Hydroelectricty Investment in the Democratic Republic of the Congo - The Grand Inga

- Chen-I Lin, Civil and Environmental Engineering, Tufts University

  Allison Schuster, Political Science, Tufts University

Abstract

Domestic and international stakeholders debated over the socio-economic and environmental impacts of further development of hydroelectricity at the Inga site in the Democratic Republic of the Congo. The 1,335,000 square-mile Congo River Basin and its Inga rapids harbor 100,000 MW of hydroelectricity potential. After the Second Congo War that erupted in 1998 and the finally ended in 2003, various international development banks are once again looking to the development of hydroelectricity as the solution to stimulate socio-economic development, not only within DRC, but also for the entire African continent (C). Critics of the proposals not only raise issues in resettlement compensations (C), lack of stakeholder participation in decision making (G), environmental degradation (E), and but also question whether the proposed Grand Inga project would deliver its promise in socio-economic development (C). Here we find the current support for hydroelectric development has not addressed the causes for the failure of a previous hydroelectric development project, Inga-Shaba, which only brought electricity to 7% of the population within DRC. The Inga-Shaba Project was motivated by the need of the state government to power the state-owned mining industry while the export of minerals was a key source of revenue for the government. The political regime under Mobutu has failed in developing institutions and laws to improve legitimacy and public accountability of the state government, and to ensure the distribution of benefits from the exploitation of natural resources are considered equitable and legitimate by stakeholders within DRC (G). The fighting over the control of mineral resources and political instability not only disrupted the operation and maintenance of the Inga facilities, but also economic livelihoods and development. Increasing foreign investment in the expansion of hydroelectricity without addressing the root causes of the political instability will likely to lead history to repeat itself.

Questions Answered and Lessons Learned

The question addressed in this case study is: Why investment in hydroelectricity fails to stimulate economic development within DRC? The investment in the Inga-Shaba project in the 1970s and 80s did not lead to socio-economic development in DRC due to political instability and mismanagement of public finance and resources. Both of which result from the failure of the political regime to develop institutions and laws that 1) involve stakeholders in the formulation of national natural resources policies, 2) distribute benefits from exploitation of natural resources in ways that are perceived as equitable and legitimate by regional stakeholders, 2) ensures public accountability in public investment. The current support for the Grand Inga Proposal is driven by interests and agendas of international organizations and multi-national companies and by the state government's need to generate revenues from export of electricity and from mining industries. The supporters for Grand Inga are either neglectful of the role of governance in socio-economic development or are promoting natural resources policies (privatization and liberalization) that could attract foreign investment yet antagonize local stakeholders within DRC. The Congo case study illustrates that one of key pre-requisites to socio-economic development - political stability - can only be sustained through institutions and laws governing ownership and access to natural resources that are perceived as equitable and legitimate by stakeholders.

1. Issue(s), stakeholders and relevant NSS variables for this case study.

Issues	Stakeholders	Variables Involved
Ownership to land and water	DRC State Government and state-owned utility and mining companies Regional political leaders Multinational mining companies Neighboring countries	Governance and Institutions (G): Energy infrastructure; Use of military in political conflicts; Natural resources laws and polices Economy (C): Government fiscal balance, Revenues from exploitation of natural resources
Public works construction	International engineering and construction companies DRC domestic labor force	Economy (C): Jobs
Socio-economic development	DRC population, regional political leaders African Development Bank, World Bank Neighboring countries	Governance and Institutions (G): Energy infrastructure; Natural Resources Laws and Polices Economy (C): Jobs, Industrialization Societal Values (V): Quality of life
Environmental conservation	International environmental NGOs River bank population (farming and fisheries) and International Rivers Network World Energy Council and the G-8 countries (Investors)	Governance and Institutions (G): Energy Infrastructure; International carbon trading Quantity (Q): In-stream flow and river morphology Ecology (E): Riparian and aquatic ecosystems Economy (C): Subsistence livelihoods Social value (V): Community and Health

In addition to substantial wealth in mineral resources, the Congo River Basin and its Inga rapids harbor 100,000 MW of hydroelectricity potential. While such natural endowments could have enabled rapid socioeconomic development, domestic and international political conflicts over the control of resources in the past few decades instead disrupted basic livelihoods within DRC. With the arrival of peace in 2002, an international consortium of energy industries, the World Energy council, has begun to promote further hydroelectricity development in DRC (The Grand Inga Project) for its potential impact in poverty reduction and improvement of living standard on the entire African continent. However, critics of proposal have argued past investment in the Inga-Shaba project in DRC has not enabled economic development within DRC. This case study will examines how interactions among key variables in governance (G), economy (C), social value (V), water quantity (Q) and ecological services and functions (E) drives hydroelectricity development and affects its outcome in DRC.

