Congo’s Energy Divide Factsheet
HYDROPOWER FOR MINES AND EXPORT, NOT THE POOR
The Democratic Republic of Congo (DRC) has been ‘rebuilding’ its power grid as part of the war-torn country’s reconstruction since 2003. Despite the millions of dollars of donor funding put into this, today only 9% of Congo’s 70 million people have access to electricity – about 30% in urban areas and an alarming 1% in rural areas. Lack of access to modern electricity services impairs the health, education and income-generating potential of millions of Congolese people. The Congolese government set a highly aggressive target to provide 60% of the population with access to electricity by 2025 but has failed to put in place plans to meet this target. Instead, the government plans to rehabilitate the existing power grid and develop new Inga dam projects, all to power the mining industry and export electricity to neighboring countries. Investments in decentralized power supply projects, including small- and medium-scale hydro across the country, could more evenly reach the population and finally begin to close DRC’s energy divide, but so far have not been considered.
The Congo River is the deepest river in the world and the fifth longest, with a flow rate second only to the Amazon’s. The Congo River is home to at least 700 fish species, with 300 documented fish species in its lower section alone. The river empties water and sediment into the Atlantic Ocean, creating “the Congo Plume” – a natural process which is thought to be one of the largest carbon sinks in the world.
The river is unique in that it has large rapids and waterfalls very close to the mouth while most rivers have these features upstream. The rapids and waterfalls give the Congo River huge hydropower potential, hence it has been targeted by hydropower developers since the Belgian colonial period. In the years following independence, the Inga I Dam (351 MW, commissioned in 1972) and the Inga II Dam (1,424 MW, commissioned in 1982) were built despite feasibility studies that found both projects uneconomical and far in excess of the country’s electricity needs at the time.
Yet neglect, financial mismanagement, years of war and siltation caused the Inga dams’ turbines and the associated electrical infrastructure to deteriorate long before the end of their expected lifespan. By 2002, the dams were producing only 40% of their capacity. The related transmission line, which runs for 1,725 kilometers, was the single largest contributor to the DR Congo’s debt burden. Budgeted at US$250 million, actual construction costs quadrupled to $1 billion. The Inga-Kolwezi high voltage direct current (HVDC) line was meant to deliver large amounts of electricity to copper mines in the faraway Katanga Province, not cities or villages along its route. Within 10 years, poor maintenance, theft, and the ravages of the tropical climate caused the line to deliver less than half the electricity it was designed to carry.
REHABILITATION: MILLIONS DOWN THE DRAIN
In 2003, after years of war, peace treaties were signed in the DRC, signaling the reentry of donors to support reconstruction projects across the country. Funds were earmarked by the World Bank (WB) to target three main components – the Inga I Dam, the Inga II Dam and the Inga-Kolwezi transmission line. Despite the early planning for rehabilitation, the effort has been met with unexpected challenges, delays and cost overruns.
In 2003, the World Bank calculated that the DRC power grid, including the dams and transmission line, could be rehabilitated for less than $200 million and be completed by 2007. The Bank argued that the rehabilitation would allow the DRC to earn an additional $40 million in revenues each year by increasing its power sales to southern Africa. However, implementation quickly fell far behind schedule because the Bank overlooked the extent of degradation of the dams, transmission line and other critical infrastructure in their original assessment. The degraded state of the dams, grossly overlooked in the Bank’s assessment, unexpectedly raised the risks of the transmission line rehabilitation. Without sufficient power supply from the dams, the transmission line would fail to earn expected export revenues on dam.
As a result, in 2007 the Bank approved a $297 million project to fully rehabilitate the dams. Additional financing was secured from the African Development Bank and European Investment Bank to meet the $499 million total projected cost. But by 2011, very little progress had been made, and additional cost overruns were identified. As a result, in 2011 the Bank approved an additional $283 million for the rehabilitation, and brought in another $146 million from the African Development Bank, German government agency KfW and electricity utility SNEL. This brings the total revised costs for the Inga dams rehabilitation to $883 million, and the rehabilitation is not expected to be completed until 2016. Even after all of this investment, if the rehabilitation is successful, only 8 of the 14 generating units will be functioning by the end of the project. Disappointingly, but perhaps not surprisingly, a November 2012 mid-term review of the project rated the overall implementation progress of the project “Moderately Unsatisfactory”.
Meanwhile, the costs for rehabilitating the 1,725-kilometer Inga-Kolwezi transmission line have continued to mount as well. At this writing it is operating at 25% of its capacity. This has presented major problems for financing rehabilitation, because the DRC cannot hope to gain revenue from electricity export if this crucial piece of infrastructure is functioning below capacity. An original World Bank loan to finance the rehabilitation of the transmission line was signed in November 2003, for $178.6 million. Due to ongoing problems, delays and ballooning costs, two additional financing loans have since been granted, resulting in a total of $560 million in investment from the World Bank and $77.5 million from the European Investment Bank.
