From SCDigest's On-Target e-Magazine
- Sept.29, 2015 -
Global Supply Chain News: As Crazy as it Sounds, Nicaragua Grand Canal Might Just Happen
Project Seems Preposterous, but Nicaragua Government, Chinese Company Say Effort will Kick-Off in Early 2016
SCDigest Editorial Staff
While most of the buzz these past few years has been about the logistics impact of an expanded Panama Canal that will be able handle larger ships when the project is finally finished sometime in 2016, a plan for a competing canal in Nicaragua, which at many levels seems an impossibility, may actually just happen.
The Nicaragua Interoceanic Grand Canal project would create a waterway some 276 kilometers long, including the use of Lake Nicaragua for a good portion of the passage. It would have even wider lanes than the expanded Panama Canal, allowing even larger megaships to use its service, though whether this makes any sense give US port dynamics is questionable.
SCDigest Says: |
 |
So is this a real project that will come up with the massive funding required to get it off the ground, or some half-baked notion that in the end will fall of it own weight? |
|
What Do You Say?
|
|
|
|
"And the project sponsors say the cost will for the effort will be about $50 billion - for times Nicaragua's annual GDP - but Panama Canal Authority CEO Jorge Quijano said last summer that he estimates the project will cost more like $67 billion-$70 billion.
Can that kind of money really be raised for a project that is financially questionable to say the least?
The Nicaraguan government of Daniel Ortego has given a 50-year commission to build and then manage the canal to a Chinese company called HKND Group. The canal if built would run from the Pacific coastal town of Brito to the mouth of the Punta Gorda River on Nicaragua's Atlantic side.
In addition to the canal itself, the project intends to also include two deep water ports, an airport, an artificial lake, two sets of locks, a tourist complex, a free-trade zone, roads and cement and steel factories.
The Reuters news service reported in December that HKND had "identified" $200 million in funding for the project, but there has been no other mention of where the money will come from, and of course that sum is but a small fraction of the tens of billions that will be needed for construction.
Might the Chinese government step in to provide a large chunk of the funding from its $3.5 trillion in foreign reserves? Chinese officials have denied it is behind the concession held by HKND, but it is one of the only sources that would seem perhaps interested and capable of bankrolling such a massive project, which would give it an important foothold in the Americas.
The project is estimated to require about 50,000 workers, half of which Ortego says will be Nicaraguans, but that means perhaps 25,000 could be shipped over from China.
Despite so few details relative to financing, operations and more, the Nicaraguan government continues to say construction will begin at the end of the Q1 2106. To that end, there was news last week that HKND announced Australia's CSA Global had kicked off the process of aerial surveying of the proposed route of the canal. It said with the final survey reports are scheduled for delivery by March 2016.
HKND said the survey will enable the assessment of geological risks including seismic and volcanic activities, tsunamis, landslides, slope stability, and liquefaction.
(Global Supply Chain Article Continued Below)
|
There has been strong opposition to the plan from environmental groups, saying the impact to the ecosystem could be devastating, and also from thousands of Nicaraguans who will be displaced from their current dwellings by the project.
