A Review of the Nigerian Energy Industry

Congo Kinshasa-South Africa treaty breathes life into Inga Dams project

Hydro electricity dam09 November 2013, Kinshasha – An energy treaty between the DRC and South Africa breathes life into the long-delayed Inga Dam project, offering a potential energy boost for southern Africa.

South Africa’s new energy treaty with the Democratic Republic of Congo has prompted a fresh round of talk about the mother of all infrastructure projects: the Inga dams.

Harnessing the power of Africa’s second biggest river after the Nile, and the world’s second largest by volume after the Amazon, Inga is an ensemble of hydropower installations on the Congo River which, at a cost of around $80bn, would be the biggest such project in the world.

Two existing dams – Inga I and II – have been running for 40 and 30 years respectively, but have underperformed due to lack of upkeep. The hope is that Inga III, combined with renovation work on the existing projects, and the construction of a further four to six dams and related infrastructures, will culminate in a 40,000MW hydro system whose output will be double that of China’s Three Gorges Dam. The energy would be cheap by any standards, let alone green ones; less than 0.02-3$/kWh, compared to 0.40 – 1.00$/kWh for solar and 0.10 – 0.15$/kWh for wind – and would save 100m tonnes of fossil fuel burning every year.

To date, the mega-project has been all potential and no progress.

However, the new treaty with South Africa breathes life into Inga III, which is a critical piece of the puzzle. The agreement gives the project a credible off-taker in Eskom, the South African state-owned energy company. Feasibility studies have been carried out, and a bidding process, which started in 2010 with the prequalification of six consortiums, has now been whittled down to three: China’s Sinohydro and Three Gorges Corporation; Actividades de Construcion y Servicios, Eurofinsa and AEE from Spain; and Daewoo-Posco from South Korea.

If successful, the Inga project will also help the World Bank show it is serious about reducing its lending to fossil fuel developments. The institution wants to leave dirty fuels behind, publishing vocal predictions about climate change and recently agreeing to restrict financing of coal-fired power to countries with no feasible alternatives. But greening is hard to do. In 2010, $6bn of the $10bn lent by the World Bank to energy still went to fossil fuel projects.

Hydro provides a way to reduce coal-lending while still pushing the kind of game-changing energy projects that Africa needs. In addition to Inga, the bank is getting behind the Batoka Gorge and Mphanda Nkuwa dams on the Zambezi.

But hydro mega projects in politically volatile nations like DRC are hard to cost and plan. The financing of Inga I and II was revised up 80 percent, from $226.7m to $460.2m. Some wonder at the wisdom of shoehorning $80bn into a highly centralised project in a country whose government ranks 160 out of 176 in Transparency International’s Corruption Perceptions Index.

– This is Africa

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