Nicaragua to grant Chinese firm 50 year canal concession

First in a series on Nicaragua’s canal plans

With little information and no public debate, the Ortega administration is pushing forward on its plans to give an unknown Chinese company the exclusive rights to build the largest development project in Nicaragua’s history.

On Wednesday morning, President Daniel Ortega sent the National Assembly a proposed law that grants a 50-year concession—with an additional 50-year option—to a recently formed Chinese company to build and manage a megaproject combo that includes an inter-oceanic canal, an oil pipeline, a railroad, two deepwater ports, two airports, and a series of free-trade zones. The bill, marked “urgent,” has not been subject to any public scrutiny or debate, despite receiving the imprimatur of Nicaragua’s main business chambers.

The canal concession is expected to be passed into law next week by the Sandinista supermajority, officially ratifying a memorandum of understanding signed last September between President Ortega and the Hong Kong-based Chinese company HK Nicaragua Canal Development Investment Co. Ltd. The Chinese company reportedly controls a local subsidiary that is reassuringly named “The Developer of Big Infrastructure Company, S.A.”, or EDGI by its Spanish acronym.

Other than that, no details about the canal project have been made public. Nicaraguans have no idea where the funding will come from, what the proposed canal route is, how long it would take to build, what the environmental toll would be, or even how much the project will cost. At various times over the past few years, the Ortega administration has said the canal would cost $18 billion, $26 billion, $30 billion, $35 billion and, most recently, $40 billion—all before the first shovel of dirt is thrown.

The only thing that’s known about the proposed canal route is that it will not be along the San Juan River, according to recent statements by President Ortega. All that’s known about HK Nicaragua Canal Development Investment is that their CEO is a Chinese telecom tycoon who has no experience building canals or port infrastructure.

Opposition: can we slow things down a bit?

After more than a century of being mesmerized by the ignis fatuus of canal fantasy, Nicaragua’s government is suddenly moving a little too fast for some people’s comfort. Opposition congressman Carlos Langrand thinks the Sandinistas are trying to hustle the megaproject forward quickly and secretly because they want to handle the Chinese canal with the same opacity with which they have managed Venezuelan AIBA aid over the past six years.

“The scale of this project affects all Nicaraguans, the future of Lake Nicaragua, our environmental resources and the economy, but the Sandinistas have made it clear that the last thing they want is to be questioned or consulted on this project, which is totally lacking in transparency,” Langrand told The Nicaragua Dispatch. “We have many more questions than answers about this project.”

Langrand, who sits on the legislative commission on infrastructure, which will study the proposed bill before it goes to the congressional floor for vote next week, accuses the Sandinistas of “confiscating the dream of Nicaraguans” by handing the project over to the Chinese. (Officially, Nicaragua will remain the majority stakeholder with 51% ownership over the canal.)

At the very least, the congressman says, the Chinese government should state its official position on Nicaragua’s canal project. Otherwise, he says, it seems a bit odd that a newly formed Chinese company would develop a $40 billion project over 50 years in a country that doesn’t have diplomatic relations with China.

President Ortega with Wang Jing (photo/ Xinwei)

Indeed, the involvement of HK Nicaragua Canal Development Investment and its local subsidiary has raised many unanswered questions—the first of which are, Who are these guys? And what are their qualifications?

The Chinese company is run by telecom mogul and apparent canal enthusiast Wang Jing, whose cellphone company Xinwei recently won a full-service telecom operator license in a Nicaraguan bidding process that was tailor made for them. Xinwei is also linked to the company China Great Wall Industry, which in the process of building a $244 million satellite for the Sandinista government .

Ortega: canal project will bring progress

The Nicaraguan government claims the canal project will be game-changer for the country. The administration promises the canal will create thousands of jobs, lift the country out of poverty and secure Nicaragua’s “economic sovereignty” for years to come—even if that sovereignty is 49% controlled by foreign investors.

