CG/LA Infrastructure's InfraBlog
By Jacopo Dettoni – Monday, June 10, 2013
The Chinese government is not directly involved in the development of an interoceanic canal in Nicaragua.
Hong Kong-based developer HK Nicaragua Canal Development Investment (HKND), which is about to be awarded a 50-year concession to develop the project, “is a 100% private company,” Ronald MacLean Abaroa, former mayor of Bolivia’s capital La Paz and a World Bank official, now a spokesperson for HKND told BNamericas.
“It will establish a joint venture with Nicaragua’s government where the latter will gradually increase its participation until it reaches full participation at the end of the concession,” MacLean said.
XI JINPING BOOST
The project, which has been talked about for nearly a century, received a sudden boost during China’s president Xi Jinping’s tour last week across Central America.
Although Xi did not hold official talks in Nicaragua, his visit in the region coincided with a sudden fast-tracking of the project bill. A first approval by congress, which would pave the way for the company to contract the consultants for the feasibility studies, is now about to come through.
Despite the fact that the Chinese government has repeatedly backed infrastructure developments throughout Latin America, offering financing and equipment from state firms, HKND initiative should remain independent from such dynamics and turn to private investors instead.
PRIVATE FINANCING AHEAD
HKND, which is a freshly established company with no proven track record in infrastructure developments, is owned by Chinese telecommunications company Xinwei. The involvement of telco in the project goes back to September last year, when Wang Jing, Xinwei’s chairman met with Nicaraguan President Daniel Ortega to inform him that China had set up a new company with the aim of developing the Nicaragua canal project.
“HKND is acting as the project promoter. It’s not going to build it, but to finance the studies and eventually raise capital in the financial markets and gather engineering and construction companies to make it happen,” MacLean said.
As soon as it receives congressional approval, HKND is ready to give a mandate to US and British consultancy companies to produce the necessary feasibility studies.
Regardless of the studies’ outcome, many uncertainties lie ahead, beginning with the fact that the country’s legal and physical infrastructure appears far from ready to handle a project whose costs could reach US$40bn.
“Adjustments will be needed,” MacLean said.