Thursday, January 22, 2015 The polemical and ambitious Nicaragua Canal project has yet another hurdle to overcome: the possibility that the waterway could generate an annual rate of return of just 2%, according to a recent evaluation of the project. The evaluation, carried out by Andy Lane, a partner at CTI Consultancy, took into account the assumption that global trade will grow 7% annually during the concession period, and that the inter-oceanic canal will take more than 60% of the expanded market share in 10 years, while the rest will be taken by the Panama Canal. Hong Kongs HKND Group has a 50-year concession to build and operate the canal, which is estimated to require some US$50bn. Initial construction works began on December 22, setting off local protests among environmental groups and other opponents concerned that the waterway could lead to expropriations and irreversible damage to Central Americas largest body of freshwater, lake Nicaragua. The legality and transparency of how the project is being developed and the benefits it will bring to the local population have also been questioned. Environmental impact studies have yet to be released to the public, although the government and HKND have maintained that the canal will cause minimal ecological damage. Yet scientists who spoke with National Geographic warned last year that the project threatens environmental disaster for Nicaragua. At risk are some of the most fragile, pristine and scientifically important regions of Central America, they were quoted as saying. Additionally, the government requested that the concessionaire carry out the EIS. It is unusual that any government that has the best interests of the nation and its citizens as its top priorities would not unilaterally undertake the necessary groundwork for such a massive project to ensure that the results of such studies would be thorough and transparent on all levels, said Jorge Huete-Pérez, director of the Centro de Biología Molecular at the Universidad Centroamericana in Managua, and Axel Meyer, a professor of zoology and evolutionary biology at the University of Konstanz, Germany. As for transparency, HKND has yet to reveal the names of investors backing the project, leading to rumors that the Chinese government may be financing the canal behind closed doors, according to International Business Times. The mounting skepticism led the US embassy to release a statement in early January urging that all processes and methodologies used to carry out the project be done in a way that is open and transparent. On top of all this, the project could potentially open a new chapter in the territorial conflict between Costa Rica and the government of President Daniel Ortega. Since 2010, the governments of Costa Rica and Nicaragua have been engaged in a dispute over the San Juan river and surrounding areas, which has gone to the International Court of Justice in The Hague. The San Juan river marks part of the border between the two countries and begins in lake Nicaragua, which the inter-oceanic canal is due to cross. The government of Nicaragua has assured that the canal will not cross the San Juan river. Yet because the environmental impact studies for the waterway have not been released, worry remains. After learning what the potential rate of return could be for HKND, combined with the other numerous problems, and that fact that finding private investors for financing has become quite a struggle due to the transparency issues, the situation begs the question, is the Nicaragua Canal worth it? BNamericas will host its 2nd LatAm & Caribbean Ports & Logistics Summit in Panama City from January 28-29. The Nicaragua Canal will be an important topic of discussion at the event. bnamericas/news/infrastructure/is-the-nicaragua-canal-worth-all-the-problems1
Posted on: Sat, 24 Jan 2015 06:29:07 +0000
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