Business

AMMAN — Jordan Chamber of Commerce’s (JCC) board of directors on Tuesday informed Senator Marouf Bakhit, Senate 2nd deputy president, and Jamal Gammoh, head of the Lower House’s energy and mineral resources committee, that raising electricity charges will negatively affect the competitiveness of the industrial sector and will lead to increasing operational costs.

In a JCC statement, the board said such a step would lead to job cuts at factories and stoppages or force industrialists to shift to neighbouring countries.

The board called on the Parliament to support the industrial sector and convince the government to freeze the decision at the current time, until a committee studies the effects.

The board noted that all studies JCC has made show that the sector will be “greatly” harmed. Bakhit stressed the importance of supporting the sector due to its high ability to employ Jordanians and its contributions to the national economy. 

AMMAN — Nippon Jordan Fertiliser Company W.L.L announced Tuesday in a press statement that its exports went up by 50 per cent this year, reaching a record 291,300 tonnes.

According to the press statement, exports last year stood at 193,000 tonnes.

Karim Halaseh, the firm's general manager, credited Australia for the improvement, indicating that exports to that market will reach 21,100 tonnes, as  the company is currently shipping 17,600 tonnes in addition to 3,500 tonnes shipped earlier this year.

He attributed the sales to the company's success in acquiring the  Australian Quarantine and Inspection Service (AQIS) level 1, which is a certification essential to maintaining Australia’s highly favourable animal, plant and human health status and access to export markets. 

"The AQIS certificate attests that  Nippon Jordan Fertiliser Company is eligible to export fertilisers to Australia which is one of the most important that consume highly-added value fertilisers," Halaseh said, noting that the company possesses the scientific and technical expertise on an international standard in the compound fertiliser industry.

"As such, Nippon Jordan Fertiliser Company is qualified to obtain the highest international quality certificates for fertiliser production," he added.

Referring to the latest shipment to Australia, Halaseh described that market as promising and, accordingly, the company views it as extremely interesting because it is one of the key agricultural lands, especially for grain production.

He said that a team from the Australian company that imports the fertilisers inspected the production process and conducted tests to verify the quality of the output and its adherence to the specifications agreed upon.

"The delegation visited the company's factories in Aqaba and was satisfied with the physical and chemical specifications of compound fertilisers produced to meet the Australian farming needs," the general manger added.

He remarked that the company conducted several experiments to produce new types of compound fertilisers with special specifications and elements  that would satisfy the needs of Australia's agricultural sector.

Amer Majali, the company’s chairman, said Nippon Jordan Fertiliser was able to achieve 291,000  tonnes of output from different types of fertilisers, following disappointments in previous years, pointing out that the volume is about 97 per cent of the 300,000  tonnes production capacity.

Majali added that the company’s profit for this year are close to $5 million due to higher production, lower costs and exports to new markets besides upgraded quality.

Of the company’s total exports this year, about 96,000 tonnes were for Thailand, Vietnam and Japan, 89,000 tonnes for Iraq and Turkey, 83,000 tonnes to Europe through Bulgaria, 1,550 tonnes to Sudan and 760 tonnes for the local markets. 

Noting that these markets are now considered traditional,  Halaseh highlighted the success of penetrating new markets in 2014 mentioning in particular the Australian and Sudanese markets as well as the Turkish which imports and re-exports to Iraq.

Jordan Phosphate Mines Company owns 70 per cent of Nippon Jordan Fertiliser, Arab Potash Company (20 per cent) and Japan’s Mitsubishi Corporation (10 per cent), according to Nippon website.

AMMAN — Jordan Industrial Estates Corporation (JIEC) attracted more than 700 industrial companies in 2014, 12.5 per cent higher than the 617 firms in the same period of 2013, its chief executive said Monday.

Ali Madadha indicated that the investment volume reached JD2,450 million this year, a 6.4 per cent increase over last year's JD2,293 million in JIEC's  five industrial estates. 

