Now that the election period is over and a government has been formed, the DRC’s infrastructure needs are again at the top of the agenda. Many investors, exporters, developers and financiers are very seriously looking together with the government at the most urgent infrastructure requirements. The DRC’s factories, mines, IT & telecoms, and services sectors all need power and, of course, as do small businesses and households. It is said that the DRC could provide a large part of the African continent with power given its huge potential in hydropower. Currently, access within the DRC to power is about 42% in urban areas and just a mere 0.4% in rural areas (source Lighting Africa). Therefore, a national power plan is the first step.
At this moment, projects of a reasonable size, which are relatively easy to realise and that require modest financial means, are at the forefront. Whatever the project or its size, the project structure should be clear and solid and the regulatory environment must allow it.
Action is required concerning the national grid and for the DRC’s large energy consumers, which are typically mines, as well as on an off-grid level to provide municipalities with power. The public power company, SNEL (Société Nationale d’Electricité), faces challenges to structure its organisation and management. The law on PPP of 9 July 2018 (Loi n°18/016 du 9 juillet 2018) offers a legal framework and is sufficiently broad in its regulations to allow creative solutions.
On 17 August 2019, the new president, Felix Tshisekedi, declared making access to power the first economic priority (‘J’ai demandé que l’accès à l’électricité soit inscrit comme la première priorité économique de mon quinquennat’).
SNEL could enter into a new private PowerCo with international power companies, private equity and funders as partners/shareholders. The largest national consumers of electricity who will benefit from a stable provision of power to their installations could have a minority stake. Such private companies can organise themselves in an OfftakeCo that will conclude a PPA with the PowerCo. Such a structure ensures that SNEL is involved, that the off-takers are aware of the steps of PowerCo, and that the off-takers provide a long term power price (i.e. cash flow) via the PPA to PowerCo that enables the financial investment to be covered. It will be important to ensure that all actors have a view on what is needed and happening at the level of energy production, energy distribution and energy consumption. It is the recipe for creating trust and will help to make progress in each area. The legal framework in the DRC allows for this goal to be realised. However, the national interest and the interest of some large energy consumers will have to be carefully balanced. This will be a task for high-end legal skills, not from an ‘ivory tower’ perspective, but using real knowledge and experience of the specific local environment.
In addition, the off-grid power generation can develop at the same time due to the opportunity to acquire a package deal consisting of solar panels, inverters, distribution cables and a payment system. It requires limited financing and is easy to implement.
The coming months will be important for the Ministries of Budget, Industry, Finance, Mining and Infrastructure to set out a feasible and realistic power plan. The challenges are huge and the DRC is encouraging all sector players to join forces and make a true start to supplying power in the DRC. The potential to export power to other countries is a topic for the more distant future.