Over the last ten years the economy of the Democratic Republic of Congo (DRC) has grown at an annual rate of 6.3%. Despite this, and its rich endowment of natural resources, the country displays low development indicators with a gross national income of only $430 per capita. The civil war from 1997 to 2003 collapsed much of the country’s infrastructure.
Hydro accounts for 99% of the country’s generation capacity. Current hydro installed capacity is 2,420MW, of which only 1,281MW is operational. A project to develop an additional 4,800MW at the Inga 3 site is at the development stage, with support from institutions such as the World Bank and the African Development Bank. The country has about 100GW of hydropower potential, the highest in Africa.
The DRC contains only 4,600km of high voltage transmission lines (above 110kV) and has an electrification rate estimated at between 6% and 9%. SNEL, the vertically integrated and state-owned utility, has suffered from years of neglect and underinvestment. The utility’s losses amounted to 28% in 2014 and 41% in 2013. The average electricity tariff (at $0.066 per kWh) is the lowest amongst members of the South African Power Pool and well below marginal costs. All of these result in financial losses equivalent to 4% of GDP.
In 2011, the government adopted a five-year programme to reform the energy sector and improve the financial and operational performance of SNEL, which resulted in a management contract with Manitoba Hydro International in February 2015.
The size of the country, the abundance of renewable resources (hydro, biomass, solar), the poor performance of SNEL and its limited reach and the presence of large energy consumers (such as mining companies in rural areas) are all conditions that should favour the development of small and independent power producers and distributors. Over the last ten years a few pilot projects have started operations. Electricité du Congo has a local generation and distribution concession in Tchikapa, which includes a 1.5MW hydro plant and 10,000 customers. Virunga SA manages a 400kW hydro power plant and serves 27,000 people in Virunga. Independent power distributors apply tariffs that are significantly higher than the state owned utility’s, reaching $0.20 to $0.30 per kWh.
The DRC’s Electricity Sector Law, adopted in June 2014, draws on these pilot projects, liberalizes the sector and aims at promoting private investment in generation and distribution.
The legal regime for third party operators depends on the type and the size of the project. All power projects are subject to obtaining a concession; generation projects above 1MW require a license, projects between 100kW and 1MW are subject to authorisation, while for projects below 100kW a declaration is sufficient. Official decrees to create a regulator and a rural electrification agency and transfer the responsibility for local projects to regional governments are expected to be issued in 2015.
The DRC has no specific incentives for renewable energy projects. Imports of goods such as solar lanterns and solar panels are subject to an import duty of 10%, an additional VAT of 16% and other import related taxes. Overall, duties can amount to up to 40%. Exemptions on import duties and various taxes and levies can be obtained under the country’s investment code for a period of three to five years.
Score Summary
The DRC scored 0.55 in Climatescope 2015, slipping several places to finish 50th on the list of countries overall and last among the African nations. The country’s highest score was on Greenhouse Gas Management Activities Parameter IV.
On Enabling Framework Parameter I, the DRC ranked 50th. Its score was weakened by the lack of clean energy incentives and the lack of openness in the structure of its power sector.
The country fell 29 places to take 49th position on Clean Energy Investment and Climate Financing Parameter II, partly reflecting the absence of any new investment.
On Low-Carbon Business & Clean Energy Value Chains Parameter III, the DRC finished 47th, down 16 places on 2014, with an absence of value chain players in most clean energy segments.
On Parameter IV, the country ranked 29th, scoring best in the carbon-offsetting category, in particular for the number of carbon credits generated relative to its overall emissions.