2. Description of the Setting

Location Coordinates	Democratic Republics of the Congo 6°04′45″S 12°27′00″E
Population	67,000,000
Climatology Rainfall Temperature	1,070 millimeters 180(Winter)-320C(Summer) in Kinshasa
Economic Factor	Subsistence livelihood; Export of natural resources and hydroelectricity for government revenues; Socio-economic development within DRC as well as for the African continent; Foreign investment and debt burden
Area	3,460,000 square kilometers
Status	Proposal for hydroelectricity development under review.
Treaty signed in	2002 Peace accord among fighting military factions
Date of negotiation	1951-1960
Top uses of water	Hydropower generation
Military Supremacy	Unclear in civil war situation
Militaristic Conflict	Among military factions backed by different foreign interests fighting over control of minerals

The 1,335,000 square miles drainage basin of the Congo River in west-central Africa covers most of the Democratic Republic of the Congo (DRC), Republic of the Congo, the Central African Republic, eastern Zambia, northern Angola and parts of Cameroon and Tanzania (Figure 1). The Congo River can be separated into three sections with distinct physical features, the upper Congo, the middle Congo, and the lower Congo (Britannica 2008). The lower Congo, located in DRC, with deeply incised, narrow river channels and water falls and rapids, has high potential for generation of hydro-electricity.

Two hydro-electricity facilities, Inga I (351 MW) and II (1451 MW) were constructed in the 1970s and 1980s under former President Mobutu Sese Seko's political regime (Figure 2). For a decade after the fall of Mobutu's regime in 1994, further development of hydroelectricity was not possible due to war, political instability and civil unrest. In 2002 rebel groups signed a peace accord and 2004 saw democratic elections and the inauguration of a new political regime. With the prospect of politcal stability at hand, multiple international actors, including the South African utility company, Eskom, and the World Energy Council (WEC), rekindled interest in further hydroelectryicty development of the Congo River. As a result of financing workshops sponsored by the WEC in 2006 and 2007, World Bank and the African Development Bank decided to finance technical feasibility studies for several proposals in expanding hydropower production at the Inga site. Among these proposals is the plan for the Grand Inga, which involves the construction of a new dam to increase generating capacity to 39,000 MW (Figure 2). The Grand Inga proposal also includes plans for transmission infrastructure that would allow Inga facilities at DRC to supply electricity to the entire African continent and parts of southern Europe (Figure 3).

3. Problem Definition

The various stakeholders define the problem of hydroelectricity development within the Congo River Basins around five main issues 1) ownership of land and water (G-C), 2) Public works construction (G-C), 3) Socio-economic development (G-C), and 4) Environmental conservations (G-E) (Figure 4).

