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Xinhua: Environmental Permit Granted for Nicaragua Interoceanic Canal, Canal Development Moving Forward Firmly 2015-11-10 09:18

By: Zhang Yong

In the evening of November 5, 2015, Beijing Time (i.e. morning of November 5, Nicaragua Time), HKND Group, the exclusive concessionaire of Nicaragua Interoceanic Canal, was granted the “Environmental Permit” by the Government of Nicaragua, signaling that the Canal Project has been proven feasible from economic, engineering and environmental perspectives and is now poised for a new phase of development.

The Chief Project Advisor of HKND Group, Bill Wild (first from left) receiving the Environmental Permit.

Canal Project to move forward with full speed

Reporters in Beijing witnessed, via internet, the historical moment of Canal development when Manuel Coronel Kautz, Chairman of the Nicaragua Canal and Development Project Commission announced in the approval ceremony convened in Managua that after a round of voting, the Canal Commission decided to grant HKND Group the Environmental Permit of the Nicaragua Canal Project. Following that, Dr. Paul Oquist, the Executive Secretary of the Canal Commission and the Private Secretary for National Policies of the Presidency of Nicaragua delivered the Environmental Permit to Bill Wild, Chief Project Advisor of HKND Group.

Telemaco Talavera, the spokesman of the Canal Commission, emphasized in the ceremony: “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 Environmental and Social Impact Assessment (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,"Wild added.

Canal development has been progressing steadily

Since HKND was granted the sole concession rights to construct and operate the Canal two years ago, the company has formed an international professional team and carried out comprehensive scientific researches with enormous manpower and resources. The Canal Project has been progressing steadily.

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. By the end of 2014, a commencement ceremony was held for the Project, followed by the expansion of the access road leading to the west port and the lock, an essential preparation for the main works. In addition, HKND has developed the Project design and the Resettlement and Action Plan, as well as prepared for the huge logistic demand in peak construction period.

Pang Kwok Wai, Executive Vice President of HKND Group, watched the ceremony via a video connection jointly with reporters from various media in Beijing. He stated that obtaining the Environmental Permit is a major milestone in the development of the Project, and also a crucial threshold at the design phase in compliance with International Best Practice. “Currently the Canal Project is poised for a new phase of development,” he said.

It’s reported that HKND Group engaged Environmental Resources Management (ERM), an internationally recognized British consultancy who won a competitive bidding to conduct the Environmental and Social Impact Assessment for the Nicaragua Canal Project. ERM completed the ESIA report after two years of hard work. The ESIA, comprising of 14 volumes with 11,000 pages and up to 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.

As set out in the ESIA report, the ecological environment in Nicaragua has been deteriorating in recent years. Pristine forests are destroyed at an alarming speed as a result of slash-and-burn farming. Without proper measures, most of the existing forests in 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.

In terms of ecological environment assessment of Nicaragua, ERM shared similar views with HKND Group who considered canal construction as the only viable means for vegetation protection and ecosystem restoration. The company will put forward reforestation plans on both sides of the Canal to prevent soil erosion. At the same time, dams will be constructed in the eastern section of the Canal, forming two huge artificial lakes which can not only fully meet the water use of the Canal, but also help the largest freshwater resources in the Central America - Lake Nicaragua to achieve sustainable development by reversing the worsening trend of its water quality.

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

To build a better future

As stated in the ESIA report, the potential impact on the surrounding environment and Lake Nicaragua has been minimized and the Canal design provided by HKND is safe and reliable. 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”.

Nicaragua is located in the center of Central America, which borders the Pacific Ocean in the west and the Caribbean Sea in the east. Due to its important geological position, Nicaragua has been considered one of the alternatives for building a transoceanic canal in the Central American isthmus for centuries. However, for historical reasons, Nicaragua’s economic development has been lagging behind its neighbors, being one of the poorest nations by nominal GDP in Latin America and the Caribbean, second only to Haiti.

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.

According to the design, the width and depth of the proposed Nicaragua Canal will dwarf those of the Panama Canal. The Nicaragua Canal will be able to accommodate container vessels of up to 25,000 TEU, super tankers of 320,000 dwt and bulk carriers of 400,000 dwt. The Canal will satisfy the constantly growing trade demands for bulk cargo, and energy commodities in particular, and make outstanding contributions to the global energy conservation and emission reduction.

The ESIA report indicated that being located closer to the United States than Panama, Nicaragua will be able to offer a shorter shipping route between Asia Pacific markets and many US East Coast ports. The business case of the Nicaragua Canal Project has also been highly recognized by ERM, which is targeting “container traffic and bulk carriers, much of which are vessels too large to fit through the expanded Panama Canal. Shipping trends are toward larger ships”.

Corridor of ESIA for the Nicaragua Interoceanic Canal

A wider and deeper interoceanic canal with greater benefits

Pang revealed that based on the recommendations in the ESIA report, as well as comments from the Government of Nicaragua, the Company will finalize the engineering design for the Canal and ports, and continue to refine preparatory work before the commencement of the main work of the Canal.

Currently, HKND Group is discussing lock preliminary design with SBE from Belgium, which has been involved in the design of a number of large-scale locks, and has entrusted CSA Global to conduct an aerial geological survey for the Canal route and Lake Nicaragua shore line.

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

Referring to doubts about its economic benefits, Pang stated that based on the current design, the construction of Nicaragua Interoceanic Canal is necessary as it will be a wider and deeper waterway with greater benefits. The Canal alone is profitable with its revenues, and the profits from auxiliary projects such as ports, free trade zone, airport, etc. could ensure a greater profit margin.