San José, Costa Rica, since 1956

Nicaragua Canal to Connect West with East

(First in a two-part series)GRANADA, Nicaragua – Building aNicaragua Canal using the natural waterwayof the Río San Juan is a pipedream thathas been flirted with here for more than 250years.And it’s an idea whose time is about tocome, says Gabriel Pasos, president ofEcoCanal.The Nicaraguan company, alreadyawarded a 30-year exploration concessionfrom Congress, proposes to create a river bargetrade route connecting CentralAmerica’s predominately west-coast productionsector with east-coast markets inthe United States and Europe.“Eighty percent of Central America’strade is on the Atlantic coast, and 90% ofCentral America (population and production)is on the Pacific coast,” Pasos said.“We are on the wrong side!”NICARAGUA is at an even greaterdisadvantage than its neighbors because ithas no accessible port on the Caribbeancoast. Producers must truck all exportsbound for the U.S.’ east coast or Europesouth to Costa Rica’s Puerto Limón, ornorth to Honduras’ Puerto Cortez, thelargest port in Central America.The land transportation increases totalshipping costs forN i c a r a g u a nexporters by an averageof $1,000 percontainer, accordingto market studies.To find a solutionto the country’s tradehandicap, Nicaraguaneed look no furtherthan the historybooks – its own historybooks, according to Pasos.“THE Río San Juan and LakeNicaragua form the historic trade routeused from 1540 to 1898,” said Pasos,whose family has resided for generations inthe colonial lakeside city of Granada,where he owns the landmark AlhambraHotel. “The Spanish distributed everythingby mule from Granada to the rest of CentralAmerica.”EcoCanal’s plan is to return Granada toits colonial-era role as Central America’strade hub by building a shallow-draft bargecanal to connect the 480-year-old city to theCaribbean Sea and eventually thePanamanian port of Manzanillo, the largestin the region.By transporting cargo from Nicaraguato Panama by barge, EcoCanal estimatesexporters will save anywhere from $400 to$2,000 per container, according to the company’smarket research. The cost of shippingcargo on the water is one-sixth theprice of land transportation, and shippingout of the Panamanian port rather than theHonduran port costs about $500 less percontainer because of the larger volume oftrade handled there.Plus, Pasos noted, the water route willget trucks off the road, reducing emissionsand the wear and tear on the Pan-AmericanHighway.ECOCANAL is one of three privatecanal proposals to win congressionalapproval to conduct feasibility and environmentalimpact studies during the governmentof former President Arnoldo Alemán(1996-2001).The other two canal proposals inNicaragua are for “dry canals,” or high speedrail systemslinking deep-waterports on both coasts.A fourth canalproject, the loftygovernment-promoted“GranCanal” project,hopes to connect theCaribbean andPacific oceans viathe Río Escondido(north of Bluefields) to Lake Nicaragua andeventually through a lock system dugacross the bottleneck stretch of land insouthern Rivas. The project, which hasbeen stuck in a congressional commissionfor more than two years and appearsdecades away from happening – if at all –carries an estimated price tag of $26 billion,or 26 times the budget of this impoverishednation.THE two approved dry canal projects,Canal Interoceánico de Nicaragua (CINN)and Sistema Intermodal de TransporteGlobal (Sit Global), were initiated duringthe mid-1990s and won exploratory permissionsfrom the National Assembly in1998 (TT, Aug. 14, 1998).CINN calls for a freight rail system tocut through the jungle connecting two portsthat would be constructed at Monkey Point,in the South Atlantic Autonomous Region(RAAS), and at Punta Pie de Gigante (inRivas) on the Pacific side. The projectwould cost an estimated $2.7 billion, makingit the largest investment in Nicaragua’shistory.Leonel Teller, president of CINN, toldThe Tico Times he expects the final feasibilityand environmental-impact studies tobe presented to Congress in 18-24 months,and have the dry canal completed and operationalin seven years.Sit Global, on the other hand, proposesto build a rail connecting a to-be constructedport at Monkey Point to a modernizedPort Corinto, which already exists but isunderused on the northwest coast ofChinandega. The project would cost $1.6billion, and could begin construction in oneyear, according to project general managerJuan Carlos Rivas.Both dry canal projects have been metwith environmentalist concerns that the raillines would cut through the Mesoamericanbiological corridor – a claim that bothCINN and Sit Global claim is incorrect.ECOCANAL, with a price tag of $35-54 million, is the least expensive of thethree approved canal projects, and claims tobe the most realistic. The company is raisingfunds to begin final feasibility and environmental-impact studies – a process thatPasos estimates will last 12-18 months andcost $4 million.The proposed EcoCanal will not be anengineering feat on par with the PanamaCanal – or even its sister proposals inNicaragua – but it will require the dredgingof some 3 million cubic meters of silt fromthe Río San Juan river bed, the constructionof three locks to bypass three sets of rapids,and the erection of 7-8 kilometers of permeabledykes to channel water flowbetween the junction of the San Juan andSan Carlos Rivers.Pasos explained that the bypass channelswould be dug on the north bank of theriver so as not to encroach on Costa Ricansoil. He insists none of the dykes or otherproposed construction would affect theflow of Costa Rican rivers into the SanJuan.Environmental-impact studies requiredby the Environment Ministry will determinethe extent construction and dredgingwill affect the river flow and surroundingwildlife. Pasos says EcoCanal aims to beas eco-friendly as possible, including themandatory use of Nicaraguan-producedbiodegradable fuel on all barges.A biodegradable fuel plant in León wasbuilt several years ago with a grant fromJapan, but no real market for the fuel hasbeen created.EcoCanal’s idea is to require tugboatsthat use its locks to be powered by thebiodegradable fuel. Pasos said the companyhopes to get Congress to pass a law supportingthese efforts as part of an initiativeto protect the river and expand tourism possibilitiesthere.IF all goes according to plan, Pasossays, EcoCanal should be built in three orfour years and be operational by 2009. Thestartup plan calls for traffic of five to 10barges pushed by tugboats in each directionper week.The barges and the to-be-constructedport in Granada will not be owned or run byEcoCanal, which plans only to run the threehydroelectric-powered river locks. The proposedtoll for passage up the EcoCanal is$100 per container.Pasos envisions the project connectingNicaragua with the industrial heartlandof the United States via Mississippibarge traffic. Once the project is operational,Pasos hopes that various industrialsectors along the Mississippi will outsourcemanufacturing and industrialwork to Nicaragua, creating much-neededjobs here.IF the project is successful, EcoCanalhas plans for a much more ambitious phaseII, which calls for the digging of a canal toconnect Lake Nicaragua to the PacificOcean. The proposed $200 million dig sitewould be southern Rivas, near San Juan delSur, Pasos said. Phase II would require separateviability, feasibility and environmental-impact studies, as well as a second governmentconcession.While Pasos admits Phase II is anuncertainty, he is convinced EcoCanal in itsoriginal design will succeed where pastcanal projects have failed because – in hiswords – “it is simple and inexpensive.”For more info about EcoCanal, e-mailGabriel Pasos at week: Viability, Feasibility and theEnvironment)

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