1) Ownership of land and water (G-C)
History illustrates that control over mineral resources rent is intertwined with hydroelectricity development in DRC. Prior to colonization, communities in present-day DRC practiced a variety of customary laws that recognized community land ownerships. Communities exercised social regulations over various land use activities such as hunting, fishing, and farming at the local levels. From 1885 to the 1950s, DRC was under colonial rule, known as the 'Congo Free State' from 1885 to 1908 and as 'Belgian Congo' from 1908 to mid 1950s. The former Belgian political administration imposed new natural resources policies over indigenous customary laws of community land ownerships and tenures, giving the state legal control over mineral resources so that colonists could have easy access to extract and exploit the mineral resources (Encyclopedia of the Nations 2008). The resulting uncertainty over ownership of land and mineral resources created a tension between the state government and the regional political and military leadership - a tension that persisted even after the end of the colonial rule. With an underdeveloped economy, the export of mineral resources by the state owned mining industry, Gecamines, served as a significant source of revenues for supporting the state government bureaucracy. In 1966 President Mobutu Sese Seko implemented the 'Bakajika Code,' which gave mineral rights to the state. The 1981 Mining Codes further "put the State at the heart of all transactions relating to the mining sector" (Kuditshini, 2008). However, regional leadership continued to contest the state for the control of minerals, especially within the mineral-rich Katanga province in southern DRC (formerly known as Shaba province) as part of the struggle for complete political secession from DRC. President Mobutu conceived the Inga-Shaba project amidst these competing demands for mineral resources. The Inga-Shaba project would support the energy-intensive state-owned mining industries and the choice of the Inga site gave the state strategic control over the energy supply in the rebel province (Figure 5). After prolonged civil war and arrival of peace in 2002, the new political regime has continued to view exploitation of mineral resources as an important source of revenue. DRC's ambassador to South Africa, Bene M'Poko, said during a presentation to the Investing in African Mining indaba in Cape Town, "We cannot expand our mineral wealth without putting in place the infrastructure" (BR 2008).
In addition to state and regional stakeholders, foreign mining industries also competed for the mineral resource wealth of DRC. With the objective of attracting foreign investors and making mining and forestry sectors competitive, the International Monetary Fund (IMF) and the World Bank pressured DRC government to liberalize access to mining and forestry resources. Beginning in the 1990s, the state government and rebel factions conceded the legal rights to the mineral resources to multinational companies in order to finance their military forces during civil war. By some reports, some of these multinational companies even supplied rebels with arms and military equipment (Kuditshini 2008). When the rebel faction under L.D. Kabila gained control over the state government, L.D. Kabila repealed the contracts with the multinationals. In response, some of the multinational companies financed other rebel factions during the Second Congo War in order to topple the state government headed by L.D. Kabila. In 2002, new mining codes regarding access for multinational companies further privatized the mining sector. With the new democratic government, many of the contracts between the state and the multinational companies are currently under review for fairness and legitimacy.

Just as issues existed surrounding the distribution of mineral resources among domestic and international actors, similar issues were present in the energy sector. At one time the state maintained a government monopoly over the energy sector, with La Société National d'Eléctrcité (SNEL) in charge of the Inga I and Inga II facilities. Prior to the civil war, SNEL served the state government's objective of supporting the state-owned mining industries in the Shaba region. In 1992, an estimated 73% of SNEL's sales were made in Shaba, with 57% of the total sales made to Gecamines. In early 1992, SNEL experienced considerable losses following the destruction and looting in the Shaba region and was plagued by a lack of spare parts for systems designed by multinational companies. Without a domestic distribution network to supply electricity to domestic users and with local economies disrupted by civil unrest and war, SNEL began to increase its export of electricity to foreign utility companies such as the South African Eskom. With no financial capacity, SNEL has to allow foreign investors to share the revenues generated from hydropower facilities in exchange for the capital investment necessary for the rehabilitation of Inga I and II facilities or expanding the hydropower capacity at Inga. In the development of the Grand Inga project, a multinational holding company, Western Power Corridor, was formed among state-owned energy industries - Empresa Nacional de Electridade of Angola, Botswana Power Corporation, NamPower of Namibia, SNEL of DRC, and Eskom of South Africa.

2) Socio-economic development: Domestic and Abroad (G-C)

The support for Grand Inga Project was first driven by demand for electricity to support socio-economic development in neighboring countries. In 1992, there were talks between SNEL and Egypt about the possibility of connecting Egypt to the Inga site The technical feasibility studies of connecting Inga to Egypt was completed in 1997 by Electricite de France (EdF) and Lahmeyer International who reported that power plant expansion and construction of transmission facilities from Inga to Egypt is technically feasible., but the plans were never realized due to the civil war. In 1994, Eskom of South Africa initiated the planning of the Grand Inga project to meet increasing demand for electricity with South Africa. With the arrival of peace in 2002, the World Energy Council began to promote Grand Inga, saying "electricity is a bridge to sustainable development," and the African Development Bank (ADB) says "Africa needs energy to catch up on its industrial lag, and improve the standard of living of its populations...the reinforcement of energy infrastructure will contribute directly to the development of other sectors such as health, water supply, education and agriculture." The international development banks like ADB and the World Bank see improving availability to electricity as a prerequisite for economic development. For this reason ADB and the World Bank have been the major financiers for the technical feasibility studies, as well as for the on-going rehabilitation projects of the Inga I and Inga II.

