INVESTMENT OPPORTUNITIES IN HYDROELECTRIC PROJECTS Plants in Operation - Santa Bárbara - Centroamérica - Las Cañas - El Sardinal - El Wawule - Siempre Vivas - Salto Grande Projects in Construction - Pantasma - Larreynaga - Tumarín - Boboké Licensed Projects - Salto Y-Y - Piedra Puntuda - El Diamante Candidate projects - Copalar Bajo - Consuelo - Pajaritos - La Estrella - Valentín Volcán Casitas San Cristóbal. Fuente: INETER - Piedra Fina - Brito - Corriente Lira 18
GEOTHERMAL PROJECTS • Momotombo • Generation: 138 MW • San Jacinto-Tizate • Investment: US$ 485 million • Casita- San Cristóbal 19
GEOTHERMAL POTENTIAL (MASTER PLAN) ESTIMATED 1,500 MW 20
PROYECTOS GEOTÉRMICOS 138 MW; US$485 millones San Jacinto- Casita-San Momotombo Tizate Cristóbal Otros Proyectos Geotérmicos Caldera de Volcán Caldera de Apoyo Mombacho Masaya • 153 MW • 111 MW • 99.5 MW • US$ 734.4 • US$ 532.8 • US$ 477.6 millones millones millones 21
SPA GEOTÉRMICO BLUE LAGOON, ISLANDIA Situado al suroeste de Islandia La laguna es alimentada por la producción Una de las de agua de la atracciones planta más visitadas geotérmica Svartsengi Aguas templadas ricas en minerales y con propiedades curativas Blue Lagoon 22
WIND PROJECTS • Amayo I, II, III • Eolo • La Fe San Martín • Alba Rivas • Generation: 187 MW • Investment: US $ 264.2 million 23
WIND POTENTIAL IN NICARAGUA INVESTMENT OPPORTUNITIES IN WIND PROJECTS
BIOMASS ENERGY (PRIVATE SECTOR) • Projects based on agrobusiness plants residues : • Sugarcane • Oil palm (oil) • urban waste Net Present generation in contribution 2012 Nicaragua Sugar Estates Ltd. Sugar Mill 30 MW 77.3 MW San Antonio Sugar Mill 30 MW 48.5 MW • CASUR –Benjamín Zeledón Sugar mill (2015): 24MW; US$24.8 millons • Montelimar Sugar mill (2016): 30MW; US$27.8 millons 2012-2016: 54MW* y US$52.6 Millions 25 *on season
SOLAR POWER PROJECT LA TRINIDAD, DIRIAMBA, 5,880 solar panels NICARAGUA 1.38 MW 1,200 homes covered US$ 12 million donated by Japan The first in Nicaragua and the largest in Central America The short-term goal is a solar mega-project that is expected to produce 50.5 MW Private sector new application for 80 MW solar energy 26
NEW SOLAR POWER PROJECT • Solar Power Plant HMV Pioneer Nicaragua • Total estimated capacity 100MW in four stages of 25MW • A 6 Km de Chinandega 27
SOLAR RADIATION MAP IN NICARAGUA
FUEL SAVINGS FOR THE IMPLEMENTATION OF RENEWABLE ENERGY PROJECT. PERIOD 2013-2020 6.000.000 700,0 600,0 5.000.000 500,0 4.000.000 400,0 Barriles Barrels 3.000.000 Millones US$ US$ million 300,0 2.000.000 200,0 1.000.000 100,0 0 0,0 2013 2014 2015 2016 2017 2018 2019 2020 29
BLOOMBERG ´ S • In the Bloomberg and Interamerican Development Bank (IDB) Climatescope , second edition, Brazil, Chile and Nicaragua top the list of most attractive markets for clean energy in Latin America and the Caribbean. • Despite being the second poorest country in the region, Nicaragua was ranked among the first three, just behind Brazil and Chile, due to the high penetration of renewables in its energy matrix and significant flow of investment in proportion to its small economy. • Nicaragua was the country that received the highest score in the categories “ Suitable Setting and Clean Energy”, “Investment parameters” and “Loans to Projects relating to Climate Change”. • In 2012, Nicaragua saw its installed renewable energy capacity grow 40% due to the US$ 292 million that was allocated to clean energy market in the context of an economy of US$ 10,500 million. 30
SIEPAC PROJECT 1794 31
INDUSTRIAL COMPLEX "SUPREMO SUEÑO FUEL STORAGE COMPLEX IN MIRAMAR DE BOLIVAR" • Refinery with a processing capacity of 140,000 b / d, US$ 3.6 billion • Petrochemical Industry: US$ 2.8 billion Fuel Distribution Plant Miramar 1.08 million barrels, US$ 306 million • Pipeline Monkey Point- Puerto Sandino: $ 270 million • GLP Project: US$ 25.9 million Storage complex in Corinto Total Industrial Complex Investment : US$ 6,700 million 32
