Nicaragua broke ground on Monday on a US$50 billion shipping canal backed by China that aims to rival Panama’s waterway.
When completed in 2020, the 278-kilometer canal is expected to raise the annual economic growth of the second poorest country in the Americas to more than 10 percent.
In the Americas, only Haiti is poorer than Nicaragua.
The groundbreaking was largely symbolic as work began on a road to transport machinery needed to build a port for the canal on the Pacific coast, according to Reuters.
The canal gives China a major foothold in Central America, a region long dominated by the United States, which completed the Panama Canal a century ago.
Construction on the new waterway will be run by Hong Kong-based HK Nicaragua Canal Development Investment Co. Ltd., controlled by Wang Jing, a little-known Chinese telecom mogul well connected to China’s political elite.
Flanked by Nicaraguan President Daniel Ortega, a former Marxist guerrilla leader, Wang said the tender for preliminary design will be offered by the end of the first quarter of 2015, by which time an environmental impact study would also be finished.
By the end of the third quarter, excavation work will begin, with a tender for the design of the locks due by the end of the year, he said.
More than a year since it was first announced, the project faces widespread skepticism, with questions still open about who will provide financing, how seriously it will affect Lake Nicaragua and how much land will be expropriated for it.
“Given how much this will cost, it’s hard to take a stance on whether it will happen or not until there is a signal whether that money is available or not,” said Greg Miller at consultancy IHS Maritime.
Earlier, Nicaraguan presidential spokesman Paul Oquist said feasibility studies, including a McKinsey report that experts say will define interest in financing the canal, had been delayed by changes to the route and would be ready by April.
Oquist said the “core financing” would come from public and private Chinese money, without giving the percentages.
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