to coast; and two free-trade zones on both coasts.

To give legal weight to this megaproject, the government and Chinese investors have established three corporations: the main one is the HK Nicaragua Canal Development Investment Co., based in Hong Kong. But to operate in Nicaragua, another firm, Major Infrastructure Enterprise Developer SA (EDGISA), based in Managua and HKND Group Holding Limited, registered in Grand Cayman on November 7, 2012, were also organized. The latter has been created to develop projects parallel to the Great Canal.

The director of HK Nicaragua and EDGISA is Wang Jing, a Chinese businessman who runs the legal consortium, Wang Jing & Co., which has nine offices in China, including the cities of Guangzhou, Shanghai, Beijing, but not in Hong Kong.

The Ortega government has not presented any economic feasibility or environmental impact studies for the country which has two large water resources: the Great Lake of Nicaragua (over 8,000 square miles) and Lake Managua (just over 1,000 square miles).

The government has also not even announced what route will be developed although Ortega said last month that it would start in the Bay of Bluefields, on the Caribbean coast, crossing the Midwest to the Great Lake and leading to the Nicaragua's southern Pacific coast.

Nevertheless, the plan has raised suspicions among sectors critical of the Sandinista leader, who consider the canal project a façade to hide shady dealings. The main concern is the high cost of the project, which is almost 25 times the annual budget of Nicaragua, a country where 47 percent of the population live under the poverty line. Nicaragua also lacks sufficient resources to even drain water from the streets of several flooded neighborhoods of the capital, Managua.