Nicaragua Canal Company Says $50 Billion Plan Has Public Backing

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August 27, 2015

Wang Jing, HKND Group chairman, answers a question at a news conference in Beijing, June 25, 2013. REUTERS/Jason Lee

By Bloomberg News

(Bloomberg) — The Chinese company seeking to build a $50 billion canal across Nicaragua said the project has broad public support and that it is willing to alter the planned route to avoid a small town.

HKND Group, led by billionaire Wang Jing, said surveys show more than 78 percent of Nicaraguans back construction of the 170-mile (275-kilometer) waterway that officials say will help lure vessels too large to fit through the Panama Canal. The company also said it plans to change the route of the waterway to avoid El Tule, a town on the southeastern side of Lake Nicaragua whose residents oppose the project.

The new route of the canal linking the Atlantic and Pacific Oceans will be at least 500 meters away from the center of El Tule, Hong Kong-based HKND said in an e-mailed statement. The change will cost $700 million, it added.

“Both in the current time and future, we can confirm that the township of El Tule will not be affected by the canal and the town will not disappear,” the Hong Kong-based company said.

The Nicaragua Canal project has drawn scrutiny because its projected cost is almost five times the gross domestic product of Nicaragua, Central America’s poorest country, and because HKND has not previously undertaken a project of this scale. Analysts including Sverre Svenning, a shipping expert at Oslo- based Fearnley Consultants AS, have also questioned whether there is sufficient demand for a second canal as Panama completes a $5.25 billion expansion of its waterway.

HKND’s release of a new route plan is pending an aerial geological survey and government approval of environmental impact studies, it said. A report on the company’s website dated Dec. 2014 still shows the canal going through El Tule. The company will also offer to relocate residents affected by the project, it said.

“After canal construction is completed, everybody will have a better life,” HKND said in the statement.

–With assistance from Michael McDonald in Guatemala City.

©2015 Bloomberg News

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