In 2006-2007, Nicaragua was a country of "blackouts" by 8, 10 and even 12 hours a day In 2020, Nicaragua will be a net exporter of electricity and petroleum 33
COMMUNICATIONS INFRAESTRUCTURE NICASAT 1 REGIONAL CENTER FOR ADVANCED STUDIES FIRST COUNTRY IN CENTRAL AMERICA IN BROADBAND FOR DEVELOPMENT WITH ITS OWN SATELLITE In orbit by 2016 Investment US$ 300 million, 15 years of lifetime 2017: A Second Satellite, US$ 300 million With support of China and Korea The Center will train over the next 10 years to 12 thousand professionals linked to telecommunications throughout the Central Expansion of Broadband American region. US$ 400 million With support of Korea and IDB. WORLD CLASS COMMUNICATIONS FOR A REGIONAL AND GLOBAL LOGISTICS 34 CENTER
"The policies of the "Another issue government of Daniel that is drawing Ortega continue international attracting even more attention is the investment and project of interest by construction of international Nicaragua Canal, companies especially an initiative that Chinese, Russian and the government American" of President Daniel Ortega seeks to develop in order to "Nicaragua is now an compete with interesting destination Panama and offer for business because of an alternative to the consensus reached the transport of between the goods' government and the FORBES MAGAZINE FOR private sector" CENTRAL AMERICA 35
WE ARE GROWING AT 5% BUT TO MEET THE BASIC NEEDS OF NICARAGUAN PEOPLE WOULD HAVE TO GROW AT 8% AND 10% OR MORE TO ERRADICATE EXTREME POVERTY, REFOREST THE COUNTRY, TO ADAPT TO CLIMATE CHANGE AND INCREASING THE RESILIENCE OF OUR ECOSYSTEM • STRATEGY: TAKE ADVANTAGE OF GEOGRAPHICAL POSITION AND WATER RESOURCES • ACTION: THE CONSTRUCTION OF THE GRAND INTEROCEANIC CANAL 36
WHAT ARE THE EXPECTED ECONOMIC AND SOCIAL IMPACTS? 37
THE GRAND INTEROCEANIC CANAL OF NICARAGUA: MAIN IMPACTS EXPECTED Formal employment in nicaragua 2012-2018 Economic Growth in Nicaragua with and without Grand Canal 5th year (2018) (Percentage change) • More formal jobs than informal 1.273.154 1.400.000 • 1.2 million formal jobs 1.179.581 • 26% of nicaraguans with bank +1,264,535 1.060.031 1.200.000 With Canal 1.011.251 relations in 2013; they could be +945,410 799.996 857.901 931.904 Without Canal 50% in 2020 1.000.000 +640,791 800.000 14,4 600.000 +355,589 10,3 11,9 10,1 8,8 +185,638 400.000 200.000 5,7 5 4,6 4,7 4,9 4 4 4 4 3,3 0 2007 2008 2009 2010 2011 2012 2013 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 General Poverty in Nicaragua Extreme Poverty in Nicaragua ( Percentage points ) ( Percentage points ) Source: PEF, IMF & Own estimates 403,583 people out The multiplier effect The increase in Government revenue, will be a source of of general poverty will further reduce by 2018 funding to fight extreme poverty. extreme poverty in later years 2013 2019 2012 Estimated Projected income US$ Income 16.46% of 353,935 people 1,897.40 GDP US$ 4,081.25 out of extreme poverty by million million 2018 +115.10% more than 2013 38
GROWTH GDP: NICARAGUA AND PANAMÁ Nicaragua Economic Growth with Canal US$millions / Percent change) 30.000,0 16,0 14,4 24.889,5 14,0 25.000,0 11,9 22.165,5 12,0 19.409,9 20.000,0 10,1 10,0 16.630,9 10,3 8,8 13.847,2 15.000,0 8,0 11.843,0 11.255,6 10.645,5 9.898,6 6,0 8.938,2 10.000,0 5,7 5,0 4,0 4,6 4,0 5.000,0 3,3 2,0 0,0 0,0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Fuente: BCN, FMI y Estimaciones SPPN Panama ´ s economic growth with Canal expansion (GDP U.S. $ Billion, Growth in Percent) 60 14 12,11 49,142 US$ Miles de Millones 12 50 10,8 44,694 10,12 42,65 10,2 10 35,938 40 7,52 31,32 8,4 8 8,53 30 27,053 24,16 6,61 6,44 7,19 % 23 6 19,79 5,9 4,21 17,14 20 15,47 14,18 4 12,93 12,27 3,86 10 2,23 2 0 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (P) 2015(P) Fuente: CEPAL, FMI. Economic Crisis Expanmsion anouncement THE PANAMA ECONOMY HAS DOUBLED DURING THE LAST 7 YEARS DESPITE THE FINANCIAL AND ECONOMIC CRISIS 39
