Infrastructure | Chinese Companies to Build Hydro Plant in Energy-Starved Congo

CONGO, Capital Markets in Africa: Sinohydro Corp. and China Railway Group Ltd. have agreed to finance a 240 megawatt, $660 million hydro-power plant in Democratic Republic of Congo’s Katanga province, ending six years of talks around the project.

The Chinese companies have agreed with Congo’s government to develop the Busanga project in the copper- and cobalt-rich region, Moise Ekanga, executive secretary of the Office for the Coordination and Monitoring of the Sino-Congolese Program, said by phone from Kinshasa, the capital. The project is meant to help fill a 900 megawatt electricity shortfall in the region.

“This will bring our energy deficit down,” Ekanga said.

Energy shortages have inhibited investment in Katanga’s mines, which have also been hit by a slump in commodity prices. The slow-down forced Congo’s government last month to slash spending by 22 percent. Busanga will help expand China Railway and Sinohydro’s so-called Sicomines venture with Congo’s state-owned copper company Gecamines, which is developing a 6.8 million metric ton mining project.

The venture is part of a $6 billion minerals-for-infrastructure deal between China and Congo signed in 2007 through which the Sicomines partners finance projects in return for mineral rights.

The Sicomines copper project will require 170 megawatts from Busanga to run at full capacity and the national grid will absorb the rest, Ekanga said.

A third signatory to the deal is Mag Energy International, which previously held the rights to develop Busanga. Congo agreed to compensate Mag Energy to allow the Chinese companies the build the plant, Ekanga said.

Source: Bloomberg Business News