The General Ports Act, which was passed in mid-May, allows private companies to invest in Nicaragua’s ports, ending the exclusive role of the State as the sole investor and operator in the sector.
Silva confirmed that there are many investors interested in developing port infrastructure in Nicaragua, particularly at Monkey Port, the long-awaited first port terminal on the country’s Atlantic coast. Asked what type of facilities Nicaragua was seeking to develop, he replied, “containers, multipurpose and liquid fuel”.
The ports law regulates matters related to the administration and operation of Nicaraguan port facilities, marine terminals and inland waterways; their construction, development, use and exploitation; and management and regulation of forms of public and private participation.
It has been reported that the initial investment needed to develop the deepwater port facility on the Atlantic coast was around US$350m. Asked if the country’s container volumes were attractive enough for investors to develop a project of this scale, Silva responded, “Yes, but it may be developed in two or three stages.”
He pointed out that Nicaragua’s economy and export volumes are growing, and that the proposed new Inter-Oceanic Nicaragua Canal is set to connect the Caribbean and Atlantic with the Pacific Ocean. This project was announced by President Daniel Ortega on the eve of a meeting of the Central American Integration System (SICA), held in Costa Rica.
Nicaraguan exports hit a new high in 2012, exceeding 2011 volumes by 17.5%. The main destination for Nicaraguan products remains the US with a market share of 27.7%, followed by Venezuela (15.8%), Canada (11.5%) and El Salvador (9.3%).
The new ports law is attractive to investors as it provides a legal framework that clearly defines rules on foreign investment. It establishes mechanisms through which private enterprises can invest in ports, such as concession contracts and leases, joint ventures and other forms of engagement with the state. It also stipulates that concessions will be granted for a maximum period of 25 years, on a renewable basis.
The law also allows that the President, “for reasons of strategic interest”, may grant concessions or contracts for the construction and operation of new ports to public or private persons, Nicaraguan or foreign.
According to local media, construction of the Inter-Oceanic Nicaragua Canal will require investment in the range of US$30–45bn. President Ortega has said that this channel will not be on the San Juan River, but further north.
The northern route will begin in Cayman Rock and continue via the Escondido and Mico rivers in the South Atlantic Autonomous Region (SAAR), cross the province of Chontales and the Great Lake of Nicaragua and exit to the Pacific via Brito in the province of Rivas, in the south of the country.
While Nicaragua has announced its intention to develop this new canal, the Panama Canal Authority (ACP) meanwhile is continuing its expansion programme, to allow the transit of post-Panamax vessels of 13,000 teu capacity. The expanded Panama Canal should be operational by mid-2015.
The administrator of the ACP, Jorge Quijano, said in response to the announcement by the Nicaraguan authorities: “Any infrastructure project in the region is positive, because it helps to improve the competitiveness of its countries.”
The Panama Canal, which is about to mark 100 years of operation as a sea route, offers competitive advantages and value-added maritime trade services compared with other routes. Its competitiveness will be maintained and enhanced by the expansion project, providing new and greater benefits on the Isthmus route, according to Quijano.
If it is implemented, the Inter-Oceanic Nicaragua Canal will be the longest, deepest and widest oceanic corridor in the world. However, according to President Ortega, it will not be in competition with the Panama Canal.