Inga3 WB
Inga3 WB
Document of
The World Bank
ON A
PROPOSED GRANT
TO THE
FOR AN
INGA 3 BASSE CHUTE AND MID-SIZE HYDROPOWER DEVELOPMENT
TECHNICAL ASSISTANCE PROJECT
March 5, 2014
Public Disclosure Authorized
This document is being made publicly available prior to Board consideration. This does not
imply a presumed outcome. This document may be updated following Board consideration and
the updated document will be made publicly available in accordance with the Bank’s policy on
Access to Information.
CURRENCY EQUIVALENTS
FISCAL YEAR
January 1 – December 31
ii
ESMF Environmental and Social Management Framework
ESMP Environmental and Social Management Plan
FM Financial Management
FSF Fragile State Facility
GEEC Groupe d’Etudes Environnementales du Congo ( DRC’s Environnemental
Studies Group)
GDP Gross Domestic Product
GoDRC Government of DRC
HC Haute Chute (High Head)
HIPC Heavily Indebted Poor Countries
HVAC High Voltage Alternating Current
HVDC High voltage Direct Current
ICB International Competitive Bidding
IDA International Development Association
IFC International Finance Corporation
IFR Interim Financial Report
IMF International Monetary Fund
Inga 1 & 2 The two existing power plants located at the Inga site
Inga 3 BC The proposed new hydroelectric plant at the Inga site
IPP Independent Power Producer
IPPF Indigenous Peoples Planning Framework
ISP Implementation Support Plan
kWh kilowatt hours
M&E Monitoring and Evaluation
MIGA Multilateral Investment Guarantee Agency
MRHE Ministry of Hydraulic Resources and Electricity of the DRC
MW Megawatt
NCB National Competitive Bidding
NGO Non-Governmental Organization
NPV Net Present Value
O&M Operations and Maintenance
PAD Project Appraisal Document
PDO Project Development Objective
PASEL Inga Site Development and Electricity Access Support Project
PEPUR Projet d’Electrification Périurbaine et Rurale (Rural and Peri-urban
Electrification Project)
PER Public expenditure Review
PIM Project Implementation Manual
PM Prime Minister
PMEDE Regional and Domestic Power Market Development Project
PPA Power Purchase Agreement
PPP Public Private Partnership
PRSP Poverty Reduction Strategy Paper
RAP Resettlement Action Plan
RFP Request for Proposal
RPF Resettlement Policy Framework
iii
RSA Republic of South Africa
SADC Southern African Development Community
SAPMP Southern African Power Market Project
SAPP Southern African Power Pool
SDR Special Drawing Rights
SNEL Société Nationale d’Electricité (DRC’s National Electricity Company)
SPV Special Purpose Vehicle
SSA Sub Saharan Africa
SSS Single Source Selection
TA Technical Assistance
WBG World Bank Group
iv
DEMOCRATIC REPUBLIC OF CONGO
Inga 3 Basse Chute and Mid-Size Hydropower Development Technical Assistance Project
TABLE OF CONTENTS
Page
v
F. Consultation, Communication and Outreach .............................................................. 28
G. Social and environmental (including Safeguards) ...................................................... 29
Annex 10: Chronogram of actions undertaken by the GoDRC since 2010 ............................98
vi
PAD DATA SHEET
Democratic Republic of Congo
Inga 3 Basse Chute and Mid-Size Hydropower Development Technical Assistance Project (P131027)
PROJECT APPRAISAL DOCUMENT
.
Africa Region
Energy Practice 2 (West and Central Africa), AFTG2
vii
Total 106.50
.
Expected Disbursements of new IDA Grant (in US$ Million)
Fiscal Year 2014 2015 2016 2017 2018 2019
viii
Projects on International Waterways OP/BP 7.50 X
Projects in Disputed Areas OP/BP 7.60 X
Description of Covenant
The Recipient has installed in and for CGI3 accounting software acceptable to the Association and also established in and for
CGI3 an accounting system acceptable to the Association.
Description of Covenant
The Recipient has adopted the Project Implementation Manual, in form and substance satisfactory to the Association.
Description of Covenant
The Recipient has recruited for CGI3 (i) a financial management specialist, and (ii) a procurement specialist, each with terms
of reference, experience and qualifications acceptable to the Association.