“After so many centuries of struggling to convert the canal into a reality, finally we are approaching the moment in history of wellbeing for the Nicaraguan people, of wellbeing for Nicaraguan families, and I am certain that Brazil will be interested in this project,” Ortega said Wednesday night, as he received the credentials from the ambassadors of Brazil, Canada, Switzerland, Canada, Kuwait and Saudi Arabia, and then pitched the canal project to each one of them in return.

To newly arrived Saudi Ambassador Hussein Mohammad Amdbdulfatah Alassiri, Ortega said, “I want you to transmit to King Abdulá, dear ambassador, the affection and greetings of the Nicaraguan people for your people and your king, and tell him also about the news that we sent the bill to the National Assembly today that will allow us to build the Great Canal of Nicaragua. I am sure that Saudi Arabia will be interested in the canal project.”

Ortega repeated his message to the other five ambassadors, telling each how he had sent the bill to congress earlier that day and how he was certain their governments would be interested in Nicaragua’s canal plans.

“The project has been advancing, and once the law is approved we will have until May of next year to prepare the feasibility study. And once that is ready, we will start the project,” Ortega said.

The president didn’t mention the timeframe for any environmental-impact studies, or address recent concerns raised by his top environmental advisor, Dr. Jaime Incer, who has warned that a water canal across Lake Cocibolca is not feasible and would spell ecological disaster for Nicaragua.

Instead, Ortega talked about how Gen. Augusto Sandino “dreamed” of a canal across Nicaragua. “We are now convinced that the moment has come for this dream to become a reality,” the president said.

Next: part II: The case of CINN, that other company that has exclusive rights to build a dry canal across Nicaragua.

 

 

  • mark druce

    How will the U.S. stop this canal attempt? In the 1800′s they put a volcano on a stamp and help fund the political opposition. In Panama, they invaded Panama, formerly Colombia ilegally and in President Teddy’s words,” I stole the land”.They illegally invaded Panama in the 1980′s after a U.S. Army secret opps unit created the sense that Anericans where in danger when the special army known as the the “Black_____” unit dressed up as cilivians and shot at Nicaraguans and Americans and also raped an American Women, the wife of a U.S. Navy Officer.

    Let’s see what militiary action the U.S. will now take. They have only invaded Nicaragua only 13 times and keep U.S. Maines in the country for 30 plus years.

    Can they still be a Teddy Rooselvetl today and steal more of Central American and Nicaragua’s wealth in the modern era.? Will they fund all the opposition candidates presidential campaingn like they did for Chamarro so she could forgive them of their $22 billion dollar fine for trying to destroy the land, bombing Nicaragua pretending to the National Guard, and trying to mine all Nicaraguan harbors during the contra affair?

    The answer will be yes!

  • mark druce

    U.S. will not allow this to happen. Past history from th 1800′s and 1900′s of military intervention to protect Private and Public U.S. frims with interest in the region and funding of politically pro U.S. opposition parties were used to stop previous canal attempts and payment of a $22 billion fine owed to the U.S. in attempts to stop pro-common citizen freedoms and economic benefits.

    Is this post better than my previous one. I guess history is not allowed to be told if it is against the U.S. interests in Nicaragua.

    • Elsa

      I just thought of any easier way the US could stop the canal from becoming a reality. By doing nothing.

      • https://www.facebook.com/carlotta.chamorro?ref=tn_tnmn Carlotta Chamorro

        It’s not the canal Ortega is after it’s the right to do whatever he pleases after approved by Nica congress….

    • https://www.facebook.com/carlotta.chamorro?ref=tn_tnmn Carlotta Chamorro

      Like your attitude, it’s the correct one!

    • Thomas

      I do not believe the US could be less interested in this project. There just is not that much money in canals anymore. Strategically canals are not as important as they used to be in the 19th century.

      They gave up the Panama Canal because they did not want it anymore not because the lease ran out.

