Nearshore Americas

Uncertain Future for Honduran Rival to Panama Canal

Honduran President Xiomara Castro has cast a shadow of doubt on his country’s ambitious US$20 billion transoceanic railroad project, calling for a comprehensive feasibility study.

Castro’s move sparked anxieties that the country’s long-held dream of a “dry canal” might be slipping away, mirroring the fate of a similar project abandoned by neighboring Nicaragua.

The decade-old plan envisioned over 300 kilometers of tracks connecting Amapala Island on the Pacific coast with Puerto Castilla, a key container port in the Caribbean. This mega-railway aimed to bite into the lucrative market serviced by the Panama Canal by offering a shorter route between the Atlantic and Pacific.

Despite repeated claims of interest from potential investors, including China, Spain, Italy and South Korea, no concrete funding commitments have materialized. This lack of tangible progress, despite years of fervent pursuit, is likely the driving force behind the president’s decision to re-evaluate the project’s viability.

Honduras has relentlessly courted investors, even severing diplomatic ties with Taiwan in 2023 to appease China, a global infrastructure powerhouse.

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However, a 2013 agreement between Honduras and China Harbour Engineering Company to build 10 rail lines connecting Puerto Cortés and Puerto Amapala, supposedly the initial leg of the transoceanic project, has seemingly stalled. The fate of this agreement remains uncertain.

Over the past few decades, several Central American countries, including Costa Rica and Guatemala, explored building alternative routes to compete with the Panama Canal. Nicaragua went farthest, even forming a public company to propel the project forward. In 2012, a Chinese firm  came forward to build a water canal. Despite this huge attempt, the undertaking ultimately faltered after officials found it financially non-viable.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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