BRAZZAVILLE (Reuters) - Debt-crippled Congo Republic’s government approved a plan on Friday to dissolve its loss-making power and water utilities and replace them with three public limited companies.
Like other Central African oil producers, Congo has been hit hard by low crude prices. Government revenues have dropped by a third since 2015. The IMF said in December that the non-oil economy was expected to contract by 9.2 percent in 2017.
The government released a statement after a cabinet meeting saying that power company Société Nationale d’Electricité (SNE) and water utility Société Nationale de Distribution d’Eau (SNDE) had failed to reach sufficient profit levels despite heavy state investment.
“The future Plc will be charged with managing the public good of electricity via contracts with public service concession contracts concluded between the State and public and private operators,” the statement read.
The water sector would be restructured along similar lines it said.
The government said it expected the reforms to spur investment into the sectors.
“The dissolution ... of the SNE and SNDE will have no consequences on the social plan as the assets, personnel as well as the rights and obligations of the old structures will be transferred automatically to the future companies,” it said.
Congo is currently in talks with the International Monetary Fund (IMF) to try to secure a bailout package to help bolster its struggling economy. Negotiations have dragged on for months, even as its regional neighbors secured deals.
Following the last round of talks in December, the IMF commended Congo on its draft 2018 budget and progress in formulating macroeconomic and structural policies.
But it urged the government to hire the legal and financial advisers needed to help it restructure its debts, mainly to commodity trading houses.
Prime Minister Clément Mouamba will establish a technical committee to oversee the reforms in the power and water sectors.
The three new public limited companies will include two that manage the power and water sectors respectively and a third that will oversee electricity transmission.
The plan must now be submitted to parliament for approval.
Writing by Joe Bavier; Editing by Andrew Heavens