US mulling partnership with China in Congo Inga 3 dam project

US mulling partnership with China in Congo Inga 3 dam project

Chinese state-owned firms and US government may end up funding costly
and controversial dam project in Democratic Republic of Congo
By Toh Han Shih, South China Morning Post, Monday, 20 January, 2014
www.scmp.com/business/china-business/article/1409212/us-mulling-partnership-china-congo-inga-3-dam-project

In an unusual move, the US government is considering partnering with
Chinese state firms in financing the US$12 billion Inga 3 dam in the
Democratic Republic of Congo, one of the world's costliest and possibly
most controversial dams.

A Chinese consortium comprising Sinohydro and China Three Gorges Corp,
both state-owned enterprises (SOEs), are bidding for the project,
according to media reports.

If the Chinese consortium wins the contract, this will be the biggest
overseas dam contract ever won by Chinese firms.

Inga 3 will have a capacity of 4,800 megawatts (MW) and is one of the
largest hydropower projects in Africa, according to Peter Bosshard,
policy director of International Rivers, a US nongovernmental
organisation (NGO) opposed to the project.

Bosshard said a partnership for such a massive undertaking between the
US and China is unusual. "I am not aware of any other such case," he added.

Benoit Tshibangu Ilunga, who runs Congo law firm Tshibangu Ilunga &
Partners and is involved in the dam project, told the South China
Morning Post that the US government was interested in partnering with
the Chinese state firms in the project.

During his current visit to China, Rajiv Shah, administrator of the US
Agency for International Development (USAID), discussed co-operation
with Chinese state firms in funding the Inga project, Bosshard claimed,
citing a "well-informed source".

"USAID continues to work with a wide range of partners to determine
whether an Inga dam project would be financially, environmentally,
socially, and politically viable. USAID continues to work to improve
access to electricity in the Democratic Republic of Congo and
sub-Saharan Africa," said a USAID spokesman when asked if Shah was
negotiating partnerships with the Chinese firms to fund the dam.

The Inga 3 dam is part of the Grand Inga plan, an US$80 billion complex
of 11 dams and six hydropower projects on the Congo River in the African
nation. If the Grand Inga plan proceeds, all its dams will have a
combined capacity of 40,000 MW, according to International Rivers. The
project would dwarf the world's biggest dam, China's US$28 billion Three
Gorges Dam, which has a capacity of 22,500 MW.

A group of NGOs, including International Rivers, sent a letter to US
Secretary of State John Kerry and Shah last month, urging Washington not
to support the Inga 3 dam.

"Inga 3 will completely bypass the local population and generate
electricity for the Congo mining sector and South African export market.
It is likely that the project will be affected by rampant corruption,
and may further entrench the country's resource curse," said the NGOs'
letter, which also cited environmental risks.

Last December, Shah told reporters the US government was considering
financing the Inga 3 dam, possibly as part of US President Barack
Obama's "Power Africa" initiative, without specifying the amount.

Obama announced the US$7 billion Power Africa plan to supply electricity
to the continent during his visit to Africa in July last year.

If a Chinese consortium wins the dam contract and USAID carries out its
intention to finance the dam, the US and China will be partners in the
project.

The US and China need not compete over Africa, but can co-operate in
developing the continent, said Charles Stith, director of the African
Presidential Archives and Research Centre at Boston University.

"In principle, economic co-operation between China and the US is a good
thing and can reduce tension. But co-operation should not come at the
expense of the environment," said Bosshard.

The Congo government has prequalified three consortiums to bid for this
project, including the Chinese consortium, according to Bosshard.

The other consortia are a Spanish consortium and a partnership between
SNC-Lavalin of Canada and two South Korean firms, Posco and Daewoo.

The Congo government wants to select the winning bidder by July,
according to media reports.

The biggest international dam contract won by a Chinese firm was signed
last October by Gezhouba and two Argentinean firms, to build two dams in
Argentina worth US$4.71 billion. Gezhouba will contribute US$2.83
billion or 60 per cent of the deal. The two dams would have a capacity
of 1,740 MW.

China is the world's biggest builder and financer of dams, according to
International Rivers.

Sinohydro, the world's largest dam builder, won 61.55 billion yuan
(HK$78.3 billion) of overseas contracts in the first 11 months of 2013,
the firm announced on the Shanghai stock exchange website.

China International Water & Electric Corp, a subsidiary of Three Gorges
Corp, won 17 overseas projects worth more than 11 billion yuan last
year, according to its website.
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