El Nuevo Diario:"In the end we will achieve a positive impact"
By: Leyla Jarquín
After the approval of the Environmental and Social Impact Assessment (ESIA) of the Nicaragua Interoceanic Canal project, the concessionaire HKND is ready to take major steps to carry out the mega-project, Bill Wild, Chief Project Advisor, assured.
One of such steps is the construction of a port in the Brito area, in Rivas, for the arrival of heavy machinery, which is scheduled to begin in the first half of 2016. In this interview, Wild talks about what comes after the approval of the ESIA and addresses issues such as the land use and funding.
Now it is known that almost three thousand square kilometers of land will be used for the project. Is there already any budget on the investment for this?
First I have to clarify that the ESIA covers a wider area for conducting impact assessment, because it includes areas in the ocean and in the lake, as the canal has areas at the entrance of the ocean and the Lake. The land area that will be needed for the canal will be about 1,000 square kilometers, instead of those nearly 3,000 square kilometers. Now that the study has been completed, we are adjusting the area that we need and reducing the space in the design; so far the defined area is of 1,000 square kilometers and the corridor of 3,000 square kilometers is the area where the canal can be moved and adjusted in the design. Concerning the budget, we are working together with the Government to define a better deal for the people.
What work scheme will you use when negotiating and paying those families whose properties will be used for the project?
Although the concession agreement stipulates two mechanisms to define land prices, which are the cadastral price and the market price, the Chairman of the company (Wang Jing) gave his promise to pay people at a fair market price. It is this fair market price that we are going to negotiate with the people, without it being manipulated or influenced by speculations.
Regarding the environmental impact of the canal, what is the biggest challenge you face?
One of the main concerns of ours, as well as for the public, is Lake Nicaragua. In this aspect, we need to maintain the water quality, to prevent saltwater intrusion and also to maintain the water levels, which doesn't mean maintaining always the same water level but to maintain the fluctuation that occurs during different periods of the year, such as the rainy season or the dry season. In this case, as we know how to manage the protection of the lake and we have the technology to do it, we do not see it as a challenge. But in terms of the environmental impact, we do have many challenges ... for example, excavations in Punta Gorda, from a technical point of view, will be a major challenge due to the location and climate. In fact, we know how to handle the issue in similar cases, but the challenge is to ensure that the final impact is positive. Apart from that, there are many other environmental issues as in other projects, because mega-projects have many aspects, (therefore) I would say the biggest challenge is managing all environmental impacts in parallel satisfactorily and ensuring it does not cause any major negative impact.
When referring to the environmental impacts, we cannot always think that all of them are negative. In fact, we are committed to protecting the Indio Maiz Reserve which will be probably lost without the Canal, because nowadays there is a significant degradation of the reserves and they are suffering human intrusion. Another issue Nicaragua is facing is deforestation, whose rate is growing at an increasingly accelerated pace... In the last three years, the amount of forest that were lost equals to the amount that was lost in the previous 20 years, which means that in about a decade most forests in Nicaragua will be lost. The company is committed to carrying out a massive reforestation program; thus we can ensure that at the end of the project there will be more forest in Nicaragua. There are difficult and negative impacts of the project, but in the end, we will achieve a positive impact.
I would like to challenge those people who criticize the project to find out a better way to protect the Indio Maiz Reserve and solve the deforestation problem that Nicaragua is facing at present, because doing nothing is not a solution. The problem is that Nicaragua does not have financial resources to solve the environment problems, then I dare to ask them if they can offer a better alternative to protect the forests that are being lost.
Nicaragua doesn't have appropriate ports for bringing in the machinery needed in this type of mega-projects. How are you going to bring it into the country without having suitable ports?
We are aware that one of the most important issues is how to bring in heavy machinery and the materials required by the project, (because) for example we will need millions of liters of fuel and thousands of parts to assemble heavy machinery, and some of these machines weigh 600 to 700 tons, so they cannot enter through the port facilities that Nicaragua has today. Therefore, we will begin with the port facilities as preparation and in this sense, the first work we will do is the construction of a temporary port in Brito, on the west side. We will begin with a temporary design that will allow us to introduce machines and then, we will expand it up to the size of the final design.