      Profits from a Panama Canal with no competition are only 800 million a year. Certainly the new canal would take the lion’s share of that. If it turns out to be feasible to build a canal across Nicaragua that carries bigger ships than the Panama there could be an expansion in canal transits but we have been told to doubt that could happen. The increased traffic combined with increased competition probably would not increase total profits for the two canals.

      In 1914 when the canal opened it took 8 days off of the average trip from East Coast to West Coast for a steam ship which was the fastest way. Now it only takes 6 days to ship overland and is how 80% of cargo is moved. It is 21.6 days by ship through the Panama Canal and 20 days through the Suez Canal.

      In summary, the US has shown disinterest by giving up the canal instead of leasing it again. There is not a financial incentive with profits of lets say 500 million per year. Now only non time sensitive low profit products travel by oceans and these items can be wait for the ship to go around the horn, or get there faster through the Suez Canal. The US will not interfere with the project.

  • https://www.facebook.com/carlotta.chamorro?ref=tn_tnmn Carlotta Chamorro

    lol and more lol…
    Not only is a canal not necessary or needed but I should let you know this are actually good news as it is what’s called in Spanish “patadas de ahogado” from the Ortega mafia club. To bad in a way a dictator can do some good but end up running away from the bullets shot by scores of very unhappy people. The downfall has been accelerated by the death of Chavez and it get worst by the minute, just wait the bus owners angry at the new card controlling the cash, the timber people, the inundated home owners, the old people.
    The law for this canal is the rip-off as with it they (Ortega) will be able to do whatever he wants anywhere in Nica.
    Just wait and see…

  • Annika

    With Chinese people, no way!

  • American Pie

    Let’s make this clear, Special Interests and American Interests are two different things. Walker and Vanderbilt, etc into the 21st Century were Americans 2nd or 3rd, corporate/personal interests 1st. It’s money making potential like the Iran-Contra, WMD, Middle East and now African invasions all over the world are not necessarily and rarely in the best interest of America or Americans in general, but the vast tentacles from the 1% minority that reap the profits. Most Americans support NGO’s that build not destroy, the Mullinium group builds highways like the one from Leon to the beach communities of Las Penitas and Poneloya, they don’t blow them up and then get generous contracts to rebuild them i.e. Halliburton, etc.
    The “Canal” is good only if Nicaragua, with total transparency, wins, not the government by decree, but the people. If there is so much hidden and won’t be disclosed then that is what normally means a corrupt one way deal is in the works,which it obviously is. Even if Nicaragua owns 51%, but of what means and who gets first count when you divvy up the “profits” and dole out the expenses?
    Even thinking of giving a project like this to an unknown and unproven company as the article points out is out of the realm of sanity: And what are their qualifications?

    “The Chinese company is run by telecom mogul and apparent canal enthusiast Wang Jing, whose cellphone company Xinwei recently won a full-service telecom operator license in a Nicaraguan bidding process that was tailor made for them. Xinwei is also linked to the company China Great Wall Industry, which in the process of building a $244 million satellite for the Sandinista government”. Who needs Venezuela now when you have the power of the pen to tap into a Chinese Corporate Vault?
    How do you like “apparent” canal enthusiast? This is more insane than thinking the magician actually cut the gal in half with a saw blade. It is so transparent that it isn’t transparent that it’s like you can see the Sandinista’s and capitalistic/corporate Chinese behind the scenes holding up the mirrors to trick you.

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  • mike

    This gravy train won’t have to leave the station to begin paying off.

  • CROM

    I don’t trust the Chinos nor Ortega, I really dislike these Chinese they’re not to be trusted, but what can you expect from somebody that have enslaved their own people.

  • Jaen

    The tangible benefits of this project seem far superior to any negative consequence some negative people can come up with (e.g. impact on the environment). Let the local people decide what is best for them. It is their land, their right. Nicaraguans are better off with the Canal, than without it. The stakeholders (investors and future users) are also better off with the Canal, than without it. Let it happen!

