Bidding nears for $9-14 bln Congo hydropower plant

Sat May 18, 2013 12:13pm EDT

* Chinese, Korean and Spanish firms to bid by early 2014

* Plant would provide 4,800 MW, S.Africa to buy over half

* Congo needs more electricity to power mining operations

By John Irish

PARIS, May 18 (Reuters) - Chinese, South Korean and Spanish firms are vying to develop a hydropower project likely to cost between $9 billion and $14 billion on the Congo River, Congolese officials said on Saturday.

The planned Inga 3 scheme, which aims to overcome power shortages that have curtailed economic growth in Africa, would produce some 4,800 megawatts (MW) of electricity and is one of the largest proposed power projects in Africa.

It would be sited about 230 km southwest of the Democratic Republic of Congo's (DRC) capital Kinshasa.

Yet the project has been dogged by problems since the 1980s, ranging from political instability including a recent civil war to local objections and, not least, the massive costs.

Speaking after three days of meetings in Paris that brought together the World Bank, African Development Bank, technical, financial advisers and potential developers, Congo's Electricity Minister said there was a commitment to the project because of rising demand for electricity in the region.

"We need to do Inga 3 because if we don't we'll be putting our country up for mortgage," Bruno Kapandji Kalala said.

Congo holds rich deposits of copper, tin, cobalt and gold.

Inga 3 project is the first of seven phases of a proposed $80 billion hydropower complex that would produce 40,000 MW of electricity, becoming the world's largest power plant, almost double the size of China's Three Gorges.

The development was given a boost in March after South Africa agreed to buy 2,500 MW of the electricity from Inga 3, securing the commercial viability of the scheme. The two nations also agreed a treaty to move ahead with the larger project.

Officials said that by 2020/21 - when the project is due to be completed - there would be a power shortage of some 5,000 MW in DRC. South Africa is expecting an electricity shortfall of 40,000 MW by 2030. Mines and smelters were hit by severe power shortages in the continent's largest economy in 2008.

FEASIBILITY STUDIES

Kalala, whose advisers include French utilities firm EDF , said feasibility studies were finished. The project will be carried out as a public-private partnership with three consortiums preparing financial and technical bids.

A decision is due in early 2014 with the objective of beginning construction towards the end of 2015.

Three consortiums are in the running, including one led by China Three Gorges Corp and Sinohydro ; a Korean/Canadian group comprising Posco, Daewoo Corp and SNC-Lavalin ; and a Spanish group led by ACS.

Existing hydro plants Inga I, commissioned in 1972, and Inga II which followed a decade later, have fallen into disrepair and only produce about a quarter of their joint capacity of 1,700 MW.

Despite a vast network of rivers, Congo exploits only a fraction of its hydroelectric potential and the government expects power shortages to worsen in coming years.

Less than 10 percent of Congo's 70 million people have access to power and mining companies are scaling back production and expansion because of shortages.

The last attempt to get Inga 3 off the ground with a consortium called Westcorp fell apart because of concerns over the business climate in Congo.

"Our government will do everything to ensure transparency. There is no possibility of corruption as we are being helped by the African Development Bank and World Bank," Kalala told Reuters.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.