DIRECT IMPACTS OF THE CANAL AND SUB PROJECTS IN THE EMPLOYMENT PLUS MULTIPLIER Operation: 50,000 jobs in 113 thousand 3,700 jobs in More than 3000 EFFECTS IN the construction jobs in free 2020 jobs in resorts stage trade zone EMPLOYMENT 12,700 in 2050 THROUGHOUT THE • 25, 000 foreign workers ECONOMY • 25, 000 nicaraguan workers 40
WHAT DOES THE GRAND INTEROCEANIC CANAL / WORLD AND REGIONAL LOGISTICAL CENTER CONSIST OF? 41
The final proposal : 7 sub proyectos THE GRAND INTEROCEANIC CANAL OF NICARAGUA: MULTIMODAL LOGISTIC CENTER FOR REGIONAL AND GLOBAL TRADE 1. A Ship Canal joining 2. A Port at Punta 3. A port at Brito in the the Caribbean Sea and Águila in the Caribbean Pacific coast the Pacific Ocean coast 7. Tourist 6. 595.66km of 4. A Free Trade 5. An Complexes (Lodging Zone on the International Roads, highways, for access roads and Pacific coast Airport in Rivas construction/operation, (Rivas) 2 bridges opening to tourism later) US$40 TO 50 BILLION INVESTMENT 42
SELECTION PROCESS OF ROUTE Previously Identified Routes Eastern Segment of Routes: • 1, 2 - Bluefields Bay and north of the Cerro Silva Reserve • 3 - Bluefields Bay and central Cerro Silva • 4 - Punta Gorda and Tule River • 5 - Punta Gorda, Rio San Juan, San Carlos • 6 - Indio Maiz, Rio San Juan and San Carlos 43
Choice of route 4: It has superior economic cost, but it is the route with the lowest environmental and social impact 275.5Km Length, 280 m wide base, 30-33m depth Theoretical Capacity: 9,153 ships per year Expected load for 2050: 5,100 vessels per year (14 ships per day), with 30 hours of each boat traffic. Stretch Length Stretch Length West section 25.9 Km Stretch Length Lake Atlanta 35.9 Km East section 126.7 Km West Section (Rivas) 25.9 Km Lake Nicaragua 106.8 Km Lake Nicaragua 106.8 Km Caribbean Coast 90.8 Km Pacífic stretch 1.7 Km (mainland) Stretches Pacífic and Caribbean 16.1Km Caribbean stretch 14.4 Km Length by land 116.7 Km Total Length 275.5 Km Length by water 158.8 Km 44
Adjustments on Route 4 Inland Port is less vulnerable to sea risks Increased protection against tsunamis A Road linking the Port to Tola A Rock Bund to be designed to enable better mix of salt and fresh water to mangrove Healthy portion of Mangrove & most of Brito River will be preserved and the impact to Reserva Marina Isla La Anciana will be minimize
Adjustments on Route 4 West Entrance into the Lake (avoid populated areas) Canal alignment and airport location changed to minimize impact in Rivas
Adjustments on Route 4 The Lake Section There will be hydraulic dredging (suction) of sediment. There will be no blasting inside the Lake. 47
Adjustments on Route 4 Spoil Treatment in the Lake Silt and fine materials will be by confined dumping. Sand and hard materials will be distributed along the south side of the Canal route.
Adjustments on Route 4 Exit from the Lake The alignment has been changed for the output from the Lake to the eastern area of the Canal, in order to minimize the impact on the wetlands of San Miguelito
The Grand Canal project is designed to not to do net use of water from Lake Nicaragua The locks will capture water from the Basin of River Punta Gorda, which otherwise would flow into the Caribbean Sea. The supplementary water supply is provided through the Zarca Water Reservoir. A system for water conservation consisting of nine basins to recycle water in both locks and Camilo Brito (three basins associated with each of the three chambers forming the lock) will be built. Should reduce the total demand for water sluice 60%. 50
Adjustments on Route 4 Port Punta Aguila will be on reclaimed land Port Punta Aguila will be on dredge filled reclaimed land with minimal impact on the Indigenous People. All developments like Free Trade Zone will be confined to the reclaimed land. Canal route avoids impact to Booby Cay.