    This has nothing to do with (against) the USA. The bad relationship between Nicaragua and the USA is a matter of the past. Move on! Actually, most Nicaraguans like the USA. The citizens in the streets like the USA movies, the cars made there, the universities, most TV programs, etc. Don’t you see that most institutions in the USA are being copied/adapted in Nicaragua and throughout Latin America?

    The USA has for long preached that Fair Competition is good (and we Nicaraguans believe it is indeed good). Then, isn’t it high time to break the years-long Monopoly of the Panama Canal?

    • car

      quite obviously you have no idea what you are talking about. the canal will, without any question whatsoever, destroy lake nicaragua. the US, with it’s essentially limitless money, has been fighting the deleterious effects of invasive species brought into inland waterways from ocean traffic on the great lakes—hundreds of miles inland. nicaraguans have NO money to fight this type of problem, and will end up saying, “asi es” and the lake will be worthless. not just to tourists, but to the thousands of locals that make their living off of it.

      in typical nica fashion, the canal will be mismanaged by uneducated, ignorant lackeys and eventually, there will be an environmental disaster of epic proportions as a result of equipment failure. nicas cannot even manage local utilities. water, sewerage, electricity–all in a shambles after decades of neglect, theft, mismanagement.

      traffic will eventually lose interest in this nica dream as transiting it will be a nightmare, whereas in panama, the locals operate with incredible efficiency and speed, the likes of which nicas can only dream about.

  • Don H

    This is a bad idea Nicaraguans! I live in Vancouver Canada and we have sold out our city and resources to the Chinese and nothing good has come from it. Just a few rich politicians and real estate developers.

  • car

    the miami herald had a slightly more interesting take on this grand dream of whoretega. that article quoted some pretty experienced folks who opined without much if any reservation, that the project would be a financial failure, sorta like i did several weeks back.

    but, this is a done deal. it is going to pass, several hundred million dollars will disappear, and nothing will get done. the chinese will pull out after they realize that the strange sensation they’re feeling in the backsides is the good ol sandinista butt#&^%*** they’re sure to get.

    keep wearing those beautiful pastel t-shirts and cheering the good guys on to mas victorias!!!

    • Thomas

      You are right. I did not want to say it, but I think this canal makes all of its profit for Nicaraguans before a shovel touches beautiful lake Nicaragua. I cannot think of any reason for Nicaraguans to not take the bribes and work that the Chinese will have to pay for before they do anything and when the jig is up the Chinese will realize the money is gone and they own nothing. Then Nicaragua will sell the concession to the next developer.

  • http://no Damian

    It might be a dry canal rather than a wet/aquatic canal. From the limited information that is being published:
    “cuyo contenido ofrece precisiones para la megaproyecto, que además incluirá dos puertos, oleoducto, zonas francas, pistas aéreas y un ferrocarril para enlazar las regiones del Atlántico y el Pacífico”

    I hope it is a dry canal.

    • Mike

      It’s both projects

      • Kelvin

        You best check with Car, the “Snopes” of The Nicaragua Dispatch…he will have that info checked and printed in no time.

        “After the Panama Canal gets its $5.25 billion widening job, the Nicaraguan Canal will be built even wider and deeper in order to accommodate the largest ships that wish to pass through”…

  • Nicagringo

    Ortega has done nothing but improve infrastructure and foreign investment in Nicaragua since he came into office. Remember rolling blackouts and potholed roads before he came into office? Have you looked at foreign investment and job creation numbers? I’ll take a benevolent dictator over the mess we have in the US any day.

    No one has any interest in an ecological disaster…where is serious data to support this assertion?

    I’m glad Ortega isn’t paralyzed by the whining opposition and is just getting stuff done. Wish he would come to the US and help straighten out our problems.

