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Environmental Permit Granted for Nicaragua Interoceanic Canal, Canal Development Moving Forward Firmly 2015-11-6 17:20

On November 5, 2015, the Government of Nicaragua announced its approval of the Environmental and Social Impact Assessment (ESIA) for the Nicaragua Interoceanic Grand Canal Project and issued the “Environmental Permit” for the project. This marks a major milestone in the history of the Nicaragua Grand Canal. The construction of the Canal will bring huge benefits to Nicaraguan people as well as meeting the need of international maritime industry for a more economic interoceanic route that can handle the largest ships now being built.

Likewise, this is a day of great significance for the HKND Group. Since HKND was granted the sole concession rights to construct and operate the Canal two years ago, the company’s international professional team has conducted technical and financial feasibility studies, produced a concept design for the project and conducted a comprehensive Environmental and Social Impact Assessment. The ESIA was submitted to the Government of Nicaragua in May this year. A rigorous review by the Government has confirmed the ESIA finding that, subject to HKND meeting a number of agreed mitigations and offset conditions, the Canal will produce a net positive environmental and social impact. This was a primary requirement of the ESIA Terms of Reference and a firm commitment of HKND. HKND takes great pride in this achievement.

The approval ceremony was held in Managua, the capital city of Nicaragua in the morning of November 5. Manuel Colonel Kautz, Chairman of the Nicaragua Canal and Development Project Commission announced that after a vote, the Canal Commission decided to grant HKND Group the Environmental Permit of the Nicaragua Grand Canal Project. Following that, Dr. Paul Oquist, the Executive Secretary of the Canal Commission and the Private Secretary for National Policies to Presidency of Nicaragua handed the environmental permit to the Chief Project Advisor of HKND Group, Bill Wild from Australia.

The Chief Project Advisor of HKND Group, Bill Wild (second from left) receiving the environmental permit delivered by the Executive Secretary of the Canal Commission and the Private Secretary for Public Policies of the Presidency, Dr. Paul Oquist (first from right).
Photograph: HKND Group

The Executive Secretary of the Canal Commission, Dr. Paul Oquist (first from right) announcing the Government’s resolution about the approval of the Environmental and Social Impact Assessment for the Canal Project, with the Advisor of PRONicaragua, Laureano Ortega (first from left) and the Chairman of the Canal Commission, Manuel Colonel Kautz (second from left).
Photograph: HKND Group

Telemaco Talavera, the spokesman of the Canal Commission emphasized that the ESIA, carried out by a world leading sustainability consultancy company with the efforts of scientists from all over the world is very scientific and rigorous. After in-depth analysis, the Canal Commission finally approved this report. He states, “Today is a historical day for Nicaragua and will go down in history. This is a project that will bring significant economic, social and environmental benefits. It will not only benefit this generation of Nicaragua, but will also benefit future generations, even the whole world.”

After receiving the Permit, Wild stated that “the ESIA process has been exhaustive and we spent longer completing it than we original envisaged, because we listened to the input we received about the design and made various changes that have improved it. Our commitment has always been to prepare an ESIA that met and exceeded all of the Terms of Reference and fully satisfied International Best Practice. We are satisfied that it does all of those things and that we have produced an ESIA that the people of Nicaragua can have total confidence in. We’re really pleased that the project can now move forward with full speed and with the sincere support from many sectors of the country.” 

Also present at these activities were: Laureano Ortega, Advisor of PRONicaragua; the Majority Leader of the National Assembly, Edwin Castro from the Sandinista National Liberation Front; Lumberto Campbell, Secretary of the Council for the Development of the Caribbean Coast; Juana Argeñal, the Minister of the Environment and Natural Resources of Nicaragua, among other Commission members. 

Pang Kwok Wai, Executive Vice President of HKND Group, stated that obtaining the environmental permit is a major milestone in the development of the project, and also a crucial threshold in terms of International Best Practice compliance at the design phase. “Currently the canal project is poised for a new phase of development.”

The ESIA represents the culmination of hard work carried out by hundreds of world-class scientists and environmentalists over a period of more than two years. Not only does it reflect the knowledge of local Nicaraguan scientists, but it also incorporates input from communities along the canal route. It demonstrates a combined international effort in accordance with the principles of International Best Practice.  

Work on the ESIA commenced in June 2013 when HKND engaged Environmental Resources Management (ERM), a British consultancy recognized as an international leader in environmental sustainability. ERM organized a team of world class experts to conduct extensive baseline field studies along a 10 km canal corridor and then to analyze the social and economic impact of the canal and determine the necessary mitigations and offsets to achieve a net positive impact, in accordance with accepted international best scientific practice. 

The report, comprising of 14 volumes with 11,000 pages and 2.7 million words, covers a wide range of scientific disciplines including geology, soil, groundwater, surface water, air, noise, vibration, marine / freshwater and terrestrial ecosystems, as well as social resources, community health, cultural heritage, local economy and employment. 

The ESIA report was received by the Government of Nicaragua at the end of May 2015. Over the 5 months since submission of the report, HKND, ERM and the Government have worked together to refine the canal proposals to minimize environmental and social impacts and to agree to a regime of mitigations and offsets, all strictly in accordance with International Best Practice. HKND has made significant design changes that have improved the project and is very satisfied with what has been achieved during this rigorous review process.

