June, 7th 2013:
Nicaragua granted a concession for 50 or 100 years -to Chinese company HK Nicaragua Canal Development Investment- to build a canal across Nicaragua, linking the Pacific Ocean and Atlantic Ocean.
Relative positions of Panama- and (planned) Nicaragua Canal.
Experts say it may take 11 years to build, cost US$ 40bn and require the dredging of about 200km of waterway.
It would accomodate 250.000 dwt vessels (compared to the 130.000 dwt for the upgraded Panama Canal, before 65.000 dwt).
The most southern route is out of the planning, since it borders Costa Rica. There are at least six proposed routes and five of them include Lake Nicaragua, but there is nothing definite.
Under this deal, the Chinese company would pay Nicaragua $10m annually during the first decade, followed by a share of canal revenues that would begin at 1% and rise higher over the duration of the concession.
Panama, which has a steady income flow from its canal, upgraded its canal during a seven-year, $5.2bn expansion to allow bigger ships to use its waterway. That project is finished in 2014, and will transit 130.000 dwt ships.
In the grand view of things: due to global warming, the North West passage is opening up, and may become a reliable and free route in another decade.
In that perspective, a Nicaragua Canal may become totally redundant.
The Nicaragua Canal is an idea that dates from 1825, as an alternative for the Panama Canal. More can be read here.
Since 2004, the Nicaraguan government proposes a canal, large enough to handle post-Panamax vessels of up to 250,000 tons, as compared to the approximately 65,000 tons for the Panama Canal (at that time, now upgraded to 130.000 dwt).
In 2008, Russian president Medvedev suggested that Russia would be interested in constructing the new Nicaraguan waterway.
In 2012, Royal Haskoning started a feasibility study.
HK Nicaragua Canal Development Investment Group has now -2013- pocketed the concession, and studies the technical and economic feasibility for the new Canal.
The whole project is many things:
a. Is it ambitious, up to unrealistic, to double up for the recently upgraded Panama Canal ? Is it a Daniel Ortega pipedream ?
b. For larger vessels (from 130.000 dwt to 250.000 dwt range), the Nicaragua Canal can be a win-win situation. Nicaragua takes definite steps towards realisation of this project.
c. Nicaragua is one of the poorest Latin American countries, all financing for the new waterway should come from foreign investors.
d. The project revives old U.S. fears of communist influence in their Latin America "backyard".
e. China brings its "African approach" of economic development, and infrastructure building to Nicaragua, rather than the guerila warfare of the past. There is a definite political twist to this project.
Marc Van de Velde, June 2013