In total, project costs for rehabilitating the dams and transmission line have skyrocketed to over $1.2 billion over the past ten years, and neither project is close to being finished. The difficulties in rehabilitating the dams and transmission line do not augur well for the successful completion of the massive Inga III or Grand Inga projects.
GENERATIONS OF TRAUMA
The DR Congo remains a country in trauma, where generations have been scarred by grand state theft, violent civil war and the chase for minerals. Widespread insecurity and the predatory system of governance have kept incomes, farming production and life spans hovering at the world's lowest levels.
In addition to the rehabilitation, the DRC’s future energy development is centered on two more large hydro projects – Inga III and Grand Inga – that together could generate an astounding 44,000 MW. These projects, especially Grand Inga, are hyped by donors and the dam industry as the magic bullet to electrify the entire African continent and export energy as far away as southern Europe and the Middle East. Besides the $80 billion price tag for Grand Inga alone, two insurmountable factors make Inga’s contribution to African development more of a pipe dream than a reality.
The first huge obstacle to success of Grand Inga is the grand transmission system that it would require to export its electricity around the continent. Despite the large power supplies that Inga III and Grand Inga could generate, widespread distribution of electricity in the DRC is cost-prohibitive. Building a national power grid that relies on Inga electricity would require unplanned and expensive investments into local transmission and distribution lines. The current design for Grand Inga includes more HVDC lines like Inga-Kolwezi. This whole system is ill-suited to meet energy needs within DRC, and for the vast majority of Africans who remain without electricity access.
For importing nations, the system poses different risks. The transmission lines would traverse a number of countries and thousands of kilometers. Each of its many thousands of transmission towers would be vulnerable to sabotage, in an area prone to conflict. The costs for building and maintaining this system would be substantial, and the environmental impacts significant.
Another obstacle is the absence of a functioning state and strong civil society in the DRC, which has led to institutionalized corruption and disregard for the public good. Large infrastructure projects like big dams are a magnet for corruption. Transparency International states that “public works and construction are singled out by one survey after another as the sector most prone to corruption.” Like other extractive industry sectors, large hydropower projects that are built and operated for the export of electricity can lead to a “resource curse”, particularly in countries such as the DRC with weak governance structures. Large export revenues that accrue centrally under the control of the state encourage patronage systems and entrench corruption. Transforming the underlying political framework will take time and require vigilant pressure from donors, governments and civil society. Short of this transformation, Inga hydropower cannot successfully “light up Africa” because there is no political will to use it for the benefit of the Congolese people. The project’s electricity would power more mines and foreign cities, while contracts for Inga would trigger a fresh feeding frenzy for bribes and kickbacks.
The DRC state power utility, SNEL, has been fraught with problems for decades. During the Mobutu years, it failed to collect funds from government entities, residential users and mining companies. In 2010, SNEL was on the verge of bankruptcy despite the fact that it had received support from the World Bank since 2007 to restructure and improve its efficiency. Unfortunately, the transformation has not been quick and SNEL continues to disappoint.
SNEL is currently unable to provide electricity to all of Kinshasa because of low production levels at Inga I and II and the aged, poorly maintained state of the transmission lines. As a result, SNEL only provides power during specific time slots to different neighborhoods, leaving portions of the capital powerless for days and months in the worst cases. Sadly, this rotation does not follow a dependable schedule so residents can neither anticipate when they will have the electricity they are billed for monthly nor anticipate the amount they will be billed for. Even when they do have power, it is unreliable and known to fluctuate unpredictably in its levels. The power cuts due to the damaged transmission lines are common. This damage is sometimes natural, but often provoked by SNEL technicians who then receive bribes to repair the lines. As a result some residents have reverted to the use of gas or oil-powered generators.
Apart from poor performance, SNEL has been linked with corruption scandals. For example in 2008, two of SNEL’s top directors were interrogated after the disappearance of $6.5 million earmarked for Inga II rehabilitation. The money was never recovered or accounted for. In September 2011, President Kabila fired all of SNEL’s management staff because of the utility’s poor performance. While this may have earned him some points with voters prior to the 2011 election, it did not improve SNEL’s quality of service. While big scandals related to SNEL have been less frequent (or better kept secrets) since its restructuring, SNEL’s difficulty in collecting fees owed continues.
DAM DEVELOPERS COME AND GO
Despite the problems of rehabilitating Inga I and II, BHP Billiton – the world’s largest mining company –signed an agreement with the DRC government to develop the 4,500 MW Inga III hydropower scheme in 2006. BHP Billiton’s interest in Inga III triggered the government’s abrupt termination of its pre-existing agreement to develop the site with four neighboring African governments in the Western Power Corridor Company (Westcor.) BHP Billiton was planning to use 2,500 MW from Inga III to power a proposed aluminum smelter. Surplus energy would have been exported to South Africa, not distributed to Congolese citizens. In March 2012, BHP Billiton opted out of Inga III following a review that revealed the economics of construction were unfavorable to the company. Westcor formally disbanded in 2012, after eight years of trying to develop the project.