Description of Covenant
The Recipient has recruited for CGI3 a consulting firm, with terms of reference, experience and qualifications acceptable to
the Association, for the purposes of conducting a structuring study for the establishment of ADEPI.
Covenants
Description of Covenant
The Co-financing Deadline for the effectiveness of the Co-financing Agreement (and the right of the Recipient to make
withdrawals thereunder) is June 30, 2014.
ix
the project, the Environmental and Social Experts Panel comprised of experts having terms of reference, qualifications and
experience acceptable to the Association to provide advice and recommendations, inter alia, on all environmental and social
aspects of the Project and Inga 3 BC.
Description of Covenant
The Recipient shall establish, no later than by June 30, 2014, and thereafter maintain at least throughout project
implementation, the Dam Safety Expert Panel comprised of experts having terms of reference, qualifications and
experience acceptable to the Association to advise, inter alia on dam safety risks associated with Inga 3 BC.
Within 3 months of
Internal and external auditors No NA
effectiveness
Description of Covenant
No later than by the date being the third month anniversary of the Effectiveness Date, or such other date as the Association
may agree in writing, the Recipient shall recruit for CGI3, (a) an international consultant in internal audit; and (b) an external
auditor, in each case with terms of reference , qualifications and experience acceptable to the Association.
Name Recurrent Due Date Frequency
Description of Covenant
The Recipient shall, no later than September 30, 2014 (or such other date as the Association may agree), exchange views
with the Association regarding the likelihood of the establishment of ADEPI by the date stipulated in Section I.A.11 of the
Schedule 2 of the Financing Agreement. In the event that, following such exchange, or in the absence of such exchange for
whatever reason, the Association considers it unlikely that ADEPI will be established by said date, then the Prime Minister’s
Office of the Recipient shall agree a written action plan with the Association by no later than by October 31, 2014, which
shall be signed by the Recipient’s Prime Minister, setting forth the corrective actions which the Recipient shall take or cause
to be taken in order to ensure that ADEPI shall be established as soon as possible following such date, and the Recipient
thereafter shall promptly take or cause to be taken all such actions.
x
and shall be signed by the Chairman of the Board of Directors of ADEPI.
Description of Covenant
The Recipient shall, throughout the implementation of the Project, carry out the Project in accordance with the Project
Implementation Manual and the E&S Studies Roadmap; provided, however, that, in the event of any conflict between the
provisions of the Project Implementation Manual or the E&S Studies Roadmap, on the one hand, and those of the Financing
Agreement, on the other hand, the Agreement shall prevail.
Description of Covenant
The Recipient shall use its best effort to ensure that all terms of reference for any Safeguards Instrument prepared in
connection with the SAPP Transmission Line are (i) consistent with, and pay due attention to, the Association’s
Environmental and Social Safeguards Policies; and (ii) submitted in draft form to the Association for prior review and
comment.
Remedies
Description of Covenant
At any time prior to the expiration of the period set forth in Section 5.03 of this Agreement, the Recipient shall have, in the
opinion of the Association, failed to act, or failed to cause other relevant parties to act, in a manner consistent with the terms
or consistent with the achievement of the objectives expressed in the Policy Letter.
xi
Mark Walker Adviser Legal LEGSO
Anthony Molle Senior Counsel Legal LEGSO
Nathalie Munzberg Senior Counsel Legal LEGEN
Rolande Pryce Senior Operations Officer Quality Assurance AFTG2
Jean Michel Devernay Chief Technical Specialist Hydropower TWI
Patrice Caporossi Senior Finance Specialist Project Finance TWIFS
Hocine Chalal Lead Environmental Specialist Environmental AFTN1
Safeguards
Antoine V. Lema Senior Social Development Specialist Social Safeguards AFTCS
Abdoulaye Gadiere Environmental specialist Environmental BURKINA FASO
Safeguards
Marie Paule Ngaleu Program Assistant Program Assistant AFTG2
Philippe Mahele Liwoke Senior Procurement Specialist Procurement AFTPW
Angelo Donou Financial Management Specialist Financial Management AFTMW
Aissatou Diallo Senior Finance Officer Disbursement CTRLA
Sarwat Hussain Senior Communications Officer Communications AFRSC
Louise Mekonda Engulu Senior Communications Specialist Communication AFRSC
Dan Petrescu Communication specialist Communication COLOMBO
Elvira Morella Senior Energy specialist Economic Analysis AFTG2
Mireille Kabasubabo Program Assistant Program Assistant AFCC2
Non Bank Staff
Name Title Office Phone City
Ibrahima Konate Senior Power Engineer TUNISIA
.
