The Panama Canal has cast fresh doubt on the viability of the planned Nicaragua canal.
The Panama Canal said there isn’t enough cargo to support two canals and that the price tag is far above what Nicaragua says it will cost.
That would require tolls three times those charged today by the Panama Canal to pay for it.
Oscar Bazan, executive vice president for planning and business development at the Panama Canal Authority (ACP) also told the Georgia Foreign Trade conference that the potential for competing canals is leading the Panama Canal to diversify into other areas, such as container terminals, liquefied natural gas, bunkering and roll-on, roll-off terminals.
The planned Nicaragua canal has suffered numerous setbacks with a latest estimate that construction on the 170-mile canal would begin in December at the Pacific coast town of Brito, according to a Bloomberg article on February 7.
The article noted growing doubts about the ability of a slowing China to foot the bill.
The expanded Panama Canal is set to open in May with the first vessel for transit tests in the third set of locks due to begin in weeks. The locks will be able to handle ships of up to 14,000 TEUs (twenty foot container equivalent units), Bazan said.
Bazan also said at the GFTC that based on the little that Nicaragua has said about the ships and cargoes that would move through its canal, such as Maersk Triple-E ships and others that would be too large for the expanded Panama Canal, and iron ore moving to Asia, “if you put all that cargo together there is not enough cargo volumes for two canals.”
He said the Panama Canal estimates the real cost of the Nicaragua canal to be $70 to $80 billion, a figure that doesn’t include roads, ports, bridges and other infrastructure, bringing the total likely cost to $100 billion. He said 5.5 billion tons of material would have to be excavated to dig the canal, which is 10 times the 550 million tons that Panama has excavated over the past 140 years. In order for the investment to be paid back through shipping tolls. “The effective Nicaragua toll rate would have to be around $12 per ton, versus $5.92 cents (currently) at the Panama Canal,” Bazan said.