State-owned company China Huadian Overseas Investment will build the Tumarín and Mojolka power projects in Nicaragua. The Daniel Ortega-Rosario Murillo regime announced the agreement in mid-October, state media El 19 Digital reported.
“Nicaragua seeks to carry out infrastructure projects, but their authenticity and viability are being questioned,” Ricardo Abello, professor of International Law at the University of Rosario, Colombia, told Diálogo on November 18. “This creates distrust about the honesty and real scope of such initiatives, due to the country’s political context.”
Tumarín is foreseen to be completed in seven years, while Mojolka will require some five years for completion, Latin American business platform Bnamericas indicated. The agreement was signed on October 17 in Beijing, during the Third Forum of the Belt and Road Initiative.
The Ortega-Murillo regime did not provide details on the nature of the financing. There are, however, signs that seemingly indicate a flow of funds into contracts that lack transparency and supervision. Evidence of such is the current agreement for the expansion of the airport known as Panchito, in Punta Huete, which was awarded without any bidding process to a Chinese firm, Nicaraguan news site Articulo 66 reported on October 17.
“One of the main concerns in establishing trade agreements with China lies in their demands to exercise complete control, which would not be beneficial for Nicaragua,” Abello said. “Chinese companies bring with them a complete package and it isn’t clear what will be left for the Central American country.”
Abello also stressed that although China is one of the main builders of major infrastructure in Latin America, this does not ensure the quality or adequacy of the projects. “The best technologies and knowledge come from other countries,” he said.
Tumarín was to be the largest power plant in the country. It stands out as one of the many ambitious infrastructure projects that the Ortega-Murillo regime failed to launch until now, Spanish news agency EFE reported. In 2009, Managua approved the law for its construction in Apawás, a hard to reach community in the South Caribbean Coast Autonomous Region.
This initiative, with an estimated cost of more than $1 billion, sought to generate around 253 megawatts, representing 25 percent of the country’s total electricity consumption. Its construction and operation had been granted to a consortium headed by Eletrobras, Brazil’s largest state-controlled electricity group and private Brazilian company Queiroz Galvão. According to independent news site Nicaragua Investiga, it was expected to start operations in 2016.
After Ortega tried to get involved in the project, proposing that his company Albanisa be a partner and builder, the Brazilians rejected the proposal, the news site reported. In 2019, the United States sanctioned Albanisa for its ties to state-owned Petróleos de Venezuela.
Despite its Brazilian backing, Tumarín faced difficulties from the beginning and finally collapsed five years later, due to the corruption scandals known as Lava Jato, which shook Brazil, Argentine news site Infobae reported.
This time, Artículo 66 reported, the Ortega-Murillo regime, which operates without restrictions, without oversight by the Comptroller’s Office, and without opposition from local environmental organizations, opted to revive the Tumarín project with the collaboration of China.
“China establishes commercial relations with any country […], what matters is to ensure the necessary stability to carry out its strategic projects,” Abello said. “However, any kind of unequal ties with this power will never be favorable.”
For Abello, when China seeks to have an impact and geopolitical control in a region, the dynamics change: doing business becomes ceding territory. Beyond commercial transactions, what China really seeks are strategic spaces for its own benefit.
For China, Nicaragua represents a tactical territory, geographically located between the Caribbean and the Pacific, which gives it the opportunity to establish ties in that region, especially under political regimes willing to abide by its wishes, Abello said.
From this perspective Nicaragua becomes a fertile ground for Beijing; a place where it can cultivate its influence. This model of expansion is similar to the strategy China employs in Africa, showing the complexity to which this country “is getting its hands everywhere,” he added.
Other projects announced by the Nicaraguan regime to be developed with China are the expansion of Punta Huete International Airport; the studies, as well as design and construction of the Managua-Masaya-Granada railroad; and the expansion of the Costanera coastal highway, Nicaraguan newspaper La Prensa reported.
In Nicaragua, the new energy generation projects are advertised as contributing to increasing competitiveness and reducing electricity service costs. In reality, however, those who benefit from the energy industry are the Ortega-Murillo family and their partners, Nicaragua Investiga reported.
Among the central issues is the imbalance in the Nicaragua-China relationship. “We are seeing a scenario in which China gets benefits, while Managua and the Latin American region do not have favorable agreements in this dynamic,” Abello concluded.