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New report finds that DRC likely to suffer financial losses, continuing energy poverty if hydropower project advances
Tuesday, June 27, 2017
FOR IMMEDIATE RELEASE
Today, International Rivers is releasing the first in-depth economic study of the proposed Inga 3 hydropower project in the Democratic Republic of Congo (DRC).
Authored by noted British economist Tim Jones, “In Debt and In The Dark” exposes glaring flaws in the assumptions about the dam’s likely performance. The report finds that Inga 3 will likely plunge DRC deeper into debt, exporting needed power and delivering little, if any, to Congolese citizens while allowing international investors to reap the benefits.
“Claims about the benefits of Inga 3 are wildly overstated,” says Jones. “In fact, the dam would be a huge financial burden for the government and the Congolese people and provide little if any electricity.”
From the outset, Inga 3 has been plagued by dangerously optimistic assumptions about the dam’s performance, including power output well above the world’s most efficient plants, zero cost overruns, and unrealistically low transmission losses.
Using empirical evidence from the performance of similar hydropower projects in Africa and globally, Jones tested proponents’ claims regarding Inga 3’s socioeconomic benefits. He then forecasted the dam’s potential performance across a range of scenarios.
His findings highlight the serious financial risks associated with the Inga 3 hydropower project, and should be deeply concerning to the DRC government, potential investors, and the Congolese people.
“The DRC is one of the most resource-rich countries in the world, but suffers from massive energy poverty,” says Freddy Kasongo of Observatoire d’Etudes et d’Appui à la Responsabilité Sociale et Environnementale (OEARSE).
Emmanuel Musuyu of Coalition des Organisations de la Société Civile pour le Suivi des Réformes et de l’Action Publique (CORAP), adds, “Unfortunately, this study shows that the Inga 3 Dam will further impoverish the DRC without delivering the energy that we need.”
The analysis shows that in the most likely scenarios, the DRC government will lose money on Inga 3. Even with fairly conservative estimates of cost overruns and generous assumptions of power generated, electricity prices, and low interest rates, DRC would stand to lose $618 million per year on the project, or nearly $22 billion over the project’s 35-year lifespan.
These financial losses could run as high as $1.5 billion to $2 billion per year under unfavorable conditions – up to $70 billion over the project’s lifespan – ballooning DRC’s debt levels and harming its long-term economic health.
“Not only will Inga 3 bring in no revenue, it will likely increase DRC’s debt burden,” says Rudo Sanyanga, International Rivers’ Africa Program Director. “And it won’t bring much-needed electricity access to the Congolese people. This would be a disastrous investment for the DRC.”
The project will sell most of its electricity to South Africa and to mines in eastern DRC. The report finds that losses along what would be the world’s longest transmission line to South Africa could leave very little power available to the mines, and the Congolese people would receive little benefit in increased electricity. Under the most likely scenario, 88% of the power would be sold to South Africa, leaving just 90 MW for Kinshasa, rather than the 1000 MW claimed. Under the worst-case scenario, no power at all would be available for sale to consumers in Kinshasa.
International Rivers’ study shows that the DRC could achieve greater energy access for its population if it used the funds intended for Inga 3 on micro-hydropower and solar energy. Such investment would support the DRC to generate enough electricity to increase access by an estimated 2.7 million people throughout the country.
Kate Horner, Executive Director of International Rivers, says, “If the DRC wants to become a true economic leader that sets a model for energy access in Africa, it should press the pause button on the Inga 3 Dam and instead explore energy solutions that can make a lasting difference for the Congolese people.”
International Rivers is a global NGO with offices on four continents. It protects rivers and defends the rights of communities that depend on them.