According to Madadha, exports of the industrial estates went up by 2.8 per cent in 2014 reaching JD1,090 million compared with JD1,060 million in 2013.

The exports constituted 25 per cent of the Kingdom’s manufactured goods  and 22 per cent of total national exports, Madadha said in a JIEC statement e-mailed to The Jordan Times. 

He added that these investments have provided 48,000 job opportunities this year, 17 per cent higher than last year's 39,000 job openings, noting that workers in industrial estates constituted 28 per cent of the total number of workers in the Kingdom's manufacturing sector.

The chief executive expects the industrial sector’s contribution to the gross domestic product to increase from 26.1 by the end of 2014 to 32 per cent by the end of 2025 in accordance with the 10-year economic plan, that was recently endorsed by the government, and the new investment law.

He revealed that JIEC is planning to establish new industrial estates in several governorates under the 10-year economic plan, in light of high occupancy rates reached in operational industrial estates.

In this context, Madadha indicated that the occupancy rate at the Abdullah II Bin Alhussein Industrial Estate in Sahab, established in 1985, reached 100 per cent with 448 industrial companies.

Occupancy rate at Al Hassan Industrial Estate, which has 138 industrial firms, reached 99 per cent, while in Al Muwaqqar Industrial Estate, the occupancy rate stands at 70 per cent having 49 industrial companies in its first phase, Madadha said. 

Al Hussein Bin Abdullah II Industrial Estate has an occupancy rate of 50 per cent with 22 industrial companies, while the first phase of the Aqaba Industrial Estate, that includes 38 industrial firms, registered a 90 per cent occupancy rate and the second phase reached 40 per cent.

ALGIERS, Algeria — Algeria's oil minister on Sunday called on the Organisation of Petroleum Exporting Countries (OPEC) to cut production and raise the price of oil, which has plunged dramatically in the last six months.

The call by Youcef Yousfi to OPEC, of which Algeria is a member, comes as the country is struggling to deal with a halving of oil prices from $120 barrel to $60 a barrel.

"For us, OPEC has to intervene to correct the imbalance and cut production to bring up prices and defend the income of its member states," Yousfi said in remarks carried by the state news agency.

While Algeria has some $200 billion foreign reserves, enough to cover imports for the next several years, it is heavily dependent on its oil revenue which provides 97 per cent of its hard currency income and 60 per cent of the budget.

In a Cabinet meeting Tuesday, President Abdul Aziz Bouteflika for the first time expressed concern over the "worrisome" situation and made vague promises of cost-cutting.

The first of such austerity measures came Saturday when Prime Minister Abdul Malek Sellal said there would be a freeze on public sector hiring in 2015. Some 60 per cent of the jobs in the country come from the government.

Major infrastructure projects, such as public transportation in Algiers and highways in the countryside are also expected to be put on hold.

Long flush with money from its gas and oil exports, Algeria operates an extensive welfare state.

Subsidies, which amount to 21 per cent of the country's annual economic output, cover electricity and many foodstuffs. Gasoline is the cheapest in North Africa.

The government also subsidizes education and provides housing. Social unrest, even before the scattered protests of the Arab Spring, was effectively bought off with higher wages and promises of housing, all funded by the bountiful oil receipts.

AMMAN — The Jordanian Free Zones Corporation (JFZC) attracted 77 investment projects worth $500 million during 2014, its chairman announced Sunday.

Nasser Shraideh said the investors, whose businesses covered industrial and commercial activities, began preparing and setting up their ventures in 2014 and are scheduled to start production next year.

The industrial undertakings include manufacturing and assembling specialised cars, food and chemical factories, and packaging plants, Shraideh indicated.

The commercial businesses focus on auto showrooms and logistic services, he added, noting that those projects will provide around 1,500 job opportunities.

According to the chairman, most of the investors will be exporting their output primarily to Iraq, Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain, Yemen and Oman.

