Chinese firm gets concession for Nicaragua canal

MANAGUA – Nicaraguan President Daniel Ortega has said a concession to build an inter-oceanic canal across his Central American nation was awarded to an unnamed Chinese consortium based in Hong Kong.

A lawmaker said the waterway would cost $40 billion to build.

Ortega made the announcement last Wednesday at ceremonies welcoming new ambassadors from Brazil, Canada, Switzerland, Saudi Arabia and Kuwait. He encouraged these countries to invest in the canal.

On Friday, members of the political opposition characterized the project as potentially “fraudulent.”

The ambitious canal idea, Ortega said, includes a conventional canal, a “dry canal” – a rail line – as well as two airports and an oil pipeline to move petroleum from the Caribbean to the Pacific.

Work on the canal should begin in May 2014 after a feasibility study is completed, the president said.

Ortega sent to the National Assembly a bill that would set the legal framework for building the canal.

Opposition lawmaker Eliseo Nunez told reporters the bill “would give a 100-year concession, like that given to the United States (to build and operate the Panama Canal), and that the Chinese were going to build the canal, which would cost $40 billion.”

Oddly, Nicaragua and China do not have formal diplomatic relations because of Managua’s ties with Taiwan. But Nicaragua and China maintain economic relations.

In September 2012, Ortega said that the China-based HK-Nicaragua company would conduct the feasibility study to build the canal. In the Wednesday announcement he mentioned no names, but did say the concession was given to a consortium based in Hong Kong and formed by Chinese companies.

The Sandinista Renovation Movement, an opposition group, said, Ortega “pretends to issue a concession, privileges and tax exemptions to an unknown company.” They demanded Otega issue environmental study and financial reports for the project.

“If this information isn’t provided, we are free to assume that this is a fraudulent plan, an operation with a paper company to issue a concession that will later be sold to other parties. It’s a corrupt operation that is an opportunity for fraudulent investors to make a lot of money,” the movement said in a statement.

Plans to build a canal across Nicaragua date back many years, but were overtaken in 1914 when the 82-kilometer (51-mile) Panama Canal was completed.

In recent years, however, Nicaraguan governments have revived the concept as a way to promote development in the poorest country in the Americas after Haiti.

When the National Assembly authorized building the canal in mid-2012, it said the project would be operated as a joint public/private partnership, with the state maintaining a 51 percent stake.