Brito & Camilo Locks: 3 Chambers & 9 water recicling pools Same design for both: three consecutive chambers, which would raise the boats over 10 meters by chamber, for a total of approximately 30 meters. Effective dimension for each one of the three chambers: 520 meters (long) x 75 meters (W) x 27.6 meters deep (threshold). Camilo Lock : located in the East segment of the Brito Lock : located on the west segment of the Canal, near the confluence of Punta Gorda with canal, near the Mono Negro River, Camilo Cano, approximately 13.7km from the approximately 14.5km from the Pacific Ocean. Caribbean coast. 52
Locks system The locks will raise or fall the ships between the level of Caribbean / Pacific Sea and the water level of Lake Nicaragua (30.2 to 33.0 meters). They will have the same design: they consist of three consecutive chambers, which would raise the ships over 10 meters by the camera, for a total of approximately 30 meters. Effective dimension for each of the three chambers: 520 meters (long) x 75 meters (W) x 27.6 meters deep (threshold). Each lock will require approximately 4.5 million cubic meters (Mm3) of concrete. 53
Comparison between the locks in the world NEW PANAMA LOCKS (3rd lane) BERENDRECHT LOCK • Current World’s largest lock • Design based on Berendrecht lock • Dimensions: 500 m x 68 m x 20 m • Dimensions: 427 m x 55 m x 18.3 m • Equipped with rolling gates • Equipped with rolling gates • No water saving basins • • Water Saving Basins Rik Thomas was design & construction manager (1984-1989) • SBE performed the reference design DEURGANCKDOK LOCK • Future largest lock in the world (2016) • Design based on Berendrecht lock • Dimensions: 500 m x 68 m x 22 m • Equipped with rolling gates • No Water Saving Basins • SBE is Owner’s Engineer BRITO & CAMILO LOCK’S (CARIBBEAN COAST) • Future largest lock in the world (2020) • Design based on Berendrecht lock – new Panama Locks • Dimensions: 520 m x 75 m x 27.6 m • Equipped with rolling gates • Water Saving Basins • SBE is Owner’s Engineer References in lock design 54
TWO PORTS WILL BE BUILT, 1 IN THE PACIFIC AND OTHER IN THE CARIBBEAN BRITO PORT ÁGUILA PORT - Design capacity: 1.68 million TEU / year . - Design capacity: 2.5 million TEU / year. Approximately 80 th in top 100 world ´ s Approximately 58 th in top 100 world ´ s container ports container ports - North Wharf Structure, 1.100 meters long, - Wharf Structure for container ship 200,000 capable of supporting 200,000 DWT bulk DWT; carriers or 25,000 TEU container ship; - Berthing Facilities 1,300 meters long, with - West Wharf berthing facilities, 1,200 meters capacity for: long, with capacity for: * Three container berths 150 thousand * Three container berths 70,000 DWT; DWT; * A jetty oil / fuel of 30,000 DWT; * A jetty oil / fuel of 30,000 DWT; * 13 workboat berths * 8 working boat docks; - Other marine services. - Other marine services.
SEAWALLS The Pacific breakwater would extend approximately 800 m from the shoreline on both sides of the canal. It will be constructed with armor rock sourced from the Brito Lock. The overall footprint of each breakwater will be about 62,000 square meters (m2), or 124,000 m2 total for the two breakwaters. The Caribbean breakwater would include two different structures, one at each side of the canal. The breakwater located to the north of the canal would extend south from Punta Aguila approximately 7 kilometers to a location about 3 kilometers southwest of Booby Cay. The breakwater located to the south of the canal would be located about 1 kilometers north of the mouth of the Rio Punta Gorda and would be oriented perpendicular to the shoreline and extend approximately 3.5 kilometers. The overall footprint of north breakwater would be about 238,000 m2. The overall footprint of the south breakwater will be about 105,000 m2. Combined, this would be approximately 343,000 m2 total for the two breakwaters. 56
Bridge over the Panamerican Highway 80M high & 600M long 57
AGUA ZARCA HIDROELECTRICAL CENTRAL 10 MW Canal operations require about 18 MW of electricity mainly for security operations (approximately 9 MW for each lock). Power will be supplied by Agua Zarca and the National Network through transmission lines that connect the Brito lock to the existing electrical substation Rivas and Camilo to the Agua Zarca Hidroelectrical existing electrical substation Corocito. Project will start operations simultaneously with the Grand HKND will have backup diesel generators Canal and provide power for the in each of the locks to ensure reliable operation of the eatsern Lock. power in the event of a power outage. 58