To a lesser extent, exports will also reach Egypt, Sudan, Libya, Algeria, Palestine, Syria, Lebanon and some European countries. 

Shraideh ranked Iraqi investors atop as they accounted for almost half of the overall investments this year.

He pointed out that the Iraqis set up eight industries valued at about $160 million, and ten commercial businesses at nearly $100 million.

Joint investments by Iraqi, Syrian and Jordanian investors came at $70 million and ranked second, Shraideh remarked.

He mentioned several improvements that were implemented by the JFZC, especially a solar energy project and infrastructure works such as roads, power stations and poles as well as water tanks and networks.

He highlighted the installation of 58 solar cells to provide the zone with lighting needs, noting this project is aimed at reducing electricity consumption and relying on renewable energy sources.

NEW DELHI — India's long-held position as the world's top diamond polisher is being challenged by soaring output from China, compelling the south Asian country to seek help from ally and top rough diamond supplier Russia to defend its market share.

India has traditionally relied on the middlemen in trading hubs of Antwerp, Tel Aviv and Dubai for its supply of rough diamonds, which mainly come from Russia or Africa. Most of the world's diamond output is sent to India for cutting and polishing before being retailed around the world.

But China has managed to break the established trade route by getting diamonds directly from African mines in which Chinese companies have a stake. This has boosted the value of China's net exports of polished diamonds by 72 per cent in the past five years to $8.9 billion.

While India's exports, supplied by firms such as Asian Star, Gitanjali Gems Ltd. and Venus Jewel, rose 49 per cent to $14 billion over that time, shipments have seen a sharp drop this year.

"China's active procurement of rough supply from African countries was reducing the supply available to Indian manufacturers," said Sandeep Varia, an executive of Indian industry body Assocham. "Many units across the country had to lay off workers due to losses."

As a result, China's share of the global polished diamond market has tripled to 17 per cent in the past decade, according to data from the United Nations. India's share has fluctuated between 19 and 31 per cent.

Bring in Russia

Indian Prime Minister Narendra Modi, who comes from the western state of Gujarat where the polishing industry is centred, has answered calls to bolster the diamond sector by convincing Russia to sell rough diamonds directly to India.

During President Vladimir Putin's visit to New Delhi this month, Russia's state-run diamond monopoly Alrosa  signed a dozen deals to increase direct rough diamond deliveries to India that would help reduce the cut taken by middlemen in the secretive precious gems trade.

The direct deals would also reduce risks linked to Western sanctions imposed over Russia's annexation of Crimea, while Modi is additionally seeking arrangements that would allow Russian jewellery makers to send rough diamonds to India and re-import polished stones duty free.

But to compete effectively with China, India will also need to streamline its tax and import rules, industry sources said.

"China is not going to displace India as the leading diamond polishing hub any time soon, but India needs to reform its archaic tax rules to make the Indian diamond polishing industry more attractive for foreign miners," said Martin Rapaport, chairman of diamond and jewellery service firm Rapaport Group.

India is looking to build a special notified zone where companies can import rough diamonds on a consignment basis and re-export unsold ones, mirroring China's investor friendly trading zones that avoid complicated export and import taxes.

"These are positive moves for the industry," said Mehul N. Shah, committee member of India's Bharat Diamond Bourse. "It will increase profit margins of the Indian diamond manufacturing industry and make it more competitive."

Despite China's upper hand in securing rough diamonds, its cutting and polishing industry is not as organised as India's and rising labour costs are a problem.

"The Chinese diamond polishing industry works on a contract-basis and through joint ventures," said Rapaport. "They are consistent at mass producing small stones, but lack the expertise required for bigger and finer stones."

RIYADH — Saudi Arabia announced a 2015 budget with a huge deficit at the weekend as the world's largest crude exporter begins to feel the impact of its own decision not to shore up oil prices.

