Tuesday, February 11, 2014

DRC Mega-Dam to Be Funded by Private Sector, Groups Charge

DRC Mega-Dam to Be Funded by Private Sector, Groups Charge
By Carey L. Biron
IPS, February 11, 2014

WASHINGTON, Feb 11 2014 - Watchdog groups here are warning that a deal
has been struck that would see Chinese investors fund a massive,
contentious dam on the Congo River, the first phase of a project that
could eventually be the largest hydroelectric project in the world.

Discussions around the Inga III dam proposal, in the Democratic Republic
of Congo (DRC), have been taking place in some form for decades. They
have picked up speed over the past year, however, under the auspices of
the World Bank, the Washington-based development funder.
"Handing the project over to a private investor will make it even less
likely the country's poor people would benefit from the project." --
Peter Bosshard

On Tuesday, the bank's board of directors were to have voted on an
initial 73-million-dollar loan for the project, to be offered through
the International Development Association (IDA), the institution's
programme for the world's poorest countries. Last week, however, that
vote was abruptly postponed.

Now, civil society groups are reporting that the project may be going
forward instead under the World Bank's private-sector arm, the
International Finance Corporation (IFC), with the backing of Chinese
investors. Yet critics, who have long worried about the local social and
environmental impact of the Inga project, worry that greater involvement
by the private sector will result in skewed prioritisation of beneficiaries.

"Handing the project over to a private investor will make it even less
likely the country's poor people would benefit from the project," Peter
Bosshard, policy director for International Rivers, an advocacy group,
said Monday.

"The IFC deal was arranged behind closed doors without any
accountability to the DRC parliament, the World Bank's board of
directors, or civil society … Non-transparent deals such as the Inga 3
Dam are the best recipe for deepening corruption in the DRC. They will
not strengthen the public accountability that is necessary for social
and economic development."

Citing multiple sources within the bank, Bosshard says the decision to
change the Inga III funding modality appears to have been made between
high-level officials from the World Bank, the IFC and USAID, the U.S.
government's main foreign-aid arm, reportedly bypassing the bank's board
of directors. Thus far, none of these institutions have publicly
confirmed any deal.

"The World Bank Group is fully committed to supporting the Inga III
hydropower project, which has the potential to improve the lives of
millions of Africans," a bank spokesperson told IPS in a statement. "We
postponed presenting to our Board a Technical Assistance package related
to the design of the project's operation, but the project has not been
cancelled, and our commitment to Inga III is unchanged."

Primary beneficiaries

As currently envisioned, the Inga III dam would be the first in a series
of hydroelectric installations along the Congo River, collectively
referred to as the Grand Inga project. This would include a single 145
metre dam, which would flood an area known as the Bundi Valley, home to
around 30,000 people.

The full project could provide up to 40,000 megawatts of electricity, a
power potential that has been eyed hungrily by the rest of the continent
for decades. While DRC's chaotic governance has stymied forward progress
on the project for years, the Grand Inga vision received an important
boost last year when the South African government agreed to purchase a
substantial amount of power produced by Inga III.

The 12-billion-dollar dam is now supposed to be built by 2020 and,
according to Congolese government estimates from November, would produce
around 4,800 MW of electricity. Of this, 2,500 MW would go to South
Africa while another 1,300 MW would be earmarked for use by mines and
related industry in the province of Katanga.

"There is little indication that the dam development schemes underway
would address the issue of access to electricity for the population
at-large; industrial users stand to be the primary beneficiaries,"
Maurice Carney, executive director of Friends of the Congo, an advocacy
group here, told IPS.

"Only 10 percent of Congo's population has access to electricity and the
situation is even worse for rural population, where only 1 percent has
access to electricity. For a country like the DRC that is endowed with a
plethora of alternative energy options, smaller-scale renewable energy
technologies would be the best way forward."

Carney and others are calling for a cumulative assessment of the Grand
Inga scheme, to include study of all social and environmental impacts.
Indeed, these have been longstanding concerns, but now some development
advocates worry that greater private sector involvement in the Inga III
project will further exacerbate such issues.

"We have questions about whether the scheme can deliver any development
at all in the hands of the private sector," Joshua Klemm, manager of the
Africa programme at the Bank Information Center, a watchdog group here
that focuses on the World Bank, told IPS.

"For good or bad, if this project belongs to the Congolese government,
there's at least some hope to expand electricity access in the country.
That would go out the window if we're talking about a purely private
sector project."

Duelling U.S. stances

As the Inga III project picked up momentum in recent months, USAID too
expressed its interest in the proposal. The agency's administrator,
Rajiv Shah, visited the Inga III dam site in mid-December, and stated
that the proposal could be added to a new, large-scale initiative by the
United States to significantly increase electrification across Africa.

Although USAID was unable to comment for this story by deadline, any
involvement by the agency in brokering a deal with the IFC would be
interesting. Just last month, the U.S. Congress passed a landmark new
law requiring the U.S. Treasury to formally vote against multilateral
funding for large-scale hydroelectric projects in developing countries.

The new provisions, contained in a huge appropriations bill funding the
federal government, impact both on bilateral U.S. funding through
agencies such as USAID, as well as on the significant contributions that
the United States provides to multilateral development institutions,
particularly the World Bank. (The U.S. Treasury was unable to comment by

"Under the [appropriations] language, the United States will have to
oppose the Inga III dam at the IFC as much as it would have had to do
this if it were an IDA project," International Rivers' Bosshard told
IPS. "There's no difference there, but it is ironic that the USAID
administrator would have pushed the deal."

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