Setback for Nicaraguan Canal

The Nicaragua Canal project has been dealt another setback amid reports that construction will not begin until the first quarter of 2016 due to environmental mitigation measures.

Nicaragua’s National Assembly approved the $50 billion project in June 2013 and work on the canal was scheduled to begin in early 2014. That projection was eventually pushed back to early 2015 due to delays in identifying the waterway’s path.

The project is led by the Hong Kong Nicaragua Canal Development Group (HKND), a privately-held international infrastructure development firm headquartered in Hong Kong and with offices in Managua, the capital of Nicaragua. HKND Group has extensive experience in construction management and infrastructure development. HKND Group is led by its Chairman and Chief Executive Officer, Mr. Wang Jing, businessman and investor.

But from financing to environmental impact, the Nicaragua Canal project has faced scrutiny and skepticism. HKND still has yet to name investors and activists worry about the canal’s potential environmental impact.

And with the Panama Canal nearing completion, many wonder if there is enough demand for a second Central American shipping route. 

The planned 173-mile canal will have three sections. The West Canal will run from Brito at the Pacific Ocean up to the Rio Brito Valley and enters Lake Nicaragua, which is the center of the canal. The Eastern Canal will run along the Rio Tule valley through the Caribbean highland to the Rio Punta Gorda valley to the Caribbean Sea.

But in order for the Nicaragua Canal to connect to the Atlantic and Pacific oceans, it must intersect Lake Cocibolca, which is the main freshwater reservoir of Central America and the ninth-largest tropical freshwater lake of the Americas. The lake is also home to some of the region’s most fragile ecosystems.

Environmentalists’ concerns include accidental oil spills from the thousands of ships that will pass through the canal annually, the extinction of plants and fish due to invasive species brought by transoceanic ships, and the lasting damages that frequent dredging could have on aquatic life.

The canal’s detractors cite protected wetlands, migratory birds as well as indigenous people and small businesses located on the shores of Lake Nicaragua. Reports estimate that 120,000 Nicaraguans could be displaced due to the project.

But despite the setbacks and criticism, Nicaragua remains steadfast that constructing the canal is vital to the nation’s economy and ability to compete in South America. Despite Nicaragua’s GDP growing by about 5 percent annually over the past three years, nearly 43 percent of its citizens live below the poverty line.

The Nicaraguan government foresees a commercial waterway that will reshape international trade and lift the nation out of poverty. The project is expected to generate about 50,000 jobs during its construction phase, and another 200,000 jobs once it is operational. A free trade zone with commercial facilities as well as tourist hotels and an international airport at Rivas will be built as well.