The government announced the $38.6 billion deficit on state-run television, saying it would nonetheless boost projected spending by tapping its vast financial reserves.

The lead producer in the Organisation of the Petroleum Exporting Countries (OPEC), Saudi Arabia has insisted the group will not move to strengthen global oil prices despite a drop of nearly 50 per cent since June.

OPEC has maintained a production ceiling of 30 million barrels per day, in a move analysts say is aimed at stifling competition from new market players with higher costs, in particular North American shale oil producers.

Saudi officials have vowed not to boost production no matter how low prices go, regardless of the impact on the country's coffers.

The budget announced for next year sees spending at 860 billion riyals ($229.3 billion) and revenues at 715 billion riyals ($190.7 billion).

Projected spending is slightly higher than planned for this year, but revenues are 140 billion riyals lower than estimates for 2014, said the statement read after a Cabinet session chaired by Crown Prince Salman Bin Abdul Aziz.

The 2015 budget shortfall is the first deficit projected by the OPEC kingpin since 2011 and the largest ever for the kingdom.

Finance Minister Ibrahim Al Assaf said the kingdom was in good enough shape to see out the downturn.

"The challenge was bigger than expected. We continued to revise the budget figures as oil prices dived," Assaf told Saudi TV. "Despite the deficit, we will continue to spend on development projects... We have the buffers to bear the drop."

Assaf said everyone agreed oil would rebound and that it was only a question of when.

In the past decade, Saudi Arabia overspent budget projections by more than 20 per cent and if the trend is maintained next year, analysts say the deficit will be much higher.

"I believe we are headed for a difficult year in 2015. I think the actual deficit will be around 200 billion riyals because actual revenues are expected to be lower than estimates," Saudi economist Abdul Wahab Abu-Dahesh said.

"Spending in the budget is not in line with the sharp decline in oil prices," he added.

The finance ministry also announced the 2014 preliminary actual budget figures, saying it expects a deficit of 54 billion riyals, the first shortfall since 2009.

Highest spending
in history 

The ministry said that, according to the preliminary figures, revenues in 2014 were at $278.9 billion, 22 per cent higher than projected.

But spending was at $293.3 billion, the highest in the kingdom's history and about $33 billion more than expenditures in 2013.

The rise was due to huge expansion projects at Muslim holy sites in Mecca and Medina, an increase in spending on development and foreign aid.

The price of oil, which makes up around 90 per cent of public income in Saudi Arabia, has lost about half of its value since June due to a production glut, weak global demand and a stronger US dollar.

In royal decrees issuing the budget, King Abdullah called for "rationalisation of spending" and for the "accurate and efficient implementation of the budget" in 2015.

If oil prices remain at the current level of about $60 a barrel for benchmark Brent crude, Saudi Arabia is expected to lose half of its oil revenues of $276 billion posted in 2013. Oil income this year is expected at $248 billion.

But the wealthy kingdom, which pumps about 9.6 million barrels per day, can easily tap into huge fiscal buffers, estimated at $750 billion, to meet the deficit.

King Abdullah authorised the finance minister to draw from the reserves or to borrow to meet the deficit.

Ratings agency Standard and Poor's lowered its outlook for Saudi Arabia to stable from positive following the oil price slide.

But it also affirmed its high ratings for Riyadh over the "strong external and fiscal positions" it has built up in the past decade.

MOSCOW — Russia's central bank offered on Wednesday to help leading exporters refinance foreign debts next year, expected to be one of the toughest of President Vladimir Putin's 15-year rule for the economy due to Western sanctions and a plunge in oil prices.

The bank said it would lend dollars and euros to major companies that were willing to put up their foreign borrowings as collateral.

The move means the state will in effect take on credit risk for the companies, whose foreign debt obligations have shot up in ruble terms because of the currency's sharp slide this year.

Even before the move, Standard & Poor's (S&P) ratings agency put Russia's sovereign credit outlook on "credit watch negative", meaning it could be downgraded to junk as soon as January due to a "rapid deterioration of Russia's monetary flexibility".

