Chinese companies sign $6 billion Congo deal
By Thomas Hubert
KINSHASA, Oct 8 (Reuters) - Chinese companies have signed an amended $6 billion infrastructure and loan deal with Democratic Republic of Congo, China's ambassador said on Thursday, a step seen clearing the way for debt relief for the African nation.
The International Monetary Fund (IMF) had feared the contract, which uses Congo's mineral reserves as a guarantee for infrastructure projects, could plunge Congo deeper into debt.
The size of the deal was cut in August to $6 billion from an original plan of $9 billion, and Congolese government guarantees connected with the mining aspect of the agreement were taken off the table. The IMF had delayed forgiveness of most of the $10 billion Congo owes pending a revision of the deal.
"I can confirm that the amendment has already been signed," Ambassador Wu Zexian told journalists on the sidelines of an investment conference in Congo's capital Kinshasa.
The IMF said in August that commitments made by both the Congolese government and its Chinese partners to change the contract indicated that the final obstacles to debt relief would soon be removed. However, it said a final decision would have to wait for official confirmation of the amendments.
Paris Club lenders are due to meet this month to discuss Congo's request for debt cancellation.
Under the original terms of the deal, Chinese companies agreed to carry out $6 billion worth of projects to construct roads, railways, schools, and hospitals.
An additional $3 billion was allotted for the construction of a mine to extract 10 million tonnes of copper and 600,000 tonnes of cobalt to repay the loans.
The contract changes narrow to $6 billion from $9 billion the total value of the deal by placing a second phase of infrastructure projects on the back burner.
Meanwhile, development is going ahead at the mine, owned by Sicomines, a joint venture between Congo's state miner Gecamines and Chinese companies China Railway Construction Corp. and Sinohydro.
"The pre-feasibility studies were done in the beginning. The feasibility studies have just been completed. We will begin construction work on the mine soon," Wu said.
Congo's infrastructure fell into ruins during decades of kleptocratic rule under former dictator Mobutu Sese Seko. Much of what remained was destroyed in a 1998-2003 war.
The Chinese deal is a cornerstone of President Joseph Kabila's post-war economic policy to help rebuild the mineral-rich but cash-strapped central African nation.
Though the $3 billion second wave of financing was suspended as part of efforts to satisfy the IMF and foreign lenders, Wu said negotiations to determine what specific projects would eventually be included in the package were still underway.
"They are in discussions about 150 health centres and 40 hospitals," he said.
(Writing by Joe Bavier; Editing by Daniel Magnowski/Ruth Pitchford)
