The Government’s perception is that Nicaragua needs to develop a Caribbean port in order for the country to continue to trade cost-effectively with its largest markets. As a result, the Nicaraguan Port Authority (NPA) has been developing a project to establish a deepwater port comprising container, bulk and liquid terminals at Monkey Point on the Caribbean coast.
The global economic downturn was only one reason why there has been no international stampede to invest in the Monkey Point project to date. With Honduras and Costa Rica planning to expand existing, viable ports, potential investors seem to be of the opinion that there is no room for another port one on the Caribbean Coast of Central America.
Moreover, the IMF is strictly controlling Nicaragua’s indebtedness and the Nicaraguan Central Bank has not approved the project. There is also doubt that shipping lines will want to add an extra call for what is a small volume of business: any savings in overland transport costs to the shippers/consignees would probably be offset by higher freight charges.
There was a recent glimmer of hope that an un-named South Korean construction company was interested in going with the Monkey Point project subject to the company obtaining finance. Hopes were dashed when it was revealed that while the Koreans had obtained the necessary financing, negotiations were at a stalemate because they wanted to recover their investment in eight years with an interest rate of 12%, whereas the Nicaraguan Government will only agree to 5% over 30 years.
The project, which includes the construction of a highway and a railway to connect the port it with Nicaragua’s Pacific coastal area at an estimated cost US$500m, is consider by many to be a dream with the only achievement so far being a vague Letter of Intent.
Nicaragua has elections coming up in two years and President Ortega has already started the process of getting himself re-elected, which is allegedly unconstitutional. Industry scepticism within Nicaragua and the region is based on economic logic but many recognise that in the circumstances, other considerations might be in play. Monkey Point has been used as a political distraction for many years and in the time of Somoza for example, there was said to be oil there which never materialised.