S&P, Moody's and Fitch all now rate Russia one notch above junk. The finance ministry said it was holding talks with ratings agencies to explain the situation in the economy.

The authorities have taken several steps in recent weeks to arrest the ruble's slide and avoid a spike in inflation after years of stability, developments that could threaten Putin's popularity.

They include a sharp interest rate hike, curbs on grain exports and informal capital controls.

While Russia's sovereign foreign debts are minimal, state and private companies and banks have accumulated $600 billion in foreign debts, of which around $100 billion are due next year.

The ability to repay the loans or roll them over has been severely reduced this year by Western sanctions, imposed on Russia for its actions in Ukraine, which effectively shut its companies and banks out of Western debt markets.

But the economic crisis in Russia's heavily oil-dependent economy goes wider. Moody's ratings agency said on Tuesday that it expected Russia's gross domestic product (GDP) to contract by 5.5 per cent in 2015 and 3 per cent in 2016, under the effect of the plunge in oil prices and the ruble's slide.

"These developments will likely lead to a severe deterioration in the operating environment for Russian corporates, namely higher inflation, unemployment and debt-servicing costs as well as lower domestic demand, resulting in a deeper and more protracted decline in domestic economic activity than previously anticipated," Moody's said.

Russia has around $414 billion in foreign exchange and gold reserves, down from around $510 billion at the start of the year, after spending heavily to prop up the ruble as the price of oil, Russia's main export earner, almost halved from this year's peaks in June.

The ruble, which dipped last week to 80 to the dollar, has since recovered to around 55, still about 40 per cent down since the start of the year.

The central bank said Wednesday's move was aimed at "helping to refinance foreign credits by Russian exporters in foreign currencies maturing in the near future at a time of their restricted abilities to access international capital markets".

It said these lending operations would also help to bring the ruble exchange rate into line with fundamentals and reduce volatility. Loans are to be provided for up to one year at auctions, at a minimal rate of Libor plus 0.75 per cent.

Oleg Kouzmin, an economist at Renaissance Capital, said the amount allocated was small enough not to undermine the central bank's ability to support the ruble.

State-controlled VTB Bank said it would use the facility if needed but that "currently, there is no such need".

The central bank and the finance ministry have also promised to help banks with extra ruble liquidity and regulatory measures.

The lower house of parliament rushed to pass a draft law on Friday that will give the banking sector a capital boost of up to one trillion rubles ($18.33 billion).

Dmitry Polevoy, chief economist for Russia at ING, said the central bank had taken too long to act: "The problems with foreign exchange funding emerged in early September and have only been getting worse since then. The Central Bank of Russia has mostly been putting out fires rather than preventing them."

Separately, an influential farm lobby group said on Wednesday that Russia's grain exports have stopped due to curbs brought in to protect domestic supply, putting big deals at risk.

Russia's main wheat buyers are Turkey, Iran and, very vulnerable to supply disruption, Egypt.

Moscow imposed informal grain export controls with tougher quality monitoring and limits on railroad loadings earlier this month, as it tackles a financial crisis linked to plunging oil and Western sanctions.

"Since last Thursday not a single vessel, which had been due to sail under contracts, has left," Arkady Zlochevsky, the head of Russia's Grain Union, the farmers lobby group, said.

Officials also plan to impose duty on grain exports.  Zlochevsky said its exact level was an unimportant detail, as he was sure it would be prohibitive.

"All loadings are suspended, there is only a need to legally formalise it," Zlochevsky added. Global wheat futures rose after his comments.

A spokeswoman for Russian Deputy Prime Minister Arkady Dvorkovich, who had promised to prepare the proposal for an export duty, was not available for comment.

Repeated restrictions

Zlochevsky criticised the decision to impose restrictions for the third time in six years.

