Is World Bank Throwing Good Money After Bad?
There is a sad irony in the fact that of one of Africa’s poorest nations, the Democratic Republic of Congo (DRC), plans to build the world’s most expensive hydropower dam – the Grand Inga, proposed for the Congo River’s Inga Falls. While the dam’s proponents at the World Bank say the project will “transform” the African energy landscape, International Rivers and local partners believe the dam could fuel corruption and conflict, while leaving the majority of poor Congolese still without electricity.
In May, World Bank President Jim Kim visited the DRC and gave a boost to Grand Inga by announcing that the Bank would be increasing its funding in coming years for big hydropower dams and the region. At the same time, I was heading to DRC to see for myself what challenges damming the Congo River at Inga Falls would bring.
The huge project took a significant step forward with the signing of a “cooperation treaty” by the DRC and South African governments in May. The multinational engineering firm Lahmeyer had just completed a feasibility study that convinced the DRC government, the World Bank and African Development Bank that Grand Inga’s impacts would be minimal. The AfDB funded this study for US$15 million. Both the World Bank and the AFDB have been giving technical support for the development of Grand Inga.
The treaty makes South Africa the principal purchaser of the power generated at the Inga III power plant, the first phase of Grand Inga. Under the agreement, South Africa will buy 2,500 MW of the project’s total 4,800 MW capacity. The balance will be sold to mining companies in southeastern DRC. The signing event, held in Paris in May, attracted a lot of media coverage and excitement within government circles in the DRC, South Africa and internationally. It made headline news within the DRC for a week running.
A First Hand Look
The sprawling DRC capital of Kinshasa is full of contradictions. There are more than 10 million people, and less than 30% have access to electricity (nationwide, only 1% in rural areas have access), with fewer than 10% having electricity for 24 hours a day. The majority rely on wood biomass. Charcoal is the most traded good, and is seen being transported to the urban centers and along the inland roads and outside most urban centers.
On the other hand, electricity is used without any thought to conservation. The tariffs do not encourage efficient use; most consumers are charged for being connected, not for how much they used (less than 10% of those with connections have meters). To overcome power outages, many wealthier people rely on huge, noisy diesel generators.
Some communities will have to be relocated to make way for the construction of Inga III project. I visited one of these communities – Mvuzi III, currently in an area approximately 100km from the Inga III dam site. It is sad to report that, despite being in the path of this huge dam project, the people here very little information about the dam and the impacts it will bring to their lives. This situation is the same everywhere in Africa where poor communities are being relocated to make way for huge infrastructure projects. The governments and developers thrive by providing little or no information to the affected.
The villagers knew that they would be relocated when Inga III construction starts but had no details of how the exercise would be conducted. They reported that the World Bank had carried out a survey in 2007 to establish the size of the affected communities and at the time informed them that they would receive US$900 compensation per household to relocate. The government and World Bank officials later informed me that a plan for the relocation would be developed to ensure fair compensation to the affected people. But the devil will be in the details – most especially how and if it will be implemented properly. The communities believe that they cannot go against the government’s wishes but would like a compensation package that does not compromise their lifestyle and livelihoods. They also hoped that the project would create employment opportunities for them.
The World Bank has yet to answer our other questions on key issues arising from this megaproject. Foremost is, how will these huge, costly, centralized projects fulfill the basic energy needs of the poor majority? How do the job-creation prospects of Inga III compare to renewable options? How are the issues of climate change mitigation and adaptation being addressed? And critically, what is being done about the very real issues of governance and corruption?
World Bank Backing
“Large hydro is a very big part of the solution for Africa … I fundamentally believe we have to be involved,” said Rachel Kyte, the bank’s vice-president for sustainable development, in a May interview. Yet the International Energy Agency (IEA) has found that grid-based electrification – including large hydropower projects – is not cost-effective for much of rural Sub-Saharan Africa, because of the continent’s low population density. According to the IEA report, 70% of the world’s unelectrified rural areas are best served through mini-grids or off-grid solutions.
