After reports earlier this month that billionaire Wang Jing's personal wealth had fallen to $1.1 billion from its high shelf of $10.2 billion in June, HKND, the company he founded to oversee the largest earthworks project in human history, has denied that equity market shifts will stand in the way of the 172-mile Nicaragua Grand Canal.
“Some media said chairman Wang Jing has lost 84 percent of his fortune, but that information was only based on the floating value of his shares in Xinwei in the stock market,” an HKND spokesperson told Infrastructure Investor in an email. “Wang Jing has more than 30 companies around the world and many of them have heavy fixed assets, such as a gold mine's reserve, which will not vary due to the fluctuation of the stock market.”
The spokesperson described Wang Jing as a man with a “long vision”, and said that while the “virtual number” assigned to equity values may shift up and down, “fixed assets can retain their net functional value, as for example one litre of fuel can be used to excavate one cubic metre of earth”.
“The total cost of the project will thus be lower as fuel consumption will be one of the major costs of the project,” the spokesperson said. “So the best time to start digging is now.”
The company believes that now is also an ideal window for Middle Eastern sovereign wealth funds to invest in the project, since they derive a large portion of their revenues from oil and could hedge its value when energy prices are low.
“Actually, in Europe and Asia there are pension funds and sovereign wealth funds that are interested in investing in the canal, as it would be a sound and stable investment. And Wang Jing's financial channels are worldwide,” the spokesperson said.
“This financial shock will not affect the canal project.”
Financing aside, the canal has recently suffered other setbacks, including a $700-million re-route to avoid interfering with an indigenous tribe and the tragic death of Canadian pilot Grant Atkinson, who was conducting an aerial survey as part of canal pre-construction for Australian firm CSA Global, on October 2.
The Piper PA31 Navajo airplane, located by Nicaraguan authorities, crashed near the city of Rivas and East of Tambo, according to an HKND statement. Aerial surveys resumed on October 9.
There is also concern among environmentalists that the canal comes with too many unknown ecological risks. According to an environmental and social impact assessment prepared by UK-based Environmental Resources Management (ERM), the project plan is “fraught with risks and uncertainties”, with potential problems including a question as to whether there is sufficient water to fill the massive canal once it is in place.
Despite concerns, ERM said the canal is likely to have a positive overall impact on the second-poorest Latin American nation, but only if it adheres to international standards, protects biological reserves and performs a full assessment of earthquake risks.