Russia imposed a duty on wheat exports in 2008 and an official ban in 2010 when a drought hit its crop.

The 2010 ban was partially responsible for triggering social unrest and a revolution in Egypt as more than 500,000 tonnes were not supplied and global prices rose damaging Egypt's state bread subsidy programme, Zlochevsky said.

About 3 million tonnes of grain due for export until the end of January were now stuck, Zlochevsky indicated.

As a result, Russia may fail to supply wheat to Egypt's General Authority for Supply Commodities (GASC), the state buyer of the world's largest wheat importer, in January, he said. "Of course, it includes supplies to GASC. How would we be able to supply it?" 

He remarked that shipments would only be possible if and when the government makes an exception for Egypt.

Mamdouh Abdel Fattah, GASC's vice chairman, told Reuters on Wednesday that trading companies were obliged to abide by their contracts to ship Russian wheat to Egypt.

GASC purchased 180,000 tonnes of wheat for January shipment, of which 120,000 tonnes for January 11-20 shipment purchased on December 11 and 60,000 tonnes for January 21-31, bought on Saturday.

"If there will be no Russian wheat available for Egypt by a government decision then the firms can proceed to negotiate with GASC to change the origin in the contract," a Cairo-based trading source said.

Russia, expected to be the world's fourth-largest exporter this year, had been exporting record volumes from a large grain crop of 105 million tonnes.

"What's clear is that they won't sell anything anymore," a European trader said. "Now the market wants to have more details on what the government will do concretely."

MUSCAT — From desert camping to luxury hotels, turtle watching, and even the Arabian Peninsula's first Italian-style opera house, Oman is hoping to carve out a place on the global tourist track.

Heavily reliant on energy exports, the tiny Gulf sultanate is keen to diversify its economy, especially as the drop in global oil prices begins to bite.

But despite its natural beauty and rich culture, Oman's tourism industry has a long way to go.

"Oman reflects the true Arabian history and culture," said Amina Al Balushi, an assistant director with the tourism ministry.

"We really need to capitalise on this," she added, indicating that the ministry is preparing a 25-year tourism strategy to be unveiled next year.

Western tourists like 46-year-old Marc Jost, who has made five trips to Oman, need no convincing.

"I can't get enough," the Swiss visitor told AFP as he strolled in the Mutrah Souk, a historic covered market in the capital Muscat. "The weather is always good. People are very nice."

Bordering Saudi Arabia, the United Arab Emirates and violence-wracked Yemen, Oman has been an island of stability under Sultan Qaboos, who has ruled since overthrowing his father in a bloodless coup in 1970.

Qaboos, now 74, has won praise at home and abroad for transforming a former backwater into a modern state.

In 2011, Oman was caught up in the Arab Spring protest movement which touched much of the region. 

Several civilians died in demonstrations that shook the government, leading Qaboos to implement a series of reforms and to arrest scores of activists.

Oil price pressure 

One of the biggest challenges facing the country now is its reliance on oil, which accounts for 75 per cent of state revenues, after the price of crude nearly halved since June.

The drop has put pressure on the government, which needs a higher oil price than most other Gulf states to balance its budget. Oman does not have financial reserves as vast as its neighbours.

"The government of course is aiming to diversify the economy through developing tourism as an important sector," Balushi said.

Oman attracted roughly 2.1 million visitors in 2013, up about 50 per cent over the previous two years, according to the tourism ministry.

More than 37 per cent of visitors last year came from Gulf countries, although Oman is also attracting a growing number of tourists from Britain, Germany, the United States and other Western nations, tourism ministry data show.

The country also invested more than $660 million (540 million euros) last year in new hotels and other tourism assets, according to the World Travel and Tourism Council, an industry body.

Still, tourism's direct contribution to the gross domestic product (GDP) reached only 3 per cent, or about $2.5 billion, last year.

This "looks like beans", said Fabio Scacciavillani, chief economist at the Oman Investment Fund, the country's sovereign wealth vehicle.

