DRC: Zongo II hydropower project, a hasty financial package (CERERK)

The Democratic Republic of the Congo has requested and obtained from the Chinese government a loan of US $ 360 million (with annual interest of 2%) in the form of a preferential loan for the Zongo II hydropower project. Studies carried out by Sinohydro in March 2013 in connection with the financial evaluation included additional works agreed with the National Electricity Company (Snel). This resulted in additional costs increasing the total from $ 360 million to $ 460.69 million.

What about the breakdown of the figures:
– Construction investment amounted to USD 447.95 million including USD 19.62 million Snel counterparty fees and USD 428.33 million loan from Exim Bank.
– $ 12.5 million in interest payable during the construction period.
– $ 240,000 in cash.

According to some experts, the amount seems reasonable. Because, the construction cost overrun is 28% « compared to the excess often between 30% and 70% in North America and Europe. »

The cost of the kilowatt installed in Zongo is 3,070 USD / Kw. A cost that seems to be higher for these kinds of projects whose average cost of kw installed is always between $ 2,000 and $ 2,500.

As for the repayment period at the annual rate of 2% is 20 years with a grace period of 8 years. The cost of energy sent to the grid has been estimated at 0.068 USD / kwh.

Experts note that the energy sold in low voltage DRC is the lowest rate. This is why the country plans to implement the market-oriented electricity tariff.

RE(READ): dam Zongo II, a project poorly evaluated technically and financially (study)

In analyzing all these figures, experts from the Kitsisa Khonde Renewable Energy Research and Study Center at ISTA Kinshasa (CERERK / ISTA) point out that financial and operational planning was not integrated during the development of the project whose editing seems to have been done in a hurry.

« Due to additional and additional work required by Snel, the investment was negotiated and adjusted from exactly $ 376,500,408 to $ 447,950,000 (including Exim Bank loan and Snel counterparty fees). ). At one point, the bills were returned to Sinohydro. Because, considered poorly presented by the steering committee Snel », indicates the report of a study carried out by CERERK.

Olivier Kamo