    • Car

      Whoretega had nothing to do with the cessation of rolling blackouts. Those were mostly political anyway. The remainder if the improvement was from the belated investment by the now defunct union fenosa in its own infrastructure.

      Foreign investment took a major hit when he was elected. Real estate investment essentially stopped–thankfully.

      Job creation numbers? You must be reading some good fiction. Unemployment and underemployment are basically the same. Salaries are stagnant and have not kept up with the 30% increase in the cost of basic goods.

      Meanwhile the Sandinistas drive bmws mercs land rovers Porsches and audis. Yeah they’re doing a great job!

  • John

    china is an aggressive, strategic opponnent of the u.s. america needs to stop sugar coating this reality.

  • car

    i guess quoting other sources is not allowed…

    anyway, just go to the miami herald website and read the article there. the dollars and lack of “cents” of this project is explained quite well. also, the environmental issue is addressed briefly.

    and for those of you that think we that are concerned with the effects of this project on the environment, and claim that we have no proof, all i can say is that you clearly place money in front of all else. nicaragua is a disgustingly polluted place as it is. the people have no sense of cleanliness outside of their homes, which are generally spotless. littering and polluting are the norm. the government itself contributes to this. there will be no sufficient controls to prevent the introduction of invasive and destructive species into lake nicaragua. it will become polluted and the indigenous species will be wiped out. say good bye to guapote!

    the project itself will not lead to the jobs they are claiming, as the chinese company will import its own slave labor.

    if it ever gets completed, which i doubt, it will be an eyesore, a detractor, and a money loser except to a select few, as it will be run at a loss, being funded by the taxpayers (the few that exist).

    • Tim Rogers

      Quoting other sources is allowed. Cutting and pasting entire news stories that belong to other newspapers is not. That article that you pasted here in the comments thread belongs to Miami Herald–if you want to comment on that article, you can do so on their website.

      • car

        sorry, i figured that since i gave them credit for their work it was ok. my bad.

  • car

    some points to ponder…

    AP: “Deputy Foreign Minister Manuel Coronel, who is chairman of the Grand Canal Authority, said Monday that awarding the concession to the Chinese company guarantees the project will be carried out.

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

    yes a very serious TELECOM company with ZERO canal experience. why would anyone doubt them or their ability???

    ” Jaime Incer, an environmentalist and adviser to the presidency on environmental issues, agreed with Vallejos and said authorities need to define a specific route 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,” Incer said.”

    so even whoretega’s own adviser has no clue????

  • http://no Damian

    Ping……Pong………

  • Robinica

    The main problem is of course environmental, but also it become a social problem, it already is a social problem, since investment interests are shifting. It is the most ridiculous idea in the field of engineering but knowing where the decisions are coming from for the development of this project it gives me no surprise. If they start they will find problems piling off, then it will become an exceedingly expensive and whatever “company” is involved will cut and run. What will happen when the world find out that suing chinese companies is as effective as shooting a hippopotamus with an air rifle, then as usual the results will be the same ton of garbage coming out profusely from the Nicaraguans.

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  • http://no Damian

    ‘RoyalHaskoningDHV’ engineering consulting and consulting group ‘Ecorys’ from the Netherlands have finished their feasibility report. It concluded that the Nicaragua Canal is economically and technically possible. There are still environmental questions that need to be answered but so far so good.

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  • Carlos Briones

    In reading a piece on the Wall Street Journal today (June 14, 2013) I noted there is no reference to the $10 million annually Mr. Wang will be paying Ortega for this canal.

    “According to the contract, Mr. Wang will pay Nicaragua up to $10 million a year as a fee for the 50-year concession, which is renewable. On the 11th year of operation, Nicaragua will own 10% of the company, a figure that would rise to 100% in a century. Mr. Wang will pay for the feasibility studies and is responsible for arranging funding for the project.” ( See, http://online.wsj.com/article/SB10001424127887323734304578543432234604100.html?mod=ITP_pageone_2).

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