$50bn Nicaragua Canal clears final permitting hurdle

The project has achieved shovel-ready status two years after HKND Group was granted exclusive development rights.

The Nicaragua Grand Canal effort has cleared a major milestone with the approval of the Environmental and Social Impact Statement (ESIA) by the Government of Nicaragua. 

The review was conducted by the Nicaragua Canal and Development Project Commission, led by chairman Manuel Colonel Katz. After approval was confirmed, an environmental permit was issued to HKND Group.

“This is a project that will bring significant economic, social and environmental benefits,” said Telemaco Talavera, spokesman for the Nicaragua Canal and Development Project Commission. “Today is an historical day for Nicaragua.”

Bill Wild, chief project advisor for HKND, said that with permitting concerns in the rearview the $50 billion project could now move forward “with full speed”.

“The ESIA process has been exhaustive and we spent longer completing it than we originally envisaged, because we listened to the input we received about the design and made various changes that have improved it.”

Over the five months since it was first submitted several alterations to the original plan were made, including one $700,000 course correction and agreement to reforest areas near the canal watershed to prevent erosion.

According to the 14-volume, 11,000-page ESIA prepared by British consultancy Environmental Resources Management (ERM), Lake Nicaragua – which the canal will pass through – has seen a deterioration in water quality due to human activities and the forest around the lake is being lost. To mitigate these issues, HKND has agreed to undertake a major reforestation in areas surrounding the lake and the canal route, and said it will work to ensure no impact to lake salinity due to lock installation on the western isthmus. 

With these measures in place, ERM said, the canal will meet international best practices standards, producing a net positive benefit which “could offer the best possible future for Nicaragua”.

The route, the company said in a statement, will impact as many as 6,800 households, or roughly 27,000 people. Twenty-five of those households were said to belong to indigenous people living in the Rama-Kriol Territorial Government area. 

“HKND Group is committed to carrying out resettlement of the displaced people completely in compliance with international best practice, and has committed that the relocated people will see improvements in their living standards, with better housing and social infrastructure than they currently have,” the statement said.

Despite numerous protests against canal development across the country throughout the summer, HKND said that a public opinion poll conducted by M&R Consultores on October 14 found 77.6 percent of the Nicaraguan population supports the project.

The canal design calls for accommodation of ships capable of carrying 25,000 twenty-foot equivalent unit (TEU) containers. For comparison, the expanded locks of the Panama Canal are designed to accommodate 13,000-TEU ships. Supertankers up to 320,000 dead-weight tonnage (dwt) and bulk carriers up to 400,000 dwt would also be able to make their way through the Nicaraguan canal. 

Along with the exclusive right to develop the Nicaragua Canal for 100 years, granted by the Nicaraguan National Assembly in 2013, HKND is also expected to develop and manage other potential “sub-projects” which include two ports, a free trade zone, an international airport, and other unspecified infrastructure projects.