The Canal will be the largest civil earthmoving operation in history • 5,000 Mm3 of excavated material Excavated material disposal areas • 4,019 Mm3 of "dry" material from upland (rock and (West) soil) • 980 Mm3 marine and freshwater dredging. • 35 areas for material disposal along the canal • • 7 Disposal 3,400 Mm3 storage volume and a total area of 179 areas km2 • These areas have been located to minimize • 731Mm3 environmental and social impacts 715Mm3 of lake Material sediment will be placed in 3 disposal sites in the • 4,880ha. area Lake • The final surface of these areas will be graded so that they can be restored to agricultural or forestry. Disposal sites for dredged material (Lake Nicaragua) Disposal sites for dredged material (East) 3 material disposal sites 15 Disposal areas 610Mm3 of dredged 6,644Mm3 of material material 26,620ha Area
CANAL STEP BY STEP JULY, 2014 • PRESENTATION OF THE ROUTE AUGUST 23-OCTOBER 15, 2014 • CENSUS FROM POPULATION AND PROPERTY NOVEMBER 20, 2014 • PRESENTATION OF THE GRAND CANAL PROJECT DECEMBER, 2014 • PRESENTATION OF FESEABILITY STUDIES DECEMBER 22, 2014 • CONSTRUCTION STARTS DECEMBER 2019 • CONSTRUCTIONS ENDS 60
UPCOMING TENDERS Locks Land Ports Dredging movements
WHAT IS THE LOGIC OF THE GRAND INTEROCEANIC CANAL? 62
GEOGRAPHICAL POSITION OF NICARAGUA GEOGRAPHICAL PROXIMITY Norfolk – Long Beach route (Distances between Panama Canal and Grand Canal of Nicaragua) WORLD SEABORNE TRADE Norfolk, Long VA Beach, CA Route by Nicaragua is 943 Km (509 Mi) closer Route by Gran Canal of Nicaragua: 7,955 Km Route by (4,295 Mi) Panama Canal: 8,898 Km (4,804 Mi) 63
WATER RESOURCES WATER NICARAGUA…..BLESSED WITH THE LARGEST WATER RESOURCES BETWEEN U.S. GREAT LAKES AND GUARANI ACQUIFER OF PARAGUAY BUT WITH THE LOWEST LEVEL OF UTILIZATION AVAILABILITY: 38,668 CUBIC METERS PER YEAR PER CAPITA (M3/YEAR) Diagnostico del Agua en las Américas, IANAS, FCCTAL, 2012 64 http://www.cira-unan.edu.ni/media/documentos/nicaragua.pdf.pdf
THE WORLD NEEDS A LARGER CANAL TRIPLE E SHIPS DOMINATE WORLD SEABORNE TRADE World seaborne trade World exports of goods, by value, (Millions of TM) 2000-2020 12.572 14.000 Source: HKND-Group.com 10.529 12.000 8.839 10.000 8.000 246.5% 6.000 Global maritime 3.585 4.000 traffic will grow 42.2% between 2.000 2011 and 2025 0 1988 2011 2019 2025 From US$ 19.9 trillion to US$35.6 trillion in 2020 Transiting the By 2030 post-Panamax vessels Panama Canal will represent 30% of all vessels today and 60-70% of world trade Vessels of 10,000 TEUs and over Can transit the accounted for 48% of the order Panama Canal after book as of October 2011. It is expansion evident that large ships are displacing smaller ships in all Can not transit by Mega container, (2014-) trade routes due to cost Panama Canal even 13,500 TEU, 366*49*15.2m efficiencies of larger ships after expansion US Army Engineers Corps, 2012 65 TEU:20-feet container equivalent unit
LIMITATIONS OF THE PANAMA CANAL FOR LARGER VESSELS Current Locks New Locks Panama (new): Nicaragua: Length: 427m Length: 520m Width: 55m Width: 750mm Depth: 18.3m Depth: 27.6m Height: 61.3m Height: 80m Las Américas bridge 61.3 m Maersk EEE 66
EEE VESSELS REDUCE 400 meters long, 59 meters wide y 73 meters high, 12.6 TRASNPORT COSTS AND CO2 meters deep EMISSIONS Reduce CO2 emissions by 50% per twenty- foot-equivalent units (TEU), compared to industry average on the Asia-Europe trade. Consumes approximately 35% less fuel per container than the 13,100 TEU vessels Emits less grams of CO2/ton km than other UP TO 30% REDUCTION IN COST OF forms of transport METRIC TONNE SHIPPED 67
The largest ships in the world 1. MSC «OSCAR» ( January 2015) • Capacity: 19.224 TEU • 395.4 m. in length • 59m breadth • 16m depth Property of China’s Bank of Communications 2. CSCL GLOBE (December 2014) • Capacity:19,100 TEU • 400 m. in length • 58.6 m breadth • 15m depth • Consumes 20% less energy than a ship of 10,000 TEUs Property of China Shipping Container Lines MAERSK LINE (Triple E’s owner) plans to build six ships of 19,000 TEU by 2017
SOME OF THE WORLD'S LARGEST SHIPYARD 4 1 2 3 8 5 6 7 9 1. Hyundai Heavy Industries , Korea. 2. Samsung Heavy Industries , Korea. 3. Daewoo Shipbuilding & Marine Engineering , Korea. 4. STX Offshore & Shipbuilding , Korea. 5. Jiangsu Rongsheng , China. 6. Oshima Shipbuilding Co. , Japan. 7. Hudong-Zhonghua Naval Shipbuilding , China. 8. Jiangsu New YZJ , China. 9. Changxing , China (under construction).
WHO BUILT THE LARGEST SHIP IN THE WORLD? Maersk EEE was built by Daewoo Shipbuilding in Okpo, Prelude FLNG is the largest ever built first floating liquefied South Korea, 2013 natural gas platform in the world and the ship. The Prelude is being built by Samsung Heavy Industries in Geoje, South Korea, by Royal Dutch Shell. Hyundai Heavy Industries has begun the construction of the first of five container ships of 19,000 TEUs of China Shipping Container Lines.
