Hong Kong's mega Nicaraguan Canal project arouses sceptical comment THE grand scheme of HKND Group, on the 18th floor of Hong Kong's IFC2 tower in Central, to build and manage a US$40 billion Nicaragua canal to rival Panama's, has aroused sceptical comment, Reuters reports.
"I'm not saying you can't do it, but it has some major engineering challenges to be overcome, and if it's your first project, I wouldn't invest in it," said Missouri University of Science & Technology geological engineering professor David Rogers.
Maersk Line said it was too early to speculate. "We applaud bold initiatives that can boost the possibilities for container shipping for the benefit of both lines and our customers," said Latin American regional spokesman Ariel Frias.Based on the belief that US shale oil and gas production could double world trade by 2030, Nicaragua canal projectors say the resulting American energy exports from the Gulf will far exceed even a newly expanded Panama Canal's capacity to get them to the Pacific.
But country risk looms large, as Nicargua might nationalise the project, said Christopher Erckert, partner of the US law firm Mayer Brown law firm, that advised the Panama Canal Authority in its $5.25 billion expansion.
"Nicaragua is not an investment grade country. That makes this a speculative grade investment, which limits the kind of investors who can play," Mr Erckert said.
Several project financiers Reuters spoke to, who asked not to be identified, said they had seen no signs in the industry of interest in the project.
Said Castalia Strategic Advisors CEO Alfonso Guzman; "The only way it can be viable is if someone like the Chinese government provides low-cost money so that the cost is low and the prices charged are lower or comparable to what the Panama Canal offers."
Little is known about HKND Group CEO Wang Jing, aged 40, a Beijing-born lawyer and businessman, who could not be reached for comment. So far there is no fixed route established for the canal, which would be three times longer than the 77-kilometre Panama Canal.
Mr Wang became the head of the Xinwei Telecom Enterprise Group in 2010, a wireless communications company, and last year went to Nicaragua to sign a wireless telecoms deal.
Xinwei's website said it has interests in telecoms, public security, oil fields, power grids, water conservancy and transportation and emergency communication and lists several subsidiaries in China, Hong Kong, Russia and Cyprus.
Xinwei's website also shows images of President Xi Jinping and Premier Li Keqiang visiting Xinwei with a quotation saying the company's future is "very bright", hinting a high-level Beijing backing.
HKND Group is a unit of holding company the HK Nicaragua Canal Development Investment Co Ltd, which was incorporated last year, according to the Hong Kong Companies Registry.
Said HKND Group spokesman Ronald MacLean-Abaroa, former mayor of La Paz: "This project can be undertaken now, and only now, thanks to the discovery of prodigious amounts of gas and oil in the United States. Three years ago that didn't exist."
Mr MacLean-Abaroa said HKND Group would seek to raise private financing in Asia, citing the growth in US exports of iron ore, coal and grain.
Like the Suez Canal, the Nicaraguan waterway would be built at sea level without locks, but sceptics say the plan is complicated by tides, which vary water levels by as much as six metres.
The company has given little information on the practicalities of building the canal, said Reuters. The concession simply lists a shipping canal, ports and terminals, an oil pipeline, a railway, free trade zones and an airport.
"I'm not saying you can't do it, but it has some major engineering challenges to be overcome, and if it's your first project, I wouldn't invest in it," said Missouri University of Science & Technology geological engineering professor David Rogers.
Maersk Line said it was too early to speculate. "We applaud bold initiatives that can boost the possibilities for container shipping for the benefit of both lines and our customers," said Latin American regional spokesman Ariel Frias.Based on the belief that US shale oil and gas production could double world trade by 2030, Nicaragua canal projectors say the resulting American energy exports from the Gulf will far exceed even a newly expanded Panama Canal's capacity to get them to the Pacific.
But country risk looms large, as Nicargua might nationalise the project, said Christopher Erckert, partner of the US law firm Mayer Brown law firm, that advised the Panama Canal Authority in its $5.25 billion expansion.
"Nicaragua is not an investment grade country. That makes this a speculative grade investment, which limits the kind of investors who can play," Mr Erckert said.
Several project financiers Reuters spoke to, who asked not to be identified, said they had seen no signs in the industry of interest in the project.
Said Castalia Strategic Advisors CEO Alfonso Guzman; "The only way it can be viable is if someone like the Chinese government provides low-cost money so that the cost is low and the prices charged are lower or comparable to what the Panama Canal offers."
Little is known about HKND Group CEO Wang Jing, aged 40, a Beijing-born lawyer and businessman, who could not be reached for comment. So far there is no fixed route established for the canal, which would be three times longer than the 77-kilometre Panama Canal.
Mr Wang became the head of the Xinwei Telecom Enterprise Group in 2010, a wireless communications company, and last year went to Nicaragua to sign a wireless telecoms deal.
Xinwei's website said it has interests in telecoms, public security, oil fields, power grids, water conservancy and transportation and emergency communication and lists several subsidiaries in China, Hong Kong, Russia and Cyprus.
Xinwei's website also shows images of President Xi Jinping and Premier Li Keqiang visiting Xinwei with a quotation saying the company's future is "very bright", hinting a high-level Beijing backing.
HKND Group is a unit of holding company the HK Nicaragua Canal Development Investment Co Ltd, which was incorporated last year, according to the Hong Kong Companies Registry.
Said HKND Group spokesman Ronald MacLean-Abaroa, former mayor of La Paz: "This project can be undertaken now, and only now, thanks to the discovery of prodigious amounts of gas and oil in the United States. Three years ago that didn't exist."
Mr MacLean-Abaroa said HKND Group would seek to raise private financing in Asia, citing the growth in US exports of iron ore, coal and grain.
Like the Suez Canal, the Nicaraguan waterway would be built at sea level without locks, but sceptics say the plan is complicated by tides, which vary water levels by as much as six metres.
The company has given little information on the practicalities of building the canal, said Reuters. The concession simply lists a shipping canal, ports and terminals, an oil pipeline, a railway, free trade zones and an airport.