Locations
Country First Administrative Division Location Planned Actual Comments
DRC Kinshasa Kinshasa X
.
Institutional Data
Sector Board
Energy and Mining
.
Sectors / Climate Change
Sector
Major Sector Sector % Adaptation Co-benefits %
xii
Energy and mining Hydropower 100
Total 100
I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project.
.
Themes
Theme
Major theme Theme %
xiii
I. STRATEGIC CONTEXT
1. Sub Saharan Africa (SSA) is suffering from a sustained and chronic power crisis. Only
31 percent of the population has access to electricity, leaving nearly 600 million people without
energy access. The combined power generation capacity of SSA, excluding South Africa, is only
28 GW. Moreover, a quarter of the installed capacity is not operational for various reasons,
including aging plants and lack of maintenance. Power outages cause losses in forgone sales and
damaged equipment for firms with an economic cost ranging between 1 and 4 percent of Gross
Domestic Product (GDP). The average power tariff, at 0.12 US$/kWh, is about twice the tariff in
other developing countries. Yet, it only partially covers Africa’s current average generation cost
of 0.18 US$/kWh. Actual average cost of power to consumers is drastically weighted by the
reliance on costly backup generators, representing up to half of total installed capacity in some
countries.
2. Yet, SSA is blessed with large hydropower resources, which can contribute to
significantly increase cost effective and clean energy supply. Hydropower generation cost
(around 0.05-0.07 US$/kWh) compares very favorably with other technologies, including
thermal, wind, and solar. Large scale hydropower development would displace thermal power
plants that would otherwise be built, saving hundred millions of tons of carbon dioxide emissions
per year. Hydropower resources are concentrated in a small number of countries (DRC, Ethiopia,
Cameroon, Angola, Madagascar, Gabon, Mozambique and Nigeria), but have potential capacity
well beyond what could either be consumed or financed domestically for the foreseeable future.
Unleashing hydropower’s transformative potential will require closer integration of Africa’s
power pools and transmission infrastructures needed to promote regional power trade.
3. DRC’s hydropower can be a regional game changer and light up the African continent.
DRC has an enormous hydropower potential estimated at 100 GW (equivalent to about 774 TWh
per annum), the third largest country potential behind China and Russia. With 40 GW, Inga is the
largest hydropower site in the world and one of the continent’s most cost-effective power sources
(estimated generation cost is 0.03 US$/kWh). The countries of the Southern Africa Power Pool
(SAPP) constitute a natural market for DRC hydropower as DRC is already interconnected with
the SAPP grid. South Africa is a creditworthy off-taker which can increase the bankability of
hydropower projects in DRC.
4. Inga 3 Basse Chute (BC) is the next phase of the Inga site development with a 4,800MW
installed capacity (Inga 1 and Inga 2 were built in the 70s and 80s). The Inga 3 BC development
consists of a diversion of part of the water of the Congo River into the Bundi tributary and a dam
across the Bundi valley. It will not require the construction of a dam on the Congo River itself.
The project has been selected by the Caucus of the African Governors in the Bretton Woods
Institutions as one of the hydropower projects in Africa demanding particular attention from the
World Bank. In the weak investment and governance environment of DRC, the proposed project
provides technical assistance to contribute to the development of Inga 3 BC and mid-size
hydropower projects in a manner that maximizes their impact on ending extreme poverty and
promoting shared prosperity.
1
A. Country Context
5. DRC is the largest country in Sub-Saharan Africa, with an estimated population of about
71 million, vast natural resources, and massive agricultural potential. DRC’s development
trajectory will have a significant impact on the economic growth and political stability of the
continent. DRC borders nine countries in Central and Southern Africa, and has complex
economic, migration, and political relations with each of them.
6. The civil war from 1997 to 2003 led to a rapid descent from the relative prosperity of the
period 1960–70. Poverty remains pervasive and poverty indicators are high even by regional
standards. In 2012, annual GDP per capita was about US$250. About 63 percent of the
population lives on less than a dollar a day. Infrastructure collapsed during the long conflict, and
today only six provincial capital cities can be reached by road from the national capital,
Kinshasa. Furthermore, the conflict affected existing assets create serious service failures that are
exacerbated by a lack of maintenance and investment.