The World Bank has been a strong backer of dams on the Congo for decades. For the past 40 years, the Bank and other donors have poured billions of dollars into dams and associated transmission lines on the Congo River. The projects have been plagued by rampant corruption, perform far below capacity, and have failed to benefit the poor. About 85% of the electricity in the DRC is consumed by the mining industry. Worse, the centralized nature of these investments has created a winner-takes-all system that has encouraged tension and civil war.
The World Bank argues that a new generation of mega-dams such as Grand Inga could “catalyze very large-scale benefits to improve access to infrastructure services” in Africa. But the projects on the Congo are designed to power the mining industry and urban centers. More than half of the electricity generated by Inga 3 would be exported to South Africa and the rest to mining companies in Katanga Province. Billions of dollars in aid for the energy sector will once again bypass them.
If past dams are an indication of how things will go for Grand Inga, the project is in trouble already. The existing Inga I (351 MW) and II (1,424 MW) dams, built in 1972 and 1982 respectively, have never operated efficiently since they were commissioned due to lack of maintenance – partly a result of years of war, partly a problem of lack of local skills, partly a problem with the corrupt and mismanaged state energy utility. Rehabilitation of the Inga I and II hydropower stations is now underway, and is expected to be completed in 2016. It is now estimated to cost $883 million – more than four times the World Bank’s original 2003 estimate, which put the project’s costs at just under $200 million. The rehabilitation of the power stations will include replacement and refurbishing of turbines, and construction of a second transmission line to Kinshasa that will enable 35,000 more consumers to be connected. The Inga-Kolwezi grid, which is operating at 25% capacity, will also be rehabilitated. The World Bank embarked on the rehabilitation project in 2003 with a justification that the rehabilitation of the two power stations and transmission line would enable the DRC to earn $40 million yearly through exports of electricity. Ten years down the line this dream has been marred by slow, barely satisfactory progress and huge cost overruns.
An $80bn Gamble
At least $12 billion will be needed for construction of Inga III and an astonishing $80 billion for the Grand Inga Dam. It does not make sense that DRC failed for over 10 years to complete the rehabilitation of Inga I and II, yet now it expects to manage a bigger and more complex project. One cannot help but question whether there is human capacity to handle such a project and even capacity to absorb the huge amounts targeted for these developments. Is it realistic that Inga III can be completed in eight years when the rehabilitation has taken a decade and is still incomplete?
Inga III is a commercial project that will supply power for export and to the mines in Eastern DRC, not for the Congolese people. The Inga III project is a “trickle down” develoment, based on the assumption that it will attract investment into the country, which will in turn create employment that will benefit local people indirectly. This has been proved over and over again to be a fallacy, especially for developing countries where the state is weak. It is almost a given that the majority of Congolese people will not receive any benefits from the project. Instead, the population will remain in the dark and the country may remain one of the poorest nations on the African continent, and among those with the lowest amount of electricity use per capita
On the other hand, those with power and influence stand to benefit from corrupt deals. Transparency International recently rated the DRC 160th for governance and corruption out of 176 countries in the world. The Inga I and II rehabilitation process was not spared of corrupt deals. In 2008, two of the utility’s top directors were interrogated after the disappearance of $6.5 million earmarked for Inga II rehabilitation. The money was never recovered or accounted for. An emergency multi-sector loan approved by the World Bank in 2002, which included $116 million for power-sector rehabilitation, became mired in corruption. It would be a sad day for the DRC if the Inga dams’ potential for corruption turns out to be as grand as their scale.
Energy Poverty in DRC
Lack of access to modern electricity services impairs the health, education and income-generating potential of millions of Congolese people. The Congolese government has set a highly aggressive target to provide 60% of the population with access to electricity by 2025, but is vague on how to meet this target. Investments in decentralized power supply projects, including small- and medium-scale hydro across the country, could be more effective than mega-dams in finally beginning to close DRC’s energy divide, but so far have not been prioritized.
International Rivers’ main focus on the Grand Inga is its inappropriateness for meeting the energy needs of Congo’s poor majority, in spurring economic growth in the country, and addressing social and environmental concerns. A clear and detailed strategy must be developed for achieving the DRC’s own target of 60% access to electricity. In the coming year, we’ll be commissioning research on decentralized energy investments that would help the country achieve this target, such as through financing small- and medium-scale power projects all over the country rather than another massive dam project.