"These figures do not portray a thriving situation," Scacciavillani told a tourism conference in Muscat. "That's strange, because Oman can probably live off tourism. If Oman didn't have oil, it would most likely be an economy based on tourism."

'Ancient soul' 

Tourism guidebooks have lauded the country, with Lonely Planet praising its "abundance of natural beauty" and "ancient soul". 

But Oman has suffered from a lack of tourism infrastructure and the belief among many tourists that the entire Middle East is off-limits because of unrest.

Officials are hoping to change that, both with continued investments and efforts to put forward the country's stability.

"We are trying to promote... that Oman is separate, Oman is safe," said Haitham Al Ghassani of the tourism ministry's promotion department.

For years, Oman said that by 2020 it aimed to attract 12 million tourists annually, more than double the number that visited Jordan last year.

But Balushi said when the ministry releases its 25-year strategy next year it will probably set an easier goal.

"We are not looking for mass tourism," Ghassani said. "We are more selective."

He admitted the country's lack of infrastructure was a problem, making hotel room rates in Oman "very expensive" because of the lack of supply.

Oman has already won over tourists like Markus Roloff, who hopes the government steers development carefully.

The 47-year-old German made the first of his seven trips to Oman in 1990.

"It's just a beautiful country and I'm impressed by what the sultan did after 1970, how the country developed," he said.

Over the past two decades, Roloff has watched the tourist scene transform from a smattering of visitors to crowds pouring off cruise ships.

He worries that if too many discover Oman, its quiet charms may be lost. 

"I think that tourism will change the country," Roloff said.

MANAGUA — Nicaragua on Monday announced the start of work on a $50 billion shipping canal, an infrastructure project backed by China that aims to rival Panama's waterway and revitalise the economy of the second-poorest country in the Americas.

The groundbreaking was largely symbolic, as work began on a road designed to accommodate machinery needed to build a port for the canal on the Central American country's Pacific coast.

Nicaragua's government says the proposed 278-kilometre canal, due to be operational by around 2020, would raise annual economic growth to more than 10 per cent.

The canal could also give China a major foothold in Central America, a region long dominated by the United States, which completed the Panama Canal a century ago.

Construction of the new waterway will be run by Hong Kong-based HK Nicaragua Canal Development Investment Co. Ltd. (HKND Group), which is controlled by Wang Jing, a little-known Chinese telecom mogul well connected to China's political elite.

Flanked by Nicaraguan President Daniel Ortega, who is a former Marxist guerrilla leader, Wang Jing said the tender for the preliminary design of the project would be offered by the end of the first quarter of 2015, by which time an environmental impact study would also be finished.

By the end of the third quarter, excavation work would begin, with a tender for the design of the locks due by the end of the year, he added.

More than a year since it was first announced, the project faces widespread scepticism, with questions still open about who will provide financing, how seriously it will affect Lake Nicaragua and how much land will be expropriated for it.

"Given how much this will cost, it's hard to take a stance on whether it will happen or not until there is a signal whether that money is available or not," said Greg Miller at consultancy IHS Maritime.

In the Americas, only Haiti is poorer than Nicaragua.

Earlier, Nicaraguan presidential spokesman Paul Oquist said feasibility studies, including a McKinsey report that experts say will define interest in financing the canal, had been delayed by changes to the route and would be ready by April.

Oquist said the "core financing" would come from public and private Chinese money, without giving a percentage.

But he added that Nicaragua is seeking international funding and rejected the idea that China will bankroll the project worth roughly four times Nicaraguan gross domestic product.

According to Wang Jing, HKND Group is preparing to launch an initial public offering.

He told reporters in Managua that he hoped the listing would take place in the stock market that offered the best conditions.

Wang Jing gave no details of how much HKND aimed to raise, nor when the offering might be. He said the company was preparing a prospectus which would reveal the investors behind the waterway.