7. During the post-civil war period, DRC saw a resumption of growth. The end of the war
coincided with a recovery in mining prices on the international market. DRC experienced an
average annual GDP growth of 6.6 percent during the 2002-2008 period, compared to an average
annual GDP contraction by 5.2 percent over the 1991-2001 period. This period of growth was
interrupted in late 2008 as a consequence of the changing international environment resulting
from the financial crisis, but growth has now resumed at a solid pace, around 7-8 percent per
year.
8. Weak governance has contributed to persistent poverty and poses threats to sustainable
economic growth. Some governance issues were addressed in the context of HIPC debt relief in
July 2010 including appropriate macroeconomic policies supported by an IMF program and the
adoption and implementation of a new Public Procurement Code. An economic governance
matrix and action plan was adopted to help increase State benefits from natural resource
exploitation, and improve legal certainty of the business environment. The governance matrix
has been updated and presented to the IDA Board of Directors together with the new Country
Assistance Strategy (CAS) for DRC in May 2013. It focuses on: (i) strengthening accountability
and transparency in concession and contract management in the mining, forestry, and oil sectors;
(ii) ensuring that divestiture of assets of public enterprises is done in compliance with
international best practices; and (iii) ensuring transparent and efficient use of public resources.
2
10. Current installed capacity is 2,442 MW, of which hydroelectric power plants represent 99
percent. Yet, the operational capacity is only 1,281 MW, as about half of the total installed
capacity is currently not operational. Electricity demand/supply projections indicate that the
DRC will require an additional firm capacity of 4,000 MW by 2020. This will require the
development of DRC’s abundant low cost hydropower. The Government intends to promote the
development of both large and small hydropower sites, including the next phase of development
at the Inga site.
12. An Electricity Bill has been passed by the National Assembly in May 2013 and by the
Senate in January 2014. Once in force, the law will liberalize power generation, transmission,
and distribution. Also, the Electricity Bill calls for the establishment of an electricity sector
regulator, an electrification agency, and an electrification fund.
13. Achieving efficient energy services to DRC’s population will depend on improving the
corporate governance and performance of SNEL. SNEL recovers revenue for slightly over 1
kWh out of every 2 kWh produced due to very high technical and commercial losses and low
collection rate. Together with a tariff that is below marginal cost, these inefficiencies absorb as
much as 4 percent of GDP.
14. In recent years, SNEL has improved its operational and financial performance but it still
has a long way to go. Between 2005 and 2012, SNEL managed to improve its revenue collected
by 230 percent. In other words, revenue collection per kWh generated increased from 0.10 to
0.33 US$ cents/kWh. This improvement was driven in part by a higher average electricity tariff.
In particular, the tariff for high voltage industrial customers (mining companies) was increased
from 0.35 to 0.55 US$/kWh in 2012, which should further improve the revenues collected per
kWh generated in 2013 and beyond, assuming collection ratios remain stable. The improvement
was also driven by an increased collection rate. In 2012, the overall collection rate including
mining, exports and residential consumers was approximately 70 percent. Low bill collection
from the public sector remains a major burden for SNEL, with an 8.1 percent collection rate from
government entities and a 37 percent collection rate from state-owned enterprises. SNEL is
overstaffed, with a low ratio of 75 customers per employee in 2012. Staff costs doubled between
2006 and 2012 and currently absorb about one third of total SNEL revenues.
15. In 2011, the Government adopted a comprehensive five-year program for the financial
and operational recovery of SNEL and to enhance SNEL's corporate governance. The program
includes five main components: (i) a five year performance contract between the State and SNEL
stipulating their respective roles and obligations, with audited performance targets; (ii) a
corporate governance plan; (iii) institutional and financial restructuring of SNEL; (iv) a three
3
year services contract with an international firm; and (v) institutional and financing arrangements
for appropriate operations and maintenance (O&M) of SNEL's transmission and hydropower
facilities. Progress has been made on the implementation of the program: the performance
contract was signed in February 2012, the selection of the service contractor is in its final stages
(contractor will be in place mid 2014), and a 2013 O&M study has provided a basis for improved
asset management.