What action will be taken as the first step in 2016? When will we see the first major work being executed?
As I said before, we will start with the ports, and even though it is a temporary port it will be a large work that we plan to start in the first half of 2016. This involves many activities, for example, we have to develop a waterway from the entrance to the port and also we have to build the facilities to discharge fuel and other materials. As for the most important works of the Canal, such as the major excavation works, we won´t be able to begin until we have a final and detailed design, which is scheduled to be completed by the end of 2016.
The Canal spokesman said that the estimated cost of the Canal may vary when the studies and designs of the work are refined. What is the trend like: raising or lowering costs?
For projects like this, there will be always a final cost higher than expected. We have firstly estimated a preliminary cost plan; this number also comprises contingency costs, which enables us to include the increased costs in different cases, (and) in this regard, the number we have at the moment includes possible future changes and it allows us to have a more flexible figure.
In the general project description, it is said that "Nicaragua has a very limited highly skilled workforce". How does that affect the execution of the project?
We understand that at the moment there is no workforce in Nicaragua specifically prepared for the project, but we also know that there is well-educated workforce in Nicaragua, therefore, we have no problem offering them training to work for the project. On the other side, I would say that in this great project there are job opportunities for everyone, because there are possibilities to work not only in machinery or the technical area, but also we need people to manage worker camps, to work in other sectors related to the construction. In short, many of them can work from the beginning on the project and then, receive training to get ready and be able to participate in other project areas.
What makes you think that Mr. Wang Jing has the capacity to carry out this work?
Firstly, the chairman is recognized for conducting successful businesses and he is conducting business with great success around the world. Secondly he (Wang Jing) understands how to do the work for the Canal. He has had assembled a highly qualified team, with a broad and large experience, and it’s a highly international team. For example, we have joined other highly-reputed companies all around the world such as ERM, as for the Environmental and Social Impact Assessment; to assess the financial feasibility we count on a prestigious company from the United States, and in engineering matters, the leading engineering companies in China will take care of the technical feasibility of the project. Moreover, we are also working with an Australian mining team, who is in charge of the earthworks for this project. We have, in summary, a highly qualified team of experts to perform this work successfully.
What does the approval of the Environmental and Social Impact Assessment mean to HKND?
The ESIA is a crucial part of the project and the approval is a step of great importance for its execution, because without the approval we cannot include more baseline information in the detailed design for the construction... This study, which was conducted during nearly two years and a half, with the participation of hundreds of scientists, is a very important study and with its approval we can already start with the detailed project design.
Does the environmental permit make it easier to obtain funds to build the Canal?
The Chairman of the company has said that he wants this job to be funded internationally, and international investors would not fund it without an approved ESIA. According to the international practices, you need to have a good ESIA and its approval. So far we have completed the ESIA and as it is a good study, we will proceed to secure the funding for the project with the international community.
Following the approval of the ESIA, what are the next steps to be taken by HKND?
We have already entered the design stage. Firstly, we will start the reference design, which means to define the most appropriate design for the project, and then, we will refine details for obtaining a final design.
According to HKND’s website, in June 2014 the American company with headquarters in Washington D.C., "McKinsey", concluded the commercial feasibility studies. Will you disclose the results of these studies or will they be managed only internally?
The results of the financial feasibility studies have been already published; they were announced to the public and they address basically two aspects: that the project is financially viable and that it has a strong business case. As for the details of the specific analysis and the financial model of the study, that is confidential information and will not be released to the public. On our website, there are data showing the new trend in the development of the shipping market and the need for another canal, concluding that the project is viable and is needed.
How will the public bidding processes be when it comes to contract those companies worldwide that specialize in this type of work?
All large or major works of the project are subject to international tender and this will take place in two stages; the first one will be a prequalification stage to assess all stakeholders, to look at their technical expertise, financial capacity and experience, to define what participants are able to carry out the project. As a result, we will have a shorter list of those who can participate in the tender, and then, we will move to the next step, which is the formal tender participation.