Questions have cropped up about the financing for South Africa’s participation in a multibillion-dollar joint infrastructure project with the Democratic Republic of Congo.
Last year, Treasury’s 2013 Budget Review determined the cost of the Grand Inga hydropower project – situated on the Congo River’s Inga Falls – at R200 billion. The financing was to be determined once feasibility studies were completed.
Initial studies have now been completed, according to the Industrial Development Corporation (IDC), and the Congolese government has opened bidding for construction of the first phase of the project, Inga 3.
South Africa recently locked down 2 500 megawatts from Inga 3 through a treaty of joint cooperation between the two governments as it took steps to address its energy deficit, with nuclear deals also on the table with other governments.
SA needs 61 200MW by 2030, according to the department of energy’s revised integrated resource plan.
Former energy minister Dipuo Peters said the R200 billion was “too little” for the project. The IDC has been approached for funding, but it is unclear if other development finance agencies have been approached, or if South Africa will fund any of the construction.
Development Bank of Southern Africa (DBSA) boss Patrick Dlamini told City Press last week that the project would need an estimated $100 billion (R1.1 trillion) for all the different phases, which will produce 40 000MW of electricity when built.
The DBSA’s annual report, which was released last week, showed it had capital of R4.8 billion on call, which Finance Minister Nhlanhla Nene wanted to raise to R20 billion.
“The likes of Eskom will be critical user [for Grand Inga],” said Dlamini. “Brand-new lines will be built, which then becomes very expensive.”
He said if the Southern African Power Pool – a grouping of the Southern African Development Community power utilities – was able to build these lines, it would be much easier to finance the project. The utilities were “very willing” to build them, but financing was a problem, he said.
There was no question of packing up and going home though, as extraction of Africa’s natural resources has always been a power-hungry endeavour.
The IDC’s Africa unit, which has an exposure of R7.5 billion out of R11.1 billion committed or approved to projects in the rest of Africa, is not involved in the hydropower project either, although spokesperson Mandla Mpangase said it had been approached to participate.
“The level of our involvement has not yet been determined,” he said.
“The project is not yet at a stage for us to make a determination of funding as there are a few gaps that need to be finalised relating to the evacuation of the power from the Democratic Republic of Congo to South Africa.”
Mpangase said it could, together with other development finance institutions, get involved in the project if it needed to.
Source: City Press