17. The Government of DRC (GoDRC) has decided to develop the hydropower potential
using a Public Private Partnership (PPP) approach. Mobilizing private participation and
investment in hydropower development will reduce the need for public investment, which faces
debt capacity constraints. Private sector participation will also enhance project cost-effectiveness
through efficiency, and innovation of the private partner.
18. The series of rapids on the Congo River at Inga in the province of Bas Congo have an
estimated hydropower potential of 40,000 MW and have long attracted the imagination of power
developers. The Inga 1 hydropower plant was commissioned in 1972 and Inga 2 was added in
1982. Inga 1 and Inga 2 have a combined installed generation capacity of 1,800 MW. The
available operational capacity of both plants has dropped below 900 MW. Inga 1 and Inga 2 are
currently under rehabilitation with IDA financing. A “Grand Inga” scheme was first studied in
the 1970s and would require the construction of a large dam across the Congo. A new approach
of a series of smaller hydropower developments was adopted in 2011. The staged development
of the Inga site is more in step with local and regional energy demand growth, limits the needed
upfront investment, and significantly reduces risks 1. Inga 3 BC is the next stage of the Inga site
development, with a 4,800 MW installed capacity.
1
The staged development of the Inga Site is sometimes confusingly also referred to as “Grand Inga”.
4
driven by the mining and manufacturing sectors. However, population growth, rural
electrification, and economic growth have also resulted in a steady increase in residential
demand. The electrification rate has increased from less than 20 percent in 1999 to nearly 31
percent in 2012. The total number of electricity customers of the combined national
interconnected systems has reached 66 million. Total peak demand has reached 45,761 MW in
2010, with South Africa accounting for about 80% of the regional consumption.
20. SNEL has entered into power sales in recent years with Zambia, Zimbabwe, and
Botswana. However, trade has largely stalled due to supply shortages in DRC and poor
transmission capacity. The ongoing rehabilitation of the 500 MW Inga-Zambia transmission
lines, under the Southern African Power Market Project (SAPMP) with IDA and European
Investment Bank (EIB) financial support, will help to re-ignite power trade. The development of
Inga 3 BC and its associated transmission lines is the next step to increase power exports.
21. Opportunity costs of power generation have significantly increased in SAPP countries
over last years. This is especially true for South Africa, which faces strong demand growth
which can only be met locally through expensive and polluting thermal generation. The maturity
of the SAPP power pool, South Africa’s low country risk, the solidity of South Africa’s power
sector and the creditworthiness of ESKOM - South Africa’s integrated power utility - makes
South Africa an attractive off taker. Other countries with significant demand, such as Nigeria,
have lower opportunity costs due to abundance of natural gas and hydropower, and face higher
country and sector risk than South Africa.
23. The series of Inga hydropower development can have a transformative impact on many
of the region’s economies and populations, particularly those relying on thermal or small
generation systems. In the DRC, Inga 3 BC and other hydropower sites will make a significant
contribution to least-cost rapid increase of electricity access. The Inga 3 BC project constitutes a
litmus test for the development and implementation of a robust financing structure, which could
also be applied to subsequent phases of Inga hydropower development. It will also establish a
solid institutional and legal framework for protecting both public and private interests, which are
essential to optimize Inga’s development impact.
24. Given its complexity, required financing and policy issues, the involvement of World
Bank Group in Inga 3 BC preparation will be critical in supporting the DRC to maximize the
development impact of the project for the benefit of the country and its population. The GoDRC
is seeking support from the Bank for its knowledge, expertise and experience in the design,
development and financing of large hydropower development and associated institutional and
regulatory frameworks, including private participation and investment. Other Development
5
Finance Institutions (DFIs) committed to support Inga 3 BC development have expressed the
need for WB involvement in the process.
25. The proposed operation will combine support for the development of Inga 3 BC and the
development of mid-size hydropower sites. This combination will help to ensure parallel
increases in electricity services in urban and rural areas across the DRC and help to ensure
economic growth is inclusive. Also, the development of several hydropower projects in parallel
will spread the risk of potential delays in one or more projects.
27. The proposed technical assistance (TA) project will pave the way for the development of
Inga 3 BC and selected mid-size hydropower projects. It thus contributes to the World Bank
Group goal to end extreme poverty within a generation and boost shared prosperity. The project
will be a first step to provide new electricity access for seven million people in the Grand
Kinshasa and two million people in the hinterland. The project will also generate revenues for
the GoDRC, which in turn can be invested in improving human development. Inga 3 BC will
also create jobs – directly at the construction site and more importantly indirectly through
provide electricity to businesses.
