Nicaraguan Railway to Compete with Panama Canal

By Roberto Fonseca, IPS, 5 August 1998

MANAGUA, Aug 5 (IPS)—Nicaragua's long-standing dream of building a dry canal connecting the Atlantic and Pacific oceans, to compete with the Panama Canal, seems about to come true.

Studies commissioned by the two consortiums interested in building an over 300-km railway running across the isthmus found that such a project would be feasible.

The Nicaraguan government set an Aug. 31 deadline for presenting the results of the studies, after which it will award the concession to one of the two consortiums, which should shortly begin work on the project, estimated to cost nearly 1.5 billion dollars.

Local analysts say President Arnoldo Aleman is inclined towards granting the concession to the Canal Interoceanico de Nicaragua (CINN), which has been planning the project for the past five years, and enjoyed the support of Aleman's predecessor Violeta Chamorro.

CINN also has the backing of the Nicaraguan army, which is rumoured to hold at least 15 percent of the company's shares, along with U.S. financier Don Bosco, the president of the private consortium.

Although armed forces commander-in-chief General Joaquin Cuadra Lacayo recently denied such reports, he admitted that his father, Joaquin Cuadra, a prominent local lawyer, held an undetermined number of shares.

If all goes smoothly, a dry canal crossing Nicaragua could soon become reality. The dream had been a frustrated once since 1525, when Spanish captain Martin de Estete proposed opening an interoceanic canal across the isthmus.

But it was not until 1902 that a trans-ocean link came into being—through Panama, not Nicaragua.

Recent proposals for a wet canal to rival Panama's have been rejected as too costly and environmentally damaging. But the plan for a railway, while facing competition from other proposed land bridges, could soon become a source of jobs in Nicaragua and an alternative transport route for container trade.

The SIT-Global company, mainly comprised of private Nicaraguan capital, will meet with President Arnoldo Aleman within the next two weeks to present the conclusions of its study. CINN has also requested an audience with the president to submit its own results.

CINN's pre-feasibility study on environmental, economic and social impact was coordinated by the Canadian firm Novaport- Vaughan Consultant Limited (NVICL) at a cost of 350,000 dollars.

The SIT-Global report was drawn up by the consultancy firm International Planning and Analysis Center (IPAC), which belongs to the U.S.-based international Columbus Group consortium. IPAC vice-presidents Ben Hackett and Roberto West are in Nicaragua to present the results of the study.

IPAC has conducted a number of feasibility studies and provided expert advice to governments interested in developing port and railway projects, including alternatives to the Panama Canal.

They are excited about the results, which corroborated the enormous potential of a dry canal in Nicaragua, SIT-Global executive director Juan Carlos Rivas told IPS.

The preliminary results of the IPAC study indicate that around five million containers were shipped last year between the west coast of the United States and Asia, the market targetted by the dry canal being discussed in Nicaragua.

Furthermore, nearly two million containers were transported between the east coast of the United States and Asia, more than what is transported through the Panama canal. And the study estimates that the flow of commerce could grow by 4.4 million containers by the year 2015.

The IPAC study calculates that the number of containers shipped across Nicaragua's planned railway could climb from 150,000 to nearly 800,000 a year from 2001 to 2015.

It also points out that while container transport by railway is growing at a rate of eight percent a year, the volume transported through the Panama canal is increasing by only 3.5 or 4.0 percent annually.

Although similar dry canal projects are being toyed with in Costa Rica, Colombia, and across the Isthmus of Tehuantepeque in Mexico, there are major legislative, geographic and social hurdles to be dealt with.

A highway-based dry canal which would run through El Salvador and Honduras is also being discussed. But the IPAC experts say only small volumes of containers would be transported along that route, as along the old railway being rebuilt in Panama parallel to the canal.