DRC plans new power law for electricity sector

CAPE TOWN – The Democratic Republic of Congo (DRC) plans to pass a new law this year to pave the way for the liberalisation of its energy sector over the next five years.

The new law will serve as the driver for investments needed to tackle the Grand Inga hydroelectric project, which could dwarf China’s Three Gorges Dam, and generate as much as 40 000 MW to ease power shortages both in the DRC and the region.
Vika di Panzu, a senior advisor to state-owned utility (SNEL), said yesterday to achieve this goal, the DRC hopes to sign into the act before the end of 2009 to liberalise a sector controlled by SNEL.
‘Now we have a vertically integrated entity … but over the next five years we plan to unbundle it into generation, transmission and distribution companies,’ the former head of SNEL told Reuters on the sidelines of a power conference.
Di Panzu said the DRC was following Nigeria’s example and in April Congo signed a law to transform 20 state-owned entities, including SNEL, into profit driven companies.
‘They are now commercial enterprises with the state as the sole shareholder… in the future we envision they could have other shareholders as well,’ he said.
The electricity act, already drafted, will set out the reforms to be taken over the next five years to provide legal, regulatory and fiscal incentives for private investors to come into the energy sector.
‘It’s a long process because you have to take into account the social impacts of any tariff increases you will need to implement to attract investors,’ Di Panzu said.
RISK AND COST
The Grand Inga project could be a long term solution to Africa’s power problems, but investors have held back due to political risk and its US$80 billion price tag.
The total potential of the country’s hydro resources was as much as 100 000 MW, he said.
‘We have been waiting for this for a long time, but now we are finally talking peace … and let’s forget the US$80 billion. It’s important to focus on the first US$10 billion, get the first part going and then the rest will follow,’ he said.
Di Panzu said financial constraints were also for the country’s average electrification rate of six per cent.
‘We have estimated it would cost US$7 billion to double that rate in five years time … the government and even the primary lenders don’t have that money,’ he said.
For now, the DRC, Angola, Namibia, South Africa and Botswana are working on Inga 3, expected to link up with the southern African grid and to supply the DRC’s growing mining industry.
‘The latest pre-feasibility study shows we could develop that project to produce between 4 300-6 500 MW … there would be enough for everyone,’ Di Panzu said.
Depending on the funding, construction could start by 2012, with a final completion date of 2018, he said. -Nampa-Reuters