Wry & Dry

Canal wars: Panama v. Nicaragua

W&D has always been fascinated by infrastructure.  Not the emotional 'Nation Building' stuff the opening/ launching of which swells the pride but bruises the pockets of we-the-taxpayer.  But the stuff that enhances productivity.

Hence, W&D is delighted that the newly widened and upgraded Panama Canal is to open on Sunday, 26th June.   It's still about 77 kilometres long, but it has now been widened and deepened.  

The nine-year, $5.4 billion expansion more than doubles the canal’s cargo capacity. A third lane has been added to the canal that accommodates ships large enough to carry up to 14,000 containers, compared with around 5,000 currently. 

But this is Central America, after all.  So the winning bid came in at almost $1 billion lower than the next best.  One of the winning consortium's key person is related to...  Well, you know how it goes.

So, the whole project is two years late, has had massive cost over-runs and may not even work to specifications.  And because cheap concrete aggregate was used to build the massive new locks, they leak.  

But wait.  There's more.  W&D is a big believer in competition.  And further up (i.e. north) the narrow isthmus of Central America that separates the Atlantic from the Pacific Ocean there is a possible new ocean-connecting canal.

The Nicaragua Canal!

CanalThe proposed Nicaragua Canal (green line) compared to the existing Panama Canal (orange)

W&D is serious.

That epitome of corruption-free government, President Daniel Ortega, and Nicaragua's National Assembly in June 2013 approved a bill to grant a 50-year concession to finance and manage the project to the private Hong Kong Nicaragua Canal Development Investment Company (HKND Group) headed by Wang Jing, a Chinese billionaire.

Well, he was a billionaire.  His personal wealth declined by some 85% as a result of the 2015–16 Chinese stock-market crash.   And so media reports have suggested the project would now be delayed or even possibly canceled. 

But W&D likes the idea.  The canal would allow for much bigger ships than through the widened Panama Canal and it would be closer to the major shipping ports of both the US and Asia.

The small problem is money.  The canal would be some 260 kilometres in length, of which 106 kilometres is across Lake Nicaragua.  But some 150 kilometres of canal would have to be dug/ cut.  As well as two massive locking systems built at either end.

The cost is expected to be in the region of $50 billion.  Mr Wang Jing doesn't have the money.  And the Nicaraguan government (the second poorest in Central and Latin America, behind the socialist paradise that is Venezuela) certainly doesn't have a dime.

But as a Nation Building Project it would be a winner.