The baseline studies of the existing environment and ecosystems established clearly that the ecological environment in Nicaragua has been deteriorating in recent years. Native forests are being destroyed at an alarming speed as a result of slash-and-burn farming. Environmental experts agree that without meaningful action most of the existing forests in the southern half of the country will disappear within 10 to 15 years. 

Mapping of Forestation Coverage in Nicaragua shows that the ecological environment in Nicaragua has been deteriorating and forests are being destroyed at an alarming speed.
Source: Environmental and Social Impact Assessment (ESIA) for the Nicaragua Canal

The baseline studies also highlighted that water quality of Lake Nicaragua is deteriorating due to human activities and forest is being lost around the Lake. One of the mitigation measures agreed to will involve HKND undertaking major reforestation in the canal watershed to prevent soil erosion and reduce sediment. At the same time, the design of the canal and the locks will ensure that the canal will not result in any net use of water from Lake Nicaragua and that there will be no impact on the Lake from ingress of salt water into the Lake. HKND is committed to ensuring that the water quality of the Lake will be improved as a consequence of the construction of the canal. 

Currently rivers flowing into the Lake all carry large sediment loads 
Photograph: HKND Group (Sep. 20, 2015)

The route selected for the canal ensures that no more than 6,800 families (27,000 people) will be relocated due to the Canal Project. Among these, only 25 households are indigenous people living in the Rama-Kriol Territorial Government (GTRK) territory. HKND Group is committed to carrying out resettlement of the displaced people completely in compliance with International Best Practice, and has committed that all the relocated people will see improvements in their living standards, with better housing and social infrastructure than they have currently.

ERM has confirmed that with the agreed mitigations and offsets, the Canal Project will meet the standards of International Best Practice and will produce a net positive benefit. It found that “construction and operation of the Project in a manner consistent with international standards could offer the best future for Nicaragua” and “could provide environmental, social, and economic benefits to the people of Nicaragua”. 

Running in parallel with the Government’s review process, nine public consultation meetings were held by the Government and HKND. The consultation meetings attracted around 3,000 participants, including representatives from various communities along the Canal route, the top leadership of private enterprises, media, university students, labor unions, scientists, religious groups, environmental organizations, and diplomatic corps as well as representatives of United Nations agencies, European Union and International Monetary Fund.

Resident representatives of Nicaragua participating in public consultation
Photograph: HKND Group

The public consultation process was successful in conveying the facts about the project and it received a very favorable response. According to the latest public opinion poll completed on 14th October, 2015 by M&R Consultores, which is a corporate member of the ESCOMAR (European Society for Opinion and Marketing Research), 77.6% of the entire Nicaraguan population supported the Canal Project while 70% of Nicaraguans considered the Interoceanic Canal Project as serious. 

Experts have estimated that the project will directly or indirectly create up to 250,000 jobs during the construction phase. ERM confirmed in the ESIA report that the Canal will have positive social impacts on the country: “It is anticipated that construction and operation of a Canal de Nicaragua would significantly benefit the Nicaraguan economy as a result of increased economic production, corporate diversity, and markets; more jobs, increased personal income and spending, improved skills and experience of workers as well as improved transport infrastructure.”

 “Nicaragua only has to look as far as Panama”, a country of proximity and similar climate, natural habitat, and social context, “to see the benefits of an interoceanic canal, as Panama is the second wealthiest country in Latin America,” explained ERM in the ESIA report.

Background Information

On June 13, 2013, Nicaragua’s National Assembly ratified an exclusive commercial agreement between the Government of Nicaragua and HKND Group to develop the Nicaragua Canal and Development Project. The agreement grants HKND Group the sole rights for up to 100 years, to develop and manage the Nicaragua Canal and other potential sub-projects, including two ports, a free trade zone, an international airport, and other infrastructure development projects.

The Canal will accommodate container vessels up to 25,000 TEU, super tankers of 320,000 dwt and bulk carriers of 400,000 dwt. The Canal will satisfy the constantly increasing demands for the transport of containers, bulk cargo, and energy to be undertaken in an economic and energy efficient manner. It will make an outstanding contribution to global energy conservation. 

In June, 2014, McKinsey & Company completed the commercial feasibility study and business case. The technical feasibility study, led by China Railway Siyuan Survey and Design Group, was also accomplished in December of the same year. With the recent ESIA approval, the Nicaragua Canal Project has been proven feasible from economic, engineering and environmental perspectives. It now enters the design and construction phase. This also involves a new round of technical studies. 

CSA Global from Australia has been appointed to conduct a terrain level survey (LiDAR) and a geophysical survey of the canal route and Lake Nicaragua shoreline. HKND is also optimizing the canal design parameters and preparing for the reference design for the locks and canal earthworks. Other logistic and enabling works are being readied to enable the major construction works. 

Lock construction and bulk excavation will commence by the end of 2016, which will mark the official launch of the major works. It is expected that the Canal will be completed within 5 years after commencement of the major works.