DR Congo to cancel two-thirds of logging contracts

KINSHASA Mon Oct 6, 2008 3:19pm EDT

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KINSHASA (Reuters) - Democratic Republic of Congo plans to cancel more than two-thirds of its timber logging contracts under a World Bank-backed review aimed at cleaning up corruption in the sector, its environment minister said on Monday.

The central African state is home to the world's second-largest tropical forest after the Amazon, and the government is also concerned illegal logging is depleting a valuable resource and damaging the environment.

Logging, mining, and land clearance for farming are eating away at the Congo Basin, which accounts for more than a quarter of the world's tropical forest, at a rate of over 800,000 hectares annually, an area roughly the size of Crete.

In partial results of the review of 156 contracts released in Kinshasa on Monday, a government panel found only 46 deals lived up to minimum legal standards and international norms.

The remaining agreements were expected to be canceled, Environment Minister Jose Endundu told journalists.

However, companies with contracts on the list of those to be scrapped will be able to appeal the panel's decision.

"They will have 15 days to lodge their appeals. The commission will also have 15 days to review their observations," Endundu said. The full list of contracts destined for cancellation will not be released until Wednesday.

In August, a group of experts evaluating the legal and technical aspects of the Congo timber deals recommended that contracts belonging to a subsidiary of Germany's Danzer Group and to Portuguese-owned Sodefor should be revoked.

A third company, Safbois, also saw its agreements slotted for cancellation. Together the three firms account for more than 66 percent of all timber exported from Congo, researchers say.

LOST TAXES, REDUCED EXPORTS

Congo launched the long-delayed review of its timber contracts in July in an effort to recoup millions of dollars in lost taxes and clean up a business rife with corruption.

Most of the country's logging deals were agreed during a 1998-2003 war or by a three-year corruption-plagued interim government which ruled after it.

In 1992, before the former Belgian colony descended into more than a decade of political turmoil and war, Congo exported around 500,000 cubic meters of timber.

By 2002, as rampant corruption took hold with much of the country under rebel control, less than 100,000 cubic meters were officially declared for export.

"Timber makes no significant contribution to the state budget," Endundu said.

Congo today exports around 200,000 cubic meters of timber annually, mostly to Europe, the environment ministry says.

If adopted without major changes, the commission's decisions would reduce the total forest area allocated to logging companies to 7 million hectares from 22 million.

Endundu said the government will maintain a moratorium on signing new logging deals for the next three years. He said proper management of the smaller exploited timber area should allow Congo to boost exports to 700,000 cubic meters per year.

(Editing by Opheera McDoom and Mark Trevelyan)

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