Nicaragua Canal Project Fraught with Risks

Nicaragua's planned $50 billion canal project is "fraught with risks and uncertainties," and could cause more harm than good unless the government and its Chinese builder fund a host of mitigation measures, an environmental consultancy said.

 

The 172-mile (278 km), Chinese-backed project to rival the Panama Canal is one of the world's most ambitious infrastructure schemes, but it has been met with widespread incredulity, especially over its source of funding and planned 2020 completion deadline.

 

The social and environmental impact study by the consultancy, Environmental Resources Management Ltd, echoed many of the same concerns. It urged Nicaragua's government to verify project builder and operator, Hong Kong-based HK Nicaragua Canal Development Investment Co Ltd (HKND Group), complied with international standards before construction begins.

 

The study was commissioned by HKND. The company is controlled by Chinese telecom mogul Wang Jing, who has dodged questions about his financial backers and much of his business background.

 

If completed, the canal could give China a major foothold in Central America, a region long dominated by the United States, which completed the Panama Canal a century ago.

 

Environmental Resources Management said the canal was likely to have an overall positive impact on Nicaragua, the second-poorest country in Latin America, but only if it follows international standards, such as protecting biological reserves and assessing possible hazards from earthquakes.

 

The report was particularly critical of the project's planned five-year timeline, saying it would create "logistical, procurement and workforce challenges."

 

HKND had planned to start excavation this month but has pushed the start date to early next year, amid planned further studies.

 

The consultancy also said HKND had not followed transparency standards, including sharing information with about 30,000 people who might have to move from their homes or lose their assets or livelihood.

 

The study was delivered in June and released to the public on Tuesday.

 

The report said the canal could help Nicaragua protect nature reserves near the planned route, as happened in the area around the Panama Canal.

 

But the consultancy warned that a worst-case scenario, where the project is begun but not completed, could harm while providing none of the proposed economic benefits.

 

Without secure financing, a strong business case for the canal and measures to limit the project's environmental impact, "Nicaragua may be worse off than doing nothing," the report said.