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La pista del aeropuerto de Punta Huete en 2006. LA PRENSA/Archivo

Ortega indebts Nicaragua nearly $400 million to China for construction of airport

Ortega's regime hopes that the new airport will have direct flights from Iran, China, Russia, Cuba, Canada, Europe, and Venezuela. The National Assembly must urgently approve the millionaire credit

Last Friday, Daniel Ortega’s regime ordered the National Assembly to approve a decree to borrow from China nearly 400 million dollars to boost the reconstruction and modernization of the Punta Huete International Airport. The project will be overseen by the Ministry of Transportation and Infrastructure
(MTI).

The construction of this airport was initiated by Ortega during his first term in the 1980s for military use, and although it was never completed, it caused tensions with Washington, and it is not impossible that the new construction will reignite these tensions.

The fear of reigniting the tensions caused by its construction arises because its reconstruction is being approved at a time when tensions between the United States, Russia and China are escalating. The Russian invasion of Ukraine keeps the United States in an indirect confrontation with Russia. These tensions are compounded by China’s threat to regain control of Taiwan by 2027 at the latest, as the United States has confirmed that it will act to defend the island, which China considers a “rebel province”.

Also read: La reactivación del aeropuerto Punta Huete

Loan was approved without objection in the National Assembly

Despite the magnitude of the loan, Ortega’s regime ordered the deputies to approve it urgently, a condition that speeds up the process and avoids any possibility of analysis by the Legislature. The loan was approved on Friday without objections from the deputies, all of whom are allies of the dictatorship.

Despite the magnitude of the loan, Ortega’s regime ordered the deputies to approve it urgently, a condition that speeds up the process and avoids any possibility of analysis by the Legislature. The loan was approved on Friday without objections from the deputies, all of whom are allies of the dictatorship.

Chinese company protected by law from default payments

The Ministry of Finance, which appears as counterpart to the agreement, has committed to pay 20 percent of this loan in advance, and the remaining amount will be provided by the Chinese company, based in Beijing, and represented by Yan HaiLu. In addition to providing part of the credit, this company will be responsible for designing and executing the project, which is located 52 kilometers from Managua.

The loan agreement leaves the Chinese company well protected, unlike the State of Nicaragua, as it establishes that the overall credit will be repaid over a period of 15 years, with a 4.5-year grace period (equivalent to 54 months), and an interest rate of 5.2 percent.

Additionally, the State of Nicaragua must pay an initial commission of 1.3 percent on the loan amount, a 0.7 percent commitment fee, another 0.5 percent for opening the credit, and 1 percent for management. Ortega’s regime assures that the credit conditions comply with the State’s debt guidelines.

Although the project execution date and the construction period are not specified, the regime says it expects the new airport to serve as a transit point for 3.5 million national and international passengers, surpassing the 1.3 million recorded in 2023 at the current Augusto C. Sandino International Airport in Managua.

Direct flights from Asia and Europe

According to the government’s aspirations, which once promised a canal project that never materialized, if the airport is built, it will handle an annual cargo movement of 35,000 tons and will be able to accommodate aircraft of maximum capacity.

Furthermore, they hope that the airport will have direct flights from Iran, China, Russia, Cuba, Canada, Europe, and Venezuela, with 20 routes. The regime also expects the cost of air transportation in Nicaragua to decrease.

The project is expected to be completed in 48 months, and it will commence 90 days after the construction project’s start order is issued, as stated in the document. To start the project, the regime must provide the Chinese company with the 20 percent advance payment of the agreed amount for both tranches, which would be around $80 million for each tranche.

The first disbursement must occur within a period of 12 months; otherwise, the credit agreement will become legally invalid unless Ortega’s regime and the Chinese company engage in negotiations.

The 48-month period includes 8 months for the design of the project and 40 months for its execution and completion.

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