Tuesday, November 26, 2013

INSIGHT-After lost decades, hopes rise for Congo dam to power Africa


* South African deal revives hopes of giant hydro dam on Congo
* Conflict, misrule have prevented project for decades
* Africa's fast-growing economy faces power crunch
* Inga dam is one of a spate of hydro projects across Africa
By Pete Jones
INGA, Democratic Republic of Congo, Nov 27 (Reuters) - Deep in the bowels of the giant Inga hydroelectric dam that straddles the mighty Congo river stands a fading map named "The motorways of electric power from Inga".
From a dot in western Democratic Republic of Congo, lines extend across the African continent. They run southwards through Zambia, Zimbabwe and South Africa, and northwards via Sudan and Libya, reaching as far as Morocco.
For decades, governments dreamed of harnessing the Congo river's enormous energy at the Inga rapids with an expansion of the dam large enough to power half of Africa. Years of conflict and misrule in Congo meant the project was never realised.
Instead, in the cavernous halls of Inga's two dams, water drips from the ceiling and rusted pipes sit above puddles. Five of the 14 turbines no longer spin at all, a sign of the decay.
Now a deal with South Africa to buy electricity from Inga has revived talk of the giant hydro project that could illuminate a continent whose economies are rapidly expanding but lack the power supply to sustain it.
"We had to find a buyer for this energy. Otherwise we cannot build Inga," Bruno Kapandji, Congo's minister of energy and hydro power, told Reuters. "South Africa is a solvent and credible buyer."
Following a year of talks, South Africa has promised to buy at least half the electricity from Inga III, a $12 billion dam that, once built, will produce 4,800 MW of energy. Much of the rest may go to Congo's power-starved mining industry.
This is nearly three times the amount produced from Inga's two existing dams, which are decades old and have been crippled by neglect, government debt and risk-averse investors.
Success for Inga III would help to raise investors' confidence in the remaining five stages of the Grand Inga project. At an estimated cost of $50-80 billion, Grand Inga would produce 44,000 MW, dwarfing all other hydro-electric projects in the world, including China's Three Gorges Dam.
"This incredible feat of human ingenuity, when completed, will have the capacity to power Africa and indeed to export electricity beyond the continent," South African President Jacob Zuma said at a signing ceremony in Kinshasa.
Talk of progress at Inga comes at a time of fresh optimism in Congo. Its army, backed by South African troops in a U.N. peackeeping mission, has defeated the most serious rebellion to plague the mineral-rich east in a decade.
It also comes amid a drive to ensure Africa's era of growth isn't brought to a halt by lack of power. According to the World Bank, sub-Saharan Africa, with its 800 million people, produces the same amount of power as Spain, home to 45 million.
Uganda has recently completed the 250 MW Bujagali dam near the source of the Nile. Ethiopia is building the 6,000 MW Grand Renaissance dam, which will be Africa's largest once completed. To the west in Sierra Leone, hydro-electric power is central to a $3.5 billion plan to increase power production tenfold by 2017.
None come close the scale of Grand Inga. But experts urge caution, even for just the first stage of the process.
In February 2012, the previous plan for Inga III fell through when the dam's main source of cash, an aluminium refinery planned by BHP Billiton, was shelved. This led to talks with South Africa to secure a market for Inga's power.
"The major issue is whether the financing for the project will come through. The cost of Inga III is twice the official voted state budget, and is actually four times the executed budget," said a Congo-based diplomat who follows the issue.
"The other real question mark is over the business climate and the kinds of guarantees that investors have," he added. Congo ranks among the world's 10 most difficult places to do business, according to the World Bank.
Not far from where the Congo River completes its 4,700 km (2,900 mile) journey to the Atlantic Ocean, the water splits in two. Some races over rocks, kicking up white water and creating a deafening roar. The rest, slow-moving and brown, builds up against concrete walls and shoot down tubes, spinning turbines.
A close look highlights how much stands between today's Inga and the 40-year-old grand pan-African power dream.
Both Inga I and Inga II, completed in 1972 and 1982, are in disrepair. Power lines to the capital, 450 km (280 miles) away, have not been upgraded since and struggle to meet the load.
Mobutu Sese Seko, who ruled Congo for 20 years, used Inga to curb secessionist plans by the distant eastern Katanga province by making its mining sector reliant on power supplies from the dam. Today, mining firms ploughing billions of dollars into copper and cobalt operations there complain of a 300 MW deficit.
Despite Congo's massive power potential, only nine per cent of its 72 million inhabitants have access to electricity and the nearby capital suffers frequent blackouts.
An official at SNEL, the state power company, says just 40 percent of the power produced is paid for, driving up debts. State agencies, including ministries and the army, are among the worst offenders.
The three consortiums in the running for the Inga III contract include China Three Gorges and Sinohydro ; Spain's Eurofinsa and ACS ; and a partnership between Canada's SNC-Lavalin and South Korean duo Posco and Daewoo.
"It's true we have dragged our feet a lot," said Désiré Baleka Njemoti, SNEL's top technician at Inga. "But now we have made serious contact with partners, with the World Bank, and other countries are very interested in this energy."
An advisor to Prime Minister Augustin Matata Ponyo said the government hopes to choose a consortium to build by dam by April. Construction would then start in October 2015 and take five to six years to complete, he added.
Kapandji said the tender process was not closed so other companies could join and the selection could be delayed.
Whoever wins will need to invest about $8.5 billion, with the World Bank, African Development Bank and the South African Development Bank plugging the gap for the total bill, estimated at $12-13 billion.
According to plans, investments will be recovered in sales of energy South Africa and to the mining companies in Katanga.
South Africa's commitment reflects Pretoria's deepening ties with Congo, a decade after it hosted peace talks to end a 1998-2003 war that sucked in many regional armies. South African soldiers were key members of U.N. peacekeeping units that went on the offensive against rebels this year in Congo's east. (Writing by David Lewis; Editing by Daniel Flynn and Peter Graff)

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