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.
Revealed: China state-owned contractor involved in Nicaragua canal project
One of China's largest state-owned companies is carrying out a technical feasibility study of the Nicaraguan inter-oceanic canal project, which, if built, would be the world's largest civil engineering project.
"We have got one of [CRCC's] engineering groups; a lot of work is being done by their design institutes," said Bill Wild, chief project adviser of HKND, the Hong Kong-based company that was awarded the concession of building the canal a month ago.
Wild said parts of the CCRC team working on the canal had worked on water-management aspects of the Three Gorges Dam, China's largest ever civil engineering project in Sichuan province.
The Nicaraguan canal, which is expected to be significantly longer than the 77-kilometre Panama Canal, is estimated to cost US$40 billion to build. Construction is set to begin by the end of 2014 and completed by 2019, HKND chairman Wang Jing said at a press conference last month.
With almost a quarter of a million employees, China Railway Construction Corporation (CRCC) is one of China's largest contractors. Under supervision of the State Council, it has built more than half of the nation's railroads. It has also built expressways in Algeria and the metro line in Mecca, Saudi Arabia.
"They formally started once the concession was signed," Wild said, referring to the ratification of a special law by the Nicaraguan parliament on June 13, which granted HKND an extendable 50-year lease over the construction and operation of the canal.
CRCC "have been looking at it for a while. They have been working for the chairman on it for a few months", he said.
Wild said he expected the technical feasibility study by CRCC to be completed by June next year, adding that CRCC's co-operation with HKND was unrelated to the Nicaraguan operations of another company chaired by Wang, Xinwei Telecom.
Beijing-based Xinwei was awarded a contract to upgrade Nicaragua's telecommunications network last year. The company, which operates in China and several other countries, signed a strategic co-operation agreement with CRCC in February.
For Evan Ellis, the author of China in Latin America: the Whats and Wherefores, CRCC's work in Nicaragua is part of a bigger trend. Chinese contractors "are rapidly expanding their role across the region, with tens of billions of generally loan-funded-projects", he said.
"There are very serious risks that will impair Western investors for signing this project," said Ellis. "If the project goes forward, it will be financed by Chinese banks and built by Chinese companies. The fact that China Railway has a foot in the door with phase one studies is a strong indication that they would be a major player in the construction phase."
Wild, however, is adamant that the project will not be a solely Chinese one and that financing should come from international investors. "We want the project to be an international project," he said, adding that it was too early to think about contractors at this stage.
CRCC's press office in Beijing could not be reached for comment.