On the other hand, the critics of the Grand Inga proposal have a different view of the potential impact of the project. First of all, they questioned whether the socio-economic benefits of the Grand Inga will be invested in state-owned and multinational mining industries, leaving majority of population without access to electricity. Even with the construction of the Inga I and Inga II dams only 7% of the population in DRC has access to electricity and in sub-Saharan Africa there are half a billion people without electricity (WEC 2008). In terms of cost recovery, securing revenues for future operation and maintenance, and ease in the collection of fees, utilities such as SNEL has stronger incentives to distribute electricity to a few major customers who are able to pay a higher price. Given the low public investment capacity of the state government to invest in distribution system to connect rural areas where the majority of the population is to the Inga site, SNEL is financially incapable of improving access of rural DRC to electricity. Foreign utility companies like Eskom, that do have the investment capacity, are concerned with increasing the amount of electricity exported to their respective countries of origin, especially to large industrial clients. Thus it is not surprising that Terri Hathaway of the International Rivers Network reported many examples where transmission lines pass over the houses of villagers next to hydro dam sites" and argued that "electricity from large hydro-power will not reach the majority of Africans, who live far from the power grid; expanding the grid to reach them would be prohibitively expensive. Hydro projects increase a nation's electricity supply in big increments, an inefficient way to address the gradual increases in market demands typical of African economies" (Hathaway 2009). The proposed Grand Inga project is estimated to cost as much as $80 billion (WEC 2008). According to International Rivers, "building a distribution network that would actually "light up Africa" would increase the project's cost exponentially (Hathaway, "Africans in the dark over the Congo river project", 2008).

3) Public Works (G-C)

While domestic industries lack both the technical capacity for the design and construction of the hydroelectricity facilities and the administrative capacity for managing a large-scale civil engineering projects, DRC will continue to rely on multinational engineering and energy firms for technical feasibility studies, engineering design, renting of heavy equipments, construction, and even operation and maintenance of the existing facilities. The $250 million contract for the Inga-Shaba project was awarded to a consortium of foreign companies, including Morrison-Knudsen International (based in USA), the Swedish ASEA, the Italian Sadelmi-Cogepi, and Irish GE Subsidiary. There is little information as to how much such a contract contributed to local economy in the form of wages for local labor force during the construction. International Rivers says that with the construction of the dams came many promises of community development and job creation, but these goals were never achieved. The construction of the dams resulted in limited employment opportunities and currently there are only a few workers at the hydropower site. Former project workers, along with displaced population, are reported to now live in small houses that lacked both water and sanitation facilities at locations such as camp Kinshasa where investment in public infrastructures has not kept pace with population growth and where they have no land titles (Hathaway, Field Report, 2008).

4) Environmental Conservation (G-E-C)

World Energy Council (WEC), a non-governmental organization with the state mission "to promote the sustainable supply and use of energy for the greatest benefit of all people" was a promoter for the Grand Inga project. According to secretary general of the WEC, Gerald Doucet, Grand Inga is "the greatest sustainable development project, offering Africa a unique chance for interdependence and prosperity" and G8 countries may get UN clean development mechanisms (CDM) credits from investing in this project (IWPD 2008).

The International Rivers Network argues that the environmental and socioeconomic impacts shouldered by displaced subsistence users outweigh the benefits of the project. Constructing and operating the dam requires resettling of an estimated 8,000 people, and can mean the loss of social ties and community support, residential properties, increased health risks and degraded environmental conditions. The subsistence users have been historically excluded from the decision making process for dam's construction and operation. In the spring 2008, the World Energy Council held a meeting in London for industries, banks, and governments to discuss the dam project. People from local communities and Congolese civil society were not invited to participate in the meeting. The local groups were prevented from participating from the meeting because the WEC subjected them, "unlike any other participants - to government authorization" (Hathaway, "Africans in the dark over the Congo River project", 2008).

