It looks as if Managua may be losing patience with HKND over the delays in starting the canal. According to source from within Albanisa, the company that handles Venezuelan aid and investment to Nicaragua, “We are hoping they will release the money to compensate landowners in the canal route, but so far they have only made excuses and want the government to provide the funds.” The source went on to allege that Albanisa has been financing HKND’s operations thus far. “My understanding is that the government already told HKND that they should stop using Albanisa funds and now invest their own money.”
That is triply interesting. Albanisa is 49%-owned by Nicaragua’s state oil company (Petronic) and 51% owned by PDVSA. Petronic buys oil from PDVSA at market rates, financed via Petrocaribe. Petronic then resells the oil and hands over the resulting revenue to Albanisa. 50% of the money goes back to PDVSA, while the remainder is split between a social fund administered by the Bolivarian Alliance and Albanisa itself. In other words, Albanisa and the social fund are financed by cheap loans from Venezuela. (The details can be found here, an English interview with the then-head of Petronic.)
Albanisa then uses that revenue to finance investment projects. (Details here.) The flow is around $400 million per year; as of June 2014 the company had received a total of $3.1 billion. Given that all the activity so far has consisted of some rather desultory roads around Brito, it is certainly plausible that Albanisa is financing everything.
The story has three implications. (1) Venezuela has been keeping the project moving forward, at least indirectly; (2) HKND is having real trouble finding investors; and (3) Managua is having second thoughts.
I would have thought that HKND would be able to get going on the free trade zone; after all, they will need it. But it seems as though they are having trouble getting even the funds to start that. Maybe Beijing does not think this is such a good idea after all.