Congo moves on hydropower plant
Chinese and Spanish consortia are the first to be formally appointed since the 11,000MW project was first mooted about a decade ago
The Democratic Republic of Congo gave two groups of investors a four-week deadline to submit a joint proposal on the development of the multibillion-dollar Inga 3 hydropower plant.
The Democratic Republic of Congo (DRC) gave two groups of investors a four-week deadline to submit a joint proposal on the development of the multibilliondollar Inga 3 hydropower plant.
The government signed an accord with Chinese and Spanish consortia this week to advance the 11,000MWt facility, the first time it has formally appointed entities to draw up plans to develop Inga 3 since the project was announced about a decade ago. The Chinese group includes China Three Gorges and State Grid International Development, while the Spanish partners are Actividades de Construccion y Servicios and AEE Power Holdings.
“There have been tenders, lots of meetings, lots of promotional activities, but it’s only today that we have for the first time a legal document,” Bruno Kapandji, director of the Agency for the Development and Promotion of the Grand Inga Project, or ADPI, told reporters after a signing ceremony on October 16. The accord calls for the creation of a single consortium by the two groups, which have been co-operating since 2017 on an “optimised bid” on how to bring the project to fruition, he said. Multiple phases and several contracts need to be completed before building begins.
By November 10 the groups must hand over a joint proposal that includes a financial model and timeline, according to the accord. The government will then negotiate an “exclusive collaboration contract” with the single consortium that will enable the codevelopers to consider themselves the project’s “prospective concessionaires,” the agency states.
In the “exclusive collaboration phase”, the Chinese and Spanish investors have undertaken to finance extra technical studies and assessments of environmental and social impacts, to update those done for an earlier 4,800MW version of the project. They will also attract lenders to finance the facility, which could cost as much as $18bn, and help the DRC find buyers of the electricity elsewhere in Africa. Finally, the government will grant the special-purpose vehicle formed by the groups a concession to construct and manage Inga 3.
The government is billing Inga 3 as the first phase of a megaproject eventually intended to harness as much as 40,000MW of hydroelectric capacity concentrated in a stretch of the Congo River in the west. In 2013 SA signed a treaty with Congo committing the nation to buy 2,500MW, which at the time was more than half of the facility’s projected output.
STARVED MINES
Inga 3’s capacity has increased because of growth in demand in the DRC, where both the population and the mining industry are starved of electricity, and the rest of Africa, said a news release issued after the ceremony. The original, smaller project also was not financially feasible, according to a presentation the groups gave to the African Development Bank in July.
SA “has recently expressed willingness to increase its commitment” to 5,000MW, according to the presentation. Inga 3’s “first financial closure is based on the demand” of SA, which means it “needs to be participating in the project from now on”, it said. The groups project the DRC national power utility and mining companies will consume 2,500MW-3,000MW.
There will be a second financial closure when other African off-takers have been identified and power-transmission plans put in place. The presentation lists Nigeria and Angola as among “several interested offtakers” involved in talks.
The DRC business climate is challenging because of a lack of roads and other infrastructure, and Inga 3 has detractors. The World Bank cancelled its $73m technical assistance in 2016 after the ADPI was set up within the presidency rather than as an autonomous state agency. In September 40 Congolese nongovernmental organisations called for a moratorium on Inga 3, urging more comprehensive assessments of its social and environmental impact. Negotiations have been “opaque and non participative” and “under direct control of “President Laurent Kabila, they said.
Kapandji has said Inga 3 will cost $13.9bn-$17.9bn. Last year US-based activist group International Rivers said the plant “risks ballooning the DRC’s debt burden”. Kapandji has dismissed such concerns, saying the concession company will “gather the money and execute the project.” Congo’s government will have a 5% free stake in the SPV, which holds the concession, according to the presentation. The joint consortium will control the company. Other investors will hold 19% of the shares.
About 80% of Inga 3 will be financed through debt and the rest through equity, according to the minutes. International finance institutions, including the African Development Bank, and export-credit agencies could provide most of the debt financing, with commercial banks picking up the rest, the presentation stated.
FIRST FINANCIAL CLOSURE IS BASED ON THE DEMAND OF SA, WHICH MEANS IT NEEDS TO BE PARTICIPATING IN THE PROJECT