HKND Group, a unit of holding company the HK Nicaragua Canal Development Investment, won a concession in June 2013 to design, build and manage a US$40 billion canal in Nicaragua to rival Panama despite having no infrastructure experience.
Canal deal will 'massively benefit' Nicaraguan economy
A Hong Kong-based adviser for construction of a massive interoceanic canal through Nicaragua said the construction projects would bring "massive economics benefits" to the impoverished country.
"The Nicaraguan government and people have a very good deal", said Bill Wild, chief project advisor with HKND. "If that project gets built, there'll be no expenditure for [Nicaragua], they don't have to meet any of these upfront costs."
"As part of the construction infrastructure, we are going to be building port facilities, roads, tank farms, accommodation, all sorts of social facilities," he said.
Wild declined to comment on the current legal challenge to the concession submitted to Nicaragua's Supreme Court by indigenous and creole communities, who said they had not been sufficiently consulted before the concession was given to HKND a month ago.
Opposition politicians and environmental groups have also criticised the concession being awarded to the newly established company, arguing that the bidding process had been obscure. They also argued that the company, established in Hong Kong last August, lacked the necessary experience to carry out the project.
Social and environmental concerns are "part of our decision making in everything we're doing," he said. Wild said that the company would share its its environmental impact report with investors, but not publish it, as demanded by local environmental groups.
With Nicaragua having the lowest per capital economic output and the highest unemployment rate in Central America, the country's 5.9 million people are in dire need of investments.
Under the terms of the concession, the Nicaraguan government will receive US$10 million per year for the next 10 years. Thereafter, the company will pay fees equal to one per cent of its income to the country.
Wild said that the company would also work with Nicaraguan universities to train students to employ as many Nicaraguans as possible in the project.
So far, HKND has no permanent staff in Nicaragua. The company employs half a dozen people in Hong Kong, said Wild, speaking in the seemingly deserted, but vast office in central Hong Kong overlooking the harbour. "Another dozen are coming in next week, he said."
The chairman of HKND, Beijing-based serial entrepreneur Wang Jing, has pledged to finance the project until international investors could be found. Construction is expected to start by the end of 2014, end by 2019, he said at a press conference in June. The estimated construction cost of US$40 billion would equal four times the Nicaraguan annual economic output.
Wild dismissed criticism against the project as precipitate. "People are not seeing what we are doing," he said. "Now we have work underway to start collecting data. We're trying to come to grips with the effect could be of what we're doing."