28. The proposed project is aligned with the growth pillar of the World Bank’s Africa
Strategy by contributing to reliable supply of electricity for growth and private investment. The
project is following the guiding principles included in the recently approved WBG paper
“Toward a Sustainable Energy Future for All: Directions for the World Bank Group’s Energy
Sector”, in particular the commitment to the responsible development of hydropower projects as
well as the search for market solutions to leverage financial resources and help governments to
foster private sector participation and investments.
29. The project is included the 2013-2016 WBG Country Assistance Strategy (CAS) for
DRC, specifically as part of Strategic Objective Two which addresses boosting competitiveness
to accelerate private-sector-led growth and job creation.
30. The proposed TA operation is embedded in and is complementary to the current IDA
program in DRC. The updated governance matrix, agreed between the Bank and the GoDRC in
2013, provides the canvas for the project. The matrix puts forward tangible actions to restore
investors’ confidence and improve transparency in natural resources management. The proposed
project is complimentary to the Bank’s ongoing support to public financial management in DRC,
through a series of Public Expenditure and Financial Assessments to improve the management of
public finance. A US$22.1 million project with co-financing of DFID to strengthen Public
Financial Management Accountability was approved in January 2014. It will enhance the
credibility, transparency and accountability in the management and use of central government
6
and selected sub-national governments’ finances. These supports will help to ensure the efficient
use of any future revenues of the Inga 3 BC development.
31. Further, the proposed project is complementary to the ongoing IDA energy program. The
proposed TA project will help to secure the production of cheaper electricity. Reinforcement of
the transmission and distribution system and support to managerial strengthening of sector
institutions under ongoing projects will improve the energy supply to clients and increase access
to electricity. The Regional and Domestic Power Market Development (PMEDE) and SAPMP
projects provide a combined US$1.1 billion grant financing for the rehabilitation and expansion
of SNEL’s generation, transmission and distribution infrastructure. In addition, IDA is
identifying support for the development of the Ruzizi 3 project within the context of the Great
Lakes Initiative as well as support to rural electrification through a new agriculture and rural
development project in Eastern Congo. IDA will finance a clean cook stove initiative in the
Bandundu province through the Forest Investment Program.
B. Project Beneficiaries
33. In the short term, the project will support DRC to maximize the development impact of
the Inga 3 BC development and to protect its long term national interest, including ensuring a
fair sharing of the rent generated by Inga to the benefit of the DRC and protecting future
development of full hydro potential at Inga. Designing balanced contracts between public and
private stakeholders and regional off takers and ensuring a transparent selection of a private
developer is at the heart of this support.
34. Direct project beneficiaries of the TA project will thus include the GoDRC which will
have an enhanced capacity to attract private financing for critical infrastructure development and
its energy sector institutions which will get an increased capacity to sustainably and efficiently
manage hydropower development.
35. Future indirect project beneficiaries include SNEL’s existing and new customers,
Katanga mining firms, and energy users in South Africa and other SAPP countries that will
benefit from more reliable and affordable energy services. DRC will benefit from the future
Inga-3 BC development through additional revenues. Local communities around Inga will
benefit from fair compensation, local development and job creation.
7
III. PROJECT DESCRIPTION
37. This section consists of two parts. Firstly, it describes Inga 3 BC development. It then
presents the proposed technical assistance operation.
8
39. 1,000 MW 2 of electricity produced by the Inga 3 BC development will be sold to the
national utility SNEL, which in turn will sell it to households and small businesses in greater
Kinshasa. The increase in power generation of Inga-3 BC combined with increased availability
of power from Inga 1 and 2 (which are currently being rehabilitated) corresponds to the
projected demand growth in Kinshasa from the current 425 MW to a forecasted demand of
2,000 MW in 2025 in the Inga feasibility study . The potential significant additional energy
access for households and small businesses in Kinshasa through Inga-3 BC can realistically only
be financed and developed by bundling it with electricity sales to credit-worthy anchor
customers. Among these customers, it is proposed 1,300MW of power will be sold to mining
companies in DRC's Katanga province -- the overall generation capacity for DRC will thus triple
from the current level of operational capacity of only 1 ,281 MW. In addition, 2,500