DRC: SNEL deprived of USD 4 billion in the mining sector in 5 years

Due to its low electrical capacity, Société nationale d’électricité (SNEL) has lost around four (4) billion dollars in the mining sector over the last five (5) years.

These staggering revelations were made on the sidelines of the Makutano Forum by Fabrice Lusinde, Managing Director of the said company.

“Mining customers buy energy from SNEL for around 800 million dollars. But on top of that, they import $200 million worth of electricity from southern Africa and, according to our calculations, they also spend between $500 and $600 million on petroleum products to run their thermal parks (…). In the end, we realize that the miners have spent around 4 billion dollars over the last five years,” he declared on a panel focusing on the theme: ”Energy deficit: what if the miners brought the light?”

Experts point out that this result is due to poor planning, but above all to the absence of an energy policy in line with the country’s assets in this area.

This situation has caused storms in production for some mining companies, such as the Canadian giant operating in the Democratic Republic of Congo, Ivanhoe Mines, which reduced its production forecasts for 2024 by 9% in October 2024.
As a result, the company is now targeting between 425,000 and 450,000 tonnes of copper, compared with the 440,000 to 490,000 tonnes initially forecast, following the power outages.

In response, the company is now planning to install additional energy capacity on site, as well as importing electricity to stabilize consumption in order to make up for the shortfall.

This aspect of things illustrates the company’s weak segment in the face of major challenges.

The Democratic Republic of Congo has a long history of dealing with energy issues, and boasts enormous hydroelectric potential, to the extent of making it the continental “energy scandal”.

Nevertheless, a number of projects designed to boost the country’s economy and drive energy-led growth are struggling to get off the ground strategically, such as the Grand Inga project, whose overall cost, according to experts, is estimated at around $100 billion.

SNEL: aging infrastructure, outdated business model!

Société Nationale d’Electricité (SNEL) is facing enormous structural challenges, illustrating the stagnation or even status quo the company is experiencing in terms of the progress that could have been made by now.

Firstly, the company continues to rely on an ageing generation and distribution infrastructure, often preventing it from reaching its installed generation capacity in line with expert forecasts.

Secondly, an outdated business model, illustrated by an economic profitability of just 3%, often prevents it from borrowing long-term on the local market, riddled with banks demanding interest rates of around 13% on government bonds in foreign currency, in order to meet the challenges facing the economy.

Flory Musiswa