Uninformed, disempowered : the Busanga hydropower project

This report by the AFREWATCH–IBGDH–OEARSE partnership analyzes governance issues related to the implementation of the Busanga project, a new hydroelectric project north of Kolwezi. This project stems from an agreement between the Democratic Republic of the Congo (DRC) and major Chinese state-owned companies to meet the production needs of some of these Chinese partners in the former province of Katanga, notably Sino-Congolese Mines (SICOMINES).

The Busanga hydroelectric plant is one of the largest in the country. With an estimated power generation capacity of 240 MW, it ranks among the top 10 hydroelectric plants in the country. Its proximity to the copper and cobalt industries has made it a site that has attracted significant interest from private operators.

The report examines the details of transactions between the various key players involved in the project, such as Gécamines, Mag Energy, and Sino-Congolaise Hydroélectrique de Busanga (SICOHYDRO), which is the current concessionaire of the site. It also seeks to analyze the balance between contributions and benefits for the parties currently involved in the project. In particular, what will be the financial benefits for each party? How will the electricity be distributed among the potential beneficiaries? Are these benefits commensurate with the contributions made to the project? And to raise questions about the Congolese government’s disbursement of 328 million U.S. dollars for the project.

Over the course of eight months, the research team conducted analyses, reviewed documentation, and carried out field surveys. These efforts enabled the team to review available agreements, contracts, and articles related to the BUSANGA and SICOMINES projects, as well as to engage in discussions and establish direct contact—through questionnaires, with stakeholders directly or indirectly involved in the development of the BUSANGA project. These include residents of the village of Wakipindji, officials from Gécamines and SNEL, representatives from the provincial and national energy ministries, SNEL, Public Administration 6, and the Coordination and Monitoring Office for the Sino-Congolese Program (BCPSC).

After analyzing the governance aspects of the Busanga project’s structure, it is important to note that the evolution of BUSANGA’s ownership is less transparent because the information gathered in the research does not allow for:

• Determine whether, prior to 2005, the site belonged to Gécamines or SNEL – Trace and verify the transaction that took place between Gécamines or SNEL and MagEnergy ;
• Understand the content of the agreements between the Congolese government and SYCOHYDRO, and especially the terms of the BUSANGA concession granted to SYCOHYDRO ;
• Determine the distribution of the energy to be produced at Busanga among potential beneficiaries other than Sicomines, the priority beneficiary ;
• To understand why the government is represented by a private company, “COMMAN SARL,” in SYCOHYDRO ;
• To understand the project’s financing and repayment mechanisms ;
• And to understand the government entity that secured the $328 million for the project

Synergie has nevertheless noted that the benefits for the Congolese side in the Busanga project are likely to be very minimal. The Congo holds only 25 percent of the shares in this project, while the Chinese side alone holds 75 percent, which seems unbalanced given that the Congolese side is contributing the site, infrastructure, water, the license, as well as a likely investment of $328 million.

Furthermore, the distribution of shares among the companies representing the DRC in this project also raises issues of transparency and balance.

In fact, these shares are held by Générale des Carrières et des Mines (GECAMINES, 7%), Société Nationale d’Electricité (SNEL, 3%), and Congo Management (COMAN, 15%). COMAN is a private company whose actual ownership has proven difficult to trace. Why does this company hold 15 percent of the shares—more than the two state-owned enterprises (GECAMINES and SNEL)—which are, after all, better positioned to effectively represent the interests of the Congolese state?

Given the importance of the Busanga project for the development of the Kolwezi region and, more broadly, the southern part of the country, the working group recommends increasing transparency regarding the stakeholders involved in the Busanga project, their contributions, the sources of funding, and the project’s benefits—particularly the distribution of energy to some and/or the revenues from its sale to others.

Press release

Read the report