South African President Jacob Zuma and DRC President Joseph Kabila signed a Memorandum of Understanding in November 2011 to develop Grand Inga. A treaty intended to create an enabling framework for the implementation of the project was to be completed within six months of signing the MOU. The treaty is supposed to include defined milestones for the execution of the Grand Inga Project. A draft of this treaty was approved in August 2012 by the South African government, and negotiations are ongoing with the DRC government.
Meanwhile, the World Bank has declared Inga III to be a “transformational project” that could reduce power costs both within DRC and across the sub-region, and that is worthy of significant investments from its concessional lending arm, the International Development Association. However, in a country where the rehabilitation of the Inga Dams and associated transmission lines is nowhere close to being completed after a decade of investment and ballooning costs, it is hard to see how a project such as Inga III could be implemented cost-effectively and on time. Moreover, because of the huge investment required, the energy from the $10 billion Inga III is likely to go to big mining interests and cities rather than the majority of Congolese that remain without access to electricity.
In the 1960s and 1970s six communities were forcibly displaced in order to develop the Inga rapids hydropower site. Despite decades of demanding compensation owed to them, they have never received payment. In 2006, the World Bank wrongly stated that “the population who had the land-use rights at the time of the construction of Inga I and Inga II has been adequately compensated,” and “there is no social legacy” from the original construction.
During the original dam construction, a temporary workers’ camp called Camp Kinshasa was erected in the Inga concession area. After construction, many of the workers remained. Today, an estimated 9,000 people – a mix of former project workers and their families, and some families from the Inga displaced communities – call Camp Kinshasa home. The Camp is like a militarized zone. Residents cannot meet freely. They cannot build new housing, nor can they modify or improve existing housing, which has led to multiple families living in each house. Water is available intermittently from a single pump, and new toilets cannot be built. The dead cannot be buried at the camp, so families pay hefty fees to transport bodies for burial outside of Camp Kinshasa. The national power utility, which made no effort to close the camp after the original construction, has attempted to evict the Camp Kinshasa residents twice since rehabilitation of the dams began.
Since 2002, more than $1.6 billion of donor aid has been approved to rebuild the DRC’s power sector, although little of the funding has been disbursed. Delays, largely stemming from corrupt governance and a lack of political will, slowed the rehabilitation to a snail’s pace. The government’s failure to effectively rehabilitate its national power grid in a timely manner raises questions regarding its political will and capacity to transform the investment into development benefits for its citizens. Public and private investors should be wary of supporting additional power projects for the DRC grid until the operational and financial performance of the rehabilitation effort is a proven success.
As the largest supporter of the DRC’s energy sector, the World Bank could play a critical role in increasing access to electricity and fighting corruption within the sector. But the World Bank has demonstrated complicity in several instances. An emergency multi-sector loan approved by the Bank in 2002, which included $116 million for power-sector rehabilitation, became mired in corruption. A 2006 assessment of the transmission-line rehabilitation found that loan approval had relied on questionable project preparation and cost analysis. Despite more than a decade of World Bank rhetoric deploring fraud and corruption, a 2008 evaluation by the Bank itself found virtually no headway had been made to systematically protect its funds.
Rehabilitation of the existing DRC power grid is creeping along – a sad state considering the millions that have been pumped into it with virtually no increase in electrification for the Congolese. Development banks and African governments have expressed renewed interest in developing Inga III and Grand Inga. Before any progress is made on new projects, the following measures should be taken:
- ACHIEVING ENERGY ACCESS: A clear and detailed strategy must be developed for achieving the DRC’s own target of 60% access to electricity by 2025 for all of its citizens. Donors should prioritize decentralized energy investments that help the country achieve this target, such as through financing small- and medium-scale power projects all over the country instead of another massive project.
- DEMANDING ACCOUNTABILITY: In a country where corruption is rife, implementing fiscal accountability is a fundamental necessity. Donors should implement mechanisms to monitor fiscal accountability of post-rehabilitation operations. They should also proactively ensure that their lending does not enable or support corrupt activities.
- SHARE BASELINE INFORMATION: Until recent international donor-funded feasibility studies for the future Inga dams were completed, little has been known about the lower Congo River environment. The baseline information from these studies must be shared with the Congolese population so they are aware of the anticipated environmental and social impacts of future Inga projects. Sponsors of future Inga projects should also initiate an assessment of the exact role of the Congo Plume in mitigating global climate change. Given the enormity of the Grand Inga project, and the potential for huge impact, the sponsors must be proactive in determining what is at stake and making all baseline information easily accessible.
- RESOLVING PAST INJUSTICES: Binding legal agreements between the government and communities displaced by Inga should be reached in order to resolve outstanding social issues. A binding legal agreement for resettlement of Camp Kinshasa residents also needs to be reached. The relatively small but vital tasks of resolving outstanding social claims would demonstrate good faith and political will.
- SUCCESSFUL REHABILITATION FIRST: A moratorium on promoting the Inga III and Grand Inga developments should be adopted until there is evidence of development gains from the current rehabilitation. The moratorium should be upheld until post-rehabilitation operation of the power grid has been evaluated and considered successful.