Nicaragua has entered into an agreement with a Chinese company to construct a substitute for the Panama Canal. The deal worth $40 billion (£26 billion) was announced by the country’s national assembly president Rene Nuñez, says a report from Guardian.

Nicaragua

The agreement that allows the Chinese company a 100-year concession will no doubt raise some concerns from the parties affected. The project when completed, will underscore China’s expanding role in world trade and at the same time undermine the U.S. dominance over the important shipping route.

Details of the Canal

Other specific details including the name the Chinese company has not been disclosed yet, but Luis Callejas, an opposition congressman, told that the government may allow a 100-year lease to Chinese company.

Recently, Daniel Ortega, Nicaragua’s president told that the new channel will be constructed in the north of the country passing the waters of Lake Nicaragua.

The new channel is being planned to have a capacity greater than that of Panama Canal. Presently, the 99-year-old Panama Canal is being upgraded involving cost a of $5.2 billion.

Nicaragua’s Govt Plans:

The Nicaraguan government, last year, revealed that the new channel should be big enough to allow passage for mega-container ships having dead weight of up to 250,000 tonnes, which is more than twice the size of the ships that will be able to pass through the newly improved Panama Canal.

A bill given to congress last year details that the new canal will be 22 metres deep, 20 metres wide and 286 km (178 miles) long. Nicaragua’s canal, with such specifications, will be bigger than Panama and Suez.

The initial plan that was made public, included that the government will be the majority shareholder in the project. The construction on the canal was expected to take 10 years, and it will take six years to make it ready to allow the passage of ships. However, such plans are still in place as unclear.

Territorial water disputed

Earlier, a former Colombian foreign secretary and Miguel Ceballos, a former vice-minister of justice, accused China of influencing a settlement in Nicaragua’s favor related to the territorial waters that is now a part of the project. It was a 13 year old dispute for 75,000 square kilometres of sea.

Nicaragua also accused Colombia and Costa Rica of raising unnecessary problems to prevent the project going ahead.

On Friday, national assembly of the country will hold discussion on two bills related to the project, one of the bills is concerning the environmental impact of the project.