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Nicaragua Canal: answers and questions

Monday, July 14, 2014

The government of Nicaragua last week confirmed that a proposed canal would follow a route, based on the Punta Gorda River on the Caribbean side, and the Brito River, on the Pacific, passing through Lake Nicaragua in between.

Nicaragua, together with developer Wang Jing, also confirmed a $40 billion price for the project, which would be 275 kilometers (175 miles) long, at least 20 meters deep and at least 230 meters wide.

Hong Kong Nicaragua Development Company, controlled by Jing, would be responsible for building the canal, and then operating it for 100 years.

The share of revenue received by HKNDC in the first year of operations would be 100%, after which the company’s participation would drop 1% each year.

Construction is scheduled to start by the end of 2014, according to Jing.

The world’s biggest ships would be able to use the canal, on a route between Asia and the East coast of the United States.

These ships would not fit in the expanded Panama Canal, scheduled to open next year.

Going through the Suez Canal involves a route, which is 1700 kilometers (1100 miles) longer than the trans-Pacific alternative.

Meanwhile, questions persist.

HKNDC has no history of major logistics projects.

To pass through Lake Nicaragua, big boats would have to be lifted and dropped a distance of 33 meters (107 feet), eight meters more than in the case of Lake Gatun in Panama.

A pricetag of $40 billion could mean high fares for ships, which use the waterway.

To build the expanded canal, Panama spent less than $6 billion.