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Nicaragua greenlights $50b canal project to Chinese company

By Lyu Chang (China Daily) Updated: 2015-11-07 09:49

HKND Group to start major work on $50b inter-oceanic project late next year

Nicaragua has given the green light to HKND Group, a privately held Chinese company, to start work on an ambitious $50 billion inter-ocean canal project.

In 2013, the Nicaraguan government awarded the canal project to HKND. The scope of work includes construction and administration of the canal, as well as six associated works for an estimated cost of $50 billion over 50 years. Major work on the 276-kilometer canal, which will connect the Pacific Ocean to the Atlantic Ocean through the Central American country, is expected to start next year.

"The clearance from the Nicaraguan Canal Commission is a milestone for the development of the project, and we are pleased that it can now move forward at full speed," said Bill Wild, chief project adviser of HKND Group.

The Hong Kong-based company said it will first start the preliminary work for Brito Portat at the end of this year, followed by lock construction and bulk excavation by the end of 2016, which will mark the beginning of the project's major works.

The canal will be completed within five years after the commencement of the major work. The route of the canal extends from the southeastern coastal city of Brito to the mouth of Punta Gorda River in the Caribbean, passing through more than 105 kilometers of Lake Nicaragua.

The environmental and social impact assessment for the project, carried out by Environmental Resources Management, a United Kingdom-based consultancy, showed that the positive benefits of the project far exceed the negatives.

It took two years for the company to complete the study, covering a wide range of factors including geology, soil, water, ecosystems and cultural heritages.

"Nicaragua only has to look as far as Panama to see the benefits of an inter-oceanic canal", as Panama, a country with proximity and similar climate, natural habitat and social complex, is the second-wealthiest country in Latin America, the report said.

Pang Kwok-wai, executive vice-president of HKND, said the total cost of the project is likely to be lower than the expected $50 billion as crude oil prices have fallen to about $40 a barrel this year.

"When we were doing the assessment for the project cost last year, oil prices were at $70 to $80. Due to the lower crude costs, our project costs will also come down," he said.

"If you look at how much fuel we use, you will know that this is the best time for such an investment."

He said the project will generate about 5 billion cubic meters of earthwork including relocation of 6,800 families and 25 indigenous households.

The earthwork of China's major South-to-North Water Diversion Project, which was designed to channel water from the water-rich south of the country, mainly the Yangtze River, to arid northern parts, was a third of the canal project.

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