Opponents also cite negative effects of dams in precedence on African continent. Gerrit Basson, a professor in South Africa discusses the impacts of dam construction. These impacts are far-reaching because all components of the river ecosystem are interlinked. Fluvial morphology can be exhibited by increased erosion and a decrease in floods. Specifically at the Inga site, concerns about human health are at the heart of discussions about the ecological impacts of the proposed Grand Inga. In 2007 at a World Energy Council conference for the Grand Inga project, WEC manager, Dr. Latsoucabe spoke about the 'Inga social and environmental issues.' (WEC, 2007). He cited increased problems relating to the Tse-tse fly, a fly that tranmist the deadly "sleeping sickness" to humans and cattle. According the World Energy Council the "problems caused by the fly [have been] exacerbated" by the existing hydropower facilities and it is probable that a new dam facility, the Grand Inga, would increase fly problems. (WEC ppt. presentation 2007, Wikipedia "Tsetse fly"). In addition, poor water quality in the river and the lack of potable water for local populations leads to increased cases of skin (dermatomes) and eye diseases (conjunctivitis, onchocercosis). (from WEC ppt. presentation 2007). A third concern was over the high levels of heavy metal in the Inga reservoir. A recent report noted the presence of lead and cadmium. Though the WEC says the report merits further investigation, the presence of these metals can have severe health implications for humans and other species in the basin (WEC ppt. presentation 2007).

4. Variable Identification

After reviewing the history of the development of the Inga-Shaba project and its impact, we find the support for the hydro-electricity development from organizations such as the World Council, the state government of DRC, and international development banks have overlooked critical variables in governance (G) that are equally, if not more, important to the success or failure of a hydroelectricity project. The previous Inga-Shaba project was undermined by political instability, lack of public investment capacity to finance its operation and maintenance, both can be traced back to poor choices in governance: 1) lack of stakeholder involvement in formulation of natural resources policies and laws at the national level; 2) use of military in political disputes; 3) lack of laws and institutions for ensuring public accountability; 4) public investment emphasis in increasing natural resources export earning by state-owned industries versus broad-based economic development programs with tangible benefits to regional stakeholders (Figure 6).

The lack of stakeholder involvement (regional political leaders) in the formulation of the Bakajika Coda and Mining Code undermined the legitimacy of the government. Subsequent rebel fighting over the control of mineral resources and the political instability disrupts livelihoods and socio-economic development, as well as in the development, operation, and maintenance of energy infrastructures. The use of military by the government in resolving political conflicts further undermines the legitimacy of the political regime under Mobutu who was subsequently ousted in 1992. The lack of public accountability and the foreign debt burden incurred partly by the investment in hydroelectricity reduces the public investment capacity of the state in maintaining and operating the existing energy infrastructures, as well as to carry out development programs with tangible benefits to regions outside of the national's capital. A Lack of domestic economic opportunities means higher attraction for young men to join rebel army or participate in illicit diamond trade.

5. Summary and Key Questions Addressed

The question addressed in this case study is: Why investment in hydroelectricity fails to stimulate economic development within DRC in the 1970s and 1980s? The investment in the Inga-Shaba project in the 1970s and 80s did not lead to socio-economic development in DRC due to political instability and mismanagement of public finance and resources, which result from the failure of the political regime to develop institutions and laws that 1) involve stakeholders in the formulation of national natural resources policies, 2) distribute benefits from exploitation of natural resources in ways that are perceived as equitable and legitimate by regional stakeholders, 2) ensures public accountability in public investment. The current support for the Grand Inga Proposal is driven by interests and agendas of international organizations and multi-national companies and by the state government's need to generate revenues from export of electricity and from mining industries. The supporters for Grand Inga are either neglectful of the role of governance in socio-economic development or are promoting natural resources policies (privatization and liberalization) that could attract foreign investment yet antagonize local stakeholders within DRC. The Congo case study illustrates that one of key pre-requisites to socio-economic development - political stability - can only be sustained through institutions and laws governing ownership and access to natural resources that are perceived as equitable and legitimate by stakeholders.

The case study may be relevant to stakeholders with the following list of broader questions:

• How effective is hydropower development in meeting the energy requirement for socio-economic development and for improving quality of life? What conditions are required for hydropower development to succeed?

• What are the socio-economic and environmental impacts of hydropower development?