(Updates with comments from Shah from second paragraph.)
Dec. 16 (Bloomberg) -- The U.S. may consider partly financing the Democratic Republic of Congo’s $12 billion Inga 3 hydropower project, Rajiv Shah, the head of the U.S. Agency for International Development, said.
Congo must commit to reforms that include reorganizing its public-utility company and creating a governance structure for Inga to attract financing before the U.S. can look into investing, Shah told reporters today after touring the site.
“The reforms we want are those that provide confidence to private investors to be part of the financing package for the Inga 3 program,” Shah said.
Since U.S. President Barack Obama announced his $7 billion Power Africa commitment to increase access to electricity on the continent in June, a number of countries have asked to be part of the program, Shah said. Congo was not included in the original Power Africa list of six sub-Saharan countries.
The world’s largest economy is working with General Electric Co. and other companies to add 10,000 megawatts in sub- Saharan Africa in the first five years of the program. Companies will contribute about $9 billion. More than two-thirds of Africa’s population don’t have access to power.
Shah toured the Inga site today with Prime Minister Matata Ponyo, Energy Minister Bruno Kapandji and World Bank officials. The 4,800 megawatt project on the Congo River is the next step in developing the Grand Inga site, which may eventually become the world’s largest hydropower producer, according to Congo’s government.
“What’s important is not just the envelope with such an amount of money, it’s the engagement” of potential partners, Matata said. “This constitutes a key moment to say that we are all behind this project and this project must move forward.”
Two previous attempts to build Inga 3 in the past four years have failed.
South Africa will receive 2,500 megawatts of power, while copper miners in Congo’s Katanga province will take 1,300 megawatts once Inga 3 is completed. The remaining 1,000 megawatts will be for domestic use. Grand Inga will churn out more than 40,000 megawatts of power through eight separate dams.
The current groups of companies bidding to develop Inga 3 include China Three Gorges Corp. and Sinohydro Corp.; Posco and Daewoo Corp. of South Korea in partnership with Canada’s SNC- Lavalin Group Inc.; and Actividades de Construccion y Servicios SA and Spain’s Eurofinsa SA.
Jin-Yong Cai, chief executive officer of International Finance Corp., the World Bank’s private investment arm, said Congo’s government should continue carrying out changes to improve the business climate. The IFC halted all new investments in Congo after the government in 2009 canceled the contract for a copper project in which it had a minority stake.
“But what we have seen is really renewed focus and commitment from the government in recent years in terms of the doing business environment,” he said.
Congo ranked 183 out of 189 economies surveyed in the IFC’s 2014 “Doing Business” report.
--Editors: Andres R. Martinez, Alastair Reed, Sarah McGregor, Andrea Snyder