Dimensions and capacities of the Grand Interoceanic Canal of Nicaragua The capacity Grand Interoceanic Canal of of a Triple-E Nicaragua vessel is 18,800 TEU • Length: 275.5km (106.8km on Lake Nicaragua) • Width: 280m Panama Canal • Depth: 30-33m Actual: • Capacity: 5,100 ships a Length: 80Km year(2050), with 30 hours of Width : 91-300m transit each boat. Depth : 12.8m (Atlantic), 13.7m (Pacific) • The Canal will allow the transit 4,500 TEU vessels, maximun of: With the ampliation: – 25,000 TEU container ships , – 13,000 TEU vessels, maximun – bulk ships of 400 thousand dwt, – Bulk ships of 200 thousand dwt – Oil tankers of 320 thousand dwt. – Oil tankers of 120 thousand dwt 71
Estimating the state of demand for maritime transport in 2050 In 2050 Present day • • Assuming a 2% average growth The gap Supply / demand of ships has been increasing per year, the growth will be from 150 million today to 450 million TEUs in 2050. With 4% this would become 640 million TEU. • Entire fleet will be replaced. • If a fleet three times larger than the current is assumed, US $ 600 billion would be needed to • Cumulative loss of $ 6 billion in the period 2009- acquire biggest new fleet. The 2013 for the 18 companies who have published largest ships are constructed in their results. China, South Korea and Japan • Without Maersk Line and CMA CGM, the remaining 16 companies have an accumulated loss of US $ 10.4 billion. • Strategy for survival: larger, more efficient Fuente: Lars Jenssen, CEO SeaIntel Consulting. ships to save the gains. 72
THE INTEROCEANIC GRAND CANAL OF NICARAGUA: THE ROUTE FOR EXTERNAL COMMERCE The Grand Canal will assume 5% of the world trade transport 900 million tons per year will transit by the Canal Iron, oil, gas from Venezuela and Brazil, soybean production from Route of copper, fruit and wine from Chile and Peru to South America to Asia Europe and European manufactured goods to the west coast of South America Oil and gas from the United States and Canada (Keystone XL Pipeline) to Asia Route from the West Coast USA to Europe and vice versa 73 Asian manufactured goods to USA, South America and Europe and vice versa
CHINA: FROM SELLER TO BUYER • In the past 30 years, the world was buying from China Size of economies of • In the next 30 years, the world will be selling to China 45.000 • The size of the Chinese economy will reach the United China and the United 40.000 States and 31 years from now will exceed it. States • China will be soon the largest consumer in the World 35.000 30.000 25.000 Estados Unidos United States 20.000 China 15.000 10.000 5.000 China will be the world's largest economy by 2044 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 Source: IMF (1980-2018) & Own estimates (2019-2044) China’s Oil imports United States Oil and gas exports 140 300 (US$ billion) (US$ billion) 120 250 100 2000: US$ 18.9 billion 200 2000: US$ 12.01 billion 2018: US$ 225.10 billion 80 2018: US$ 113.09 billion 150 (projection) 60 100 40 50 20 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 74 Source: CEIC Source: IMF
Port Throughput by Relative Share (Containers) Source: Gonzalez laxe, Freire & Pais (2011)
Freight Estimated Savings in the main exports to Asia Considering that the transport of goods in larger vessels reduce the cost of freight by 30% per ton. FOB exports from Brazil to Asia (excluding Middle East) January-September 2014. example: 3 main products (million tons. and US $ million) Approximate Estimated Weight (TM.) US$ cost of freight Savings General Total (others included) 250.94 59,320.65 4,449.05 1,334.71 Soy 35.60 18,127.05 1,359.53 407.86 Iron ore 167.72 12,481.26 936.09 280.83 Oil* 7.21 45,45.65 340.92 102.28 Ministry for Development, Industry and Foreign Trade, Brazil *It will grow with offshore fields Venezuela fuel exports to Asia. Total exports from Argentina to 2012 China. 2012 US$ millions US$ millions Total 38,363.3 Total 5,900 Approximate cost Approximate cost of freight 2,877.2 of freight 442.5 Estimated Savings 863.2 Estimated Savings 132.8 76 World Trade Organization (WTO)
IMPACTOS DIRECTOS DEL CANAL Y LOS SUBPROYECTOS EN EL EMPLEO Operación: 113,000 Más de 3,000 MÁS EL EFECTO 50,000 puestos 3,700 puestos de puestos de de trabajo en la trabajadores en MULTIPLICADOR trabajo en la trabajo en los fase de 2020 zona de libre centros construcción EN EL EMPLEO comercio turísticos 12,700 en 2050 • 25 mil trabajadores extranjeros • 25 mil trabajadores nicaragüenses 77
NUEVO PUERTO EN EL CARIBE REDUCIRÁ LOS COSTOS DE IMPORTACIÓN Y EXPORTACIÓN EN NICARAGUA Exportaciones FOB por Puerto Cortés y Limón Importaciones CIF por Puerto Cortés y Limón (Millones de dólares) (Millones de dólares) 700 120 602,28 99,99 600 100 90,09 87,68 491,39 81,79 500 77,91 449,80 77,69 77,53 73,88 80 390,86 400 60 300 224,20 212,08 40 200 148,20 136,68 20 100 0 0 2010 2011 2012 2013 2010 2011 2012 2013 PUERTO CORTES PUERTO LIMON PUERTO CORTES PUERTO LIMON Fuen uente: DGA Fuen uente: DGA Ahorro Anual de Costos Logísticos a la Economía Doméstica Cálculo del Ahorro de Costos Conceptos % del PIB US$ millones PIB de Nicaragua en 2013 100% 11,255.60 Costos Logísticos sin Puerto Águila 25% 2,813.91 Costos Logísticos con Puerto Águila 13% 1,463.23 Ahorro Generado por Puerto Águila 12% 1,350.67 Fuente : Martínez & Piñeiro (2014) 78
