Financial Times, Nov. 27 2015 Nicaragua’s $50bn canal plan delayed Jude Webber in Mexico City and Christian Shepherd in Beijing
Doubts over a planned $50bn waterway across Nicaragua that aims to compete with the Panama Canal are set to intensify after the Chinese-led project was postponed by up to a year. Since its inception the project to build a second canal linking the Pacific and Atlantic oceans has met fierce criticism over its potential ecological impact as well as scepticism over its viability. The doubts have mounted in recent months amid concerns that Hong Kong Nicaragua Development Group, the company building the canal, was in financial trouble after China’s stock market rout led to a plunge in owner Wang Jing’s wealth. Mr Wang has yet to spell out who else is investing in the project, which he has hailed as part of the Beijing-driven “21st-century maritime silk road” initiative. However, Telémaco Talavera, spokesman for Nicaragua’s canal commission, told the Financial Times on Thursday that financing was secure. He and HKND blamed the project’s delay on a rigorous environmental approval process. “The canal has not been delayed because of a lack of funds but because of the technical time [for the environmental study],” he said. “We would be worried if we thought the delay was for financing reasons . . . but the resources are available.” Neither Mr Talavera nor HKND’s chief project adviser, Bill Wild, would give details of how much had been raised, or from whom. Mr Talavera said the canal commission and HKND had been “very, very busy” courting Asian, North American, European and Latin American private investors and now had the funding lined up. HKND indicated earlier this year that it was in talks with potential international investors but would not give details pending due diligence. Mr Wang has previously stated that he invested $200m of his own money in the project. He and HKND officials suggested in 2014 that an initial public offering would follow the location of suitable partners for the project. The businessman lost 85 per cent of his wealth in mid-September, according to Bloomberg’s Billionaires Index, when the stock market rout pushed Beijing Xinwei Telecom Enterprises Group, in which he owns a 35 per cent stake, to a 57 per cent drop this year. Xinwei has since rebounded to a level 37 per cent below its January 1 value. “The project’s financing does not depend on the state of the stock market in China or on Wang Jing’s financial position,” Mr Wild said in an emailed response to questions. The delay to the environmental and social impact assessment (ESIA) was because the company was incorporating feedback and the project was now “completely in accordance with best international practice”, he added. “Now we have the ESIA approved, such organisations as World Bank and IFC [International Finance Corporation] are now in a position to support the project,” Mr Wild said. “Without an ESIA that conforms to their standards they would not do so. In that regard we have moved ahead.” Mr Talavera said no financing had yet been committed from multilateral agencies. The canal has faced criticism for its potential impact on fragile ecosystems, its depletion of fresh water supply and for the fact that an estimated 28,000 people will have to be relocated from along its route. The Nicaraguan government — which has hailed the project as the realisation of a century-old dream — issued an environmental permit on November 5 after a two-year assessment. Main construction of the canal, including dredging work and lock-building, is now due to start in the second half of 2016, putting it as much as a year behind the original schedule. Construction of a port at Brito on the Pacific coast was now expected to start early next year, Mr Talavera added. He said the final route would be announced “in the coming weeks”, allowing a timetable for relocating and giving “fair compensation” to those affected. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
