Funders to gather in London next week to discuss giant Inga power project

17th April 2008 By: Terence Creamer - Creamer Media Editor

The inaugural financiers conference for the much-vaunted Inga 3 hydro-electric project, proposed to be sited on the mighty Congo river in the western Democratic Republic of Congo (DRC), will take place in London on Monday and Tuesday next week.

The project is conceived as the first stage within the far larger ‘Grand Inga’ scheme, which project proponents believe could deliver up to 75 000 MW of much needed low-carbon electricity over the next two to three decades.

Inga 3, itself comprising four parts, could deliver up to 4 500 MW of electric power by 2015, some of which could be supplied to power-stretched South Africa through a new-generation 800 kV high-voltage, direct-current transmission system, which would have to cross five borders.

The promoters hope that construction will begin during 2010 should funding become available.

Western Power Corridor (Westcor) CEO Pat Naidoo, who heads the Botswana-based utility driving the initiative, reports that a preparatory meeting will be held over the weekend ahead of the funding workshop, under the stewardship of the secretary general of the World Energy Council (WEC), Gerald Doucet.

This meeting would involve high-level representatives from the utilities and governments participating in Westcor, which falls under the Southern African Power Pool and has been set up as a joint venture owned by the power utilities of Angola (ENE), Botswana (BPC), DRC (Snel), Namibia (Nampower) and South Africa (Eskom).

“There is a lot of interest in the project and we are increasingly confident that we will be able to raise the $5-billion to $6-billion required [for Inga 3],” Naidoo revealed at a gathering organised by the South African National Energy Association ahead of his departure for the UK.

He acknowledges, though, that there is still some scepticism about the project, given that it has been on the continent’s electricity agenda for more that three decades.

But he argues that the difference this time around is the confluence of supportive energy, environmental and political factors that have hitherto been absent. Most notably, the emerging peace and stability in the sub-region, the prevailing electricity crisis in South Africa, and a desire among the development finance institutions to bankroll low-carbon electricity initiatives.

PRESIDENTIAL PRIORITY STATUS
The project has been elevated to ‘Presidential priority’ status in both the DRC and South Africa, with Presidents Joseph Kabila and Thabo Mbeki having been briefed on developments during the recent binational commission, which took place in Pretoria in early April.

Speaking after that meeting, Mbeki indicated that both countries were keen to accelerate processes that would enable the region to offer the Inga 3 project to potential investors and development finance institutions.

It is anticipated that the project could be officially launched at the World Economic Forum to be held in Cape Town in June.

Initially, Westcor will be seeking to raise $30-million to complete the bankable feasibility study for the hydro scheme itself, as well as a further $30-million for the detailed design of the transmission system.

It has already received numerous expressions of interest from leading engineering organisations keen to participate in the detailed feasibility studies, which Westcor wants to see finalised during either 2008 or 2009.

The project is also robust enough to be advanced on commercial terms, with the power purchase agreements from all five shareholders underpinning its financial viability.

However, Naidoo adds that there is also real potential to attract energy-intensive investment into the West Coast as anchor offtakers, hinting to preliminary talks with BHP Billiton, which currently operates aluminium smelters in South Africa and Mozambique.

The project, Naidoo enthuses, could provide low-cost, reliable and affordable energy into an increasingly power-hungry territory. He calculates that the electricity could be sold at around US5c/kWh, which would yield yearly revenues of $1,75-billion once the facility was producing at a capacity of 4 000 MW.

“So there is a strong commercial basis for this project and it has the potential to entirely redefine the economies of the West Coast of Africa,” Naidoo concludes.