Development Process of the Gran Interoceanic Canal Legal Framework July 3, 2012 Law 800 'Law of Legal Regime of the Grand Interoceanic Canal of Nicaragua and Creation of the Authority of the Grand Interoceanic Canal of Nicaragua» September 5, 2012 Memorandum of Understanding with HKND May 23, 2013 Consultations with the Autonomous Southern Caribbean Regional Council June 14, 2013 Law 840 "Special Law for the Development of Infrastructure and Transportation relating to Nicaraguan Canal , Free Trade Zone and associated infrastructure" 2013-2014 Constitutional Reform August 26, 2014 Permission granted for canal studies to HKND by the Territorial Government Rama-Kriol 79
Law 840 «Special Law for the Development of Nicaraguan Infrastructure and Transportation related to the Canal, Free Trade Zone & Associated Infrastructures » • Grants an exclusive concession in favor of The Investor and its concessionaries for the Development and Operation of every Sub- Project, according to the MCA for a term of fifty (50) years, renewable for other 50 years. • HKND assumes all costs and risks of the feasibility • HKND commits to mobilize at least US$40 billion for the construction. • The Nicaraguan Canal Commission approves the plans of the subprojects and monitors their execution, emits environmental and construction permits through a one stop shop window and is in charge of environmental protection. 80
THE MASTER CONCESSION AGREEMENT AND IMPLEMENTATION FRAMEWORK WITH NICARAGUA HK INVESTMENT DEVELOPMENT COMPANY, LTD. (HKND) Law 840 grants to HKND Concession to conduct studies, and to promote further concessions for subprojects. Concession of use for a Fiscal and legal incentives period of 50 years, to attract investments to renewable for another the Canal and 50 years. subprojects. Commission of the Nicaragua will start, 1% Development of the Grand of shares and shall be Canal Project will monitor increased by 10% its financial and physical stake in every 10 years. execution of each Also receive $ 100 million subproject and will issue in 10 annual payments all environmental permits for the concession. and construction permits. Each sub project should have its feasibility studies and a plan approved by the Commission of the Grand Canal Project. 81
FEASIBILITY STUDIES 2nd largest governmental construction company of China The 5th environmental and social consultant World's most prestigious consulting firm • Group of Xuzhou Construction Machinery (XCMG) No. 7 construction machinery industry of China • Shipping company • China Ocean Shipping (Group) Company (COSCO); • World leader in shipping 5th most prestigious law firm in the USA • International Marine Shipping Container of MEC Mining. China(CIMC); Australia. • The world's largest Open pit manufacturer of shipping mining and civil containers engineering Washington-base • China National Corporation public relations Civil Engineering, of Building Materials (CNBM) based in Belgium; • Major industry group of Communications with Specialized in locks building materials of China the financial media and canals (Bloomberg, Financial Times, among others) INVESTORS: .. Ò ther investors PRIVATE PRIVATE when feasibility MULTILATERAL HKND EQUITY INVESTMENT studies are concluded BANKS FUNDS BANKS 82
From Financial Times : “ Public face of $40bn project to boost China-Latin America links” "It is one of the largest infrastructure projects in the world. T he feasibility study alone is set to cost $900 million. And when complete, the Nicaragua Canal should lower transport costs for shipping oil from Latin America to China. " "Right now, 4,000 people, including staff McKinsey, British environmental consultancy ERC the law firm from USA, Kirkland, and research institutes belonging to the CRC, are working on the feasibility study. Mr. Wang said that HKND could cover with its own funds, the operating cost even before the start of construction, scheduled for late 2014 " 83
« The world ´ s largest container carrier Maersk Line believes it, makes good sense to construct an alternative to the Pnama Canal that can Maersk Line apoya el handle the biggest container Canal de Nicaragua ship .» “ Building a Nicaragua Canal seems to make sense. The Canal is projected to have room for the biggest ships, while also saving 800 kilometers on a journey from New Yor to Los Alngeles. We generally support infraestructure improvements. It brings opportunities for transport, and therefore trade. When we built container ships 20 years ago were scaled according to the Panama Canal, but, ships today are larger than 4,500 TEU that could fit into the larger ships then. Even after the Panama Canal expansion, larger 84 ships can not fit there, "Keith Svendsen, Head of Operations at Maersk Line daily.
