PowerChina set to construct 2 hydropower plants in Congo

Power Construction Corp. of China agreed to build two hydroelectric power plants in the Democratic Republic of Congo to help reduce the mining industry’s yawning energy deficit, its local partners said.

Metal output in Congo is hampered by a shortage of power from the national grid, meaning mines in the world’s biggest cobalt-producing nation have to rely on costlier alternatives like diesel generators. The lack of electricity means that some mines produce copper and cobalt concentrates instead of the more value-added exports the government is trying to encourage.

The smaller and most-advanced of the two projects would be built in the southeastern Lualaba province, while a 900-megawatt plant in the capital, Kinshasa, could cost as much as $3 billion and take seven years to finish, according to executives from the respective partners on the projects.

State-owned PowerChina recently built the 150-megawatt Zongo 2 facility on the Congo River, the first power plant finished in the country in more than 30 years. It’s also constructing the $660 million Busanga hydroelectric project in Lualaba province, which will feed the giant Sicomines copper mine.

Financial Partners

PowerChina signed an agreement with Lubumbashi-based Kipay Investments in April to build a 150-megawatt facility on the Lufira River in copper- and cobalt-rich Lualaba, founder and Chief Executive Officer Eric Monga said in an interview. PowerChina will have a 51% stake in the venture, and Kipay 49%, he said.

Construction of the project, which will cost more than $400 million, is scheduled to start by early 2020 and take three years to finish, according to Monga. At least 70% of the project will be financed by debt, according to Kipay’s website.

The second development is in an earlier phase, but larger — a 900-megawatt plant in Kinshasa on the Congo River. PowerChina finalized a contract with Great Lake Energy in March to take a majority stake in the project, GLE founder and CEO Yves Kabongo said in an interview.

“PowerChina can take up to 51% and I have the freedom to bring in financial partners on my side,” he said.

Feasibility Study

PowerChina and GLE will soon start the final phase of the feasibility study, for which the Chinese company will provide as much as 70% of the $15 million cost, according to Kabongo. Should the project go ahead, Kabongo said the entire process — fundraising before constructing the plant on the Congo River and transmission lines to southeast Congo — will take seven years and cost as much as $3 billion.

Neither deal has previously been announced publicly. Several calls to PowerChina’s news department in Beijing went unanswered and it didn’t immediately respond to an emailed request for comment.

Last week, Zimbabwean President Emmerson Mnangagwa said PowerChina and General Electric Co. had been chosen to build a $4 billion hydropower plant on the border with Zambia.

The Congolese government’s long-term solution to the country’s energy shortage is the ambitious Inga 3 hydropower plant, which is projected to provide 11,000 megawatts and cost up to $18 billion. While two groups of investors — one Chinese, the other Spanish — were appointed co-developers of the mammoth project last October, even the most optimistic forecasts see Inga 3 only being commissioned toward the end of the next decade.

Source: Bloomberg

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