Nicaraguan lawmakers on Thursday approved a controversial deal that would allow a Hong Kong company to build a $40 billion oceanic waterway to rival the Panama Canal, and then manage it for the next 50 years.

The law granting the concession to HK Nicaragua Canal Development Investment Co., known as HKND Group and owned by Beijing-based entrepreneur Wang Jing, aim to fulfill a long-held national dream for a waterway linking this nation's Caribbean coast to the Pacific.

The project is highly controversial because the little-known company was founded less than a year ago, and because of its huge pricetag -- the equivalent of twice this impoverished country's GDP.

Opposition politicians, environmentalists, economists and indigenous communities have criticized the project, saying the government of President Daniel Ortega is "mortgaging Nicaragua" to a company created by "a Chinese businessman nobody knows."

"The president has gone mad," said Sandinista dissident Congressman Victor Tinoco, casting the deal as a plan by Ortega and Wang to "become fabulously wealthy."

The head of the opposition bloc, Eduardo Montealegre, blasted the law as "unconstitutional, fraudulent and harmful to our interests."

Ortega -- whose administration only has diplomatic relations with Taiwan and not Beijing -- is set to sign the agreement in Managua on Friday with the company, which has also created a subsidiary in the Cayman Islands.

The plan includes building a canal linking the Atlantic and Pacific Oceans through Nicaraguan territory, along with ports, an airport, pipeline and a railway. A free trade zone is also set to be created.

The waterway is expected to be wider and deeper than the 82-kilometer (51-mile) Panama Canal.

Work on the canal should begin in May 2014 after a feasibility study is completed, according to Ortega.

The Panama Canal handles five percent of world trade annually, and has hosted more than one million vessels since it was inaugurated in 1914.

It also generated a record $1 billion for Panama in fiscal year 2010-2011, for a total of $6.6 billion since the United States handed over control more than a decade ago.