ONUDI is going to provide technical advice to the Commission of the Grand Canal, in environmental issues, resource efficiency, quality and certification, employment generation and monitoring and evaluation of projects 85
CEMEX CONSTRUCTS A NEW PLANT Construction of a new cement grinding plant in Nicaragua Announced in Monterrey on May 5, 2014 cost of US $ 55 million. • First pahse: – First half of 2015 – US $ 30 million in the installation of a cement factory in Ciudad Sandino – Production capacity of 220,000 tons. • Second phase – End of 2017 – The installation includes a second grinding mill – Capacity of 220,000 tons. Positioning for Central American development pole of the century in Nicaragua. 86
PUBLIC OPINION ON THE CANAL Monitoring System of Public Opinion(SISMO XLII) M&R Consultores Diciembre 2014 87
WHAT ARE THE CHALLENGES AND OPPORTUNITIES FOR NICARAGUA? 88
CANAL AREA CHALLENGE All construction projects have an environmental and social cost. The route has been chosen, engineering choices have been made and the necessary adjustments that minimize environmental and social impact have been decided. Mitigation and compensation measures, improving the environment to cause a net positive environmental impact THE GOAL IS A POSITIVE NET ENVIRONMENTAL IMPACT, WHETHER IN THE AREA OF CANAL OR AT THE NATIONAL LEVEL. WITH THE RESOURCES FOR MASSIVE REFORESTATION, WHICH CAN INCREASE THE RESILIENCE OF THE ECOSYSTEMS. 89
Commitment to increasing the ecosystems resilience Small-scale dredging of West Entrance into Most of the Río Brito A road linking the port the lake by suction Lake (avoid populated and healthy with Tola. (hydraulic)l. areas). mangroves NOT be THERE WILL BE NO A rock wall will be affected. Canal alignment and BLASTING IN THE LAKE designed to allow a good mix of fresh and Brito ´ s Mangroves, Airport location will The sand and hard salt water for the materials will be arranged southward of Canal, change to avoid at along the south side of mangroves. remain intact. impacting Rivas. Route Canal.
Commitment to increasing the ecosystems resilience The alignment has been Puerto Águila will be changed to the output Protection of Indio filled with dredged to from the Lake to the Maíz . The Canal acts as The impact on palm minimize the impact on east of the Canal, in a barrier to the forest in the Caribbean Indigenous Peoples. order to avoid intrusions of people in will be minimized. Canal Route avoids the environmentally the area. impact on Booby Cay. sensitive areas.
Globally, the construction of the Grand Canal will reduce 32.5 million tons in annual CO2 emissions made by maritime trade worldwide Comparison of CO2 emissions in some countries CO2 emissions (thousand metric tons) and the emissions avoided by the transit of Mega Boats trough the Canal (thousands of metric tons) 1.309.321 1.273.154 1.179.581 1.060.031 1.011.251 931.904 857.901 799.996 749.184 Fuente: Indicadores Mundiales de Desarrollo. Banco Mundial The avoided emissions are greater than the emissions of the countries of Central America and comparable with those produced by countries like Switzerland 92
NET POSITIVE ENVIRONMENTAL IMPACT: On the site of the Canal Prevent further penetration into Reserves Indian Corn and Punta Gorda Reverse Provide compensation and Rehabilitation of degraded areas funding to improve in Indio Maiz Reservations and deforestation Punta Gorda and improve RAMSAR site of San trends watershed management Miguelito. Provide alternatives and better living conditions 93
THE CHALLENGE OF AN ONGOING DEFORESTATION • 25% of the total land area is forested. • Current rate of deforestation is 70 thousand hectares annually. • The estimated reforestation of 20 thousand hectares per year. It is necessary to contain the advance of the agricultural frontier THE ROUTE OF GRAND INTEROCEANIC CANAL, RUNS THROUGH AREAS WITH DEGRADED SOILS BY THE AGRICULTURE FRONTIER 94
NET POSITIVE ENVIRONMENTAL IMPACT: NATIONAL LEVEL Integrated watershed management Stop (massive reforestation, reinjection present and of water, biodiversity protection) future sedimentati on of Lake MAS MASSIVE Nicaragua REFORESTATI REF TION • Protection of local populations from flood or drought. • Environmental monitoring, climate Strengthen and integrated health. protected areas — 17% territory ECLAC estimate that in 2011 Nicaragua had adaptation needs over US$ 1,900 Millions The Canal is a water project whose viability depends on water and this on massive reforestation and watershed management. 95
OPPORTUNITIES • Opportunities for young Nicaraguans and Central Americans for professional, technical, and skilled formal sector employment in news fields, including: – Example 1: Maritime industry – Example 2: Regional and world multimodal logistical center 96
WHAT ARE THE EMPLOYEMENT AND BUSINESS OPPONTUNITIES? 97
OPPORTUNITIES • Opportunities for young Nicaraguans and Central Americans for professional, technical, and skilled formal sector employment in news fields, including: – Example 1: Maritime industry – Example 2: Regional and world multimodal logistical center 98
A Free Trade Zone on the Pacific coast (Rivas) Location: 20 km from the Pan American Highway and Rivas in the east, 120km from Managua in the north , 8km from the tourist complex planned in the south, and 17km from San Juan del Sur, and 16 km from the new airport near Rivas. 4 functional areas: 29.2Km2, 113 thousand jobs Urban Areas: 15.08 km2. 140 thousand residents Export Processing Zone: 7.87Km2. Free Trade Zone: 4.34Km2. 58 thousand jobs. 30 thousand comercial jobs. US$2,000 million in 2030 US$25,000 million of import and export trade in 2030 Financial Offices Area: 0.82Km2. will focus on providing financial, and transportation services. 25 thousand jobs 99
Touristic Complexes The complex will be: • Superior Field Service lodging during project implementation • Tourism destination for Tourist Complex Nicaraguans • 6.94km2 • • 377,600 m2 of built 1st world level area themed coastal • resort in 761 villages • Nicaragua Hotel with 1,400 rooms, and from 1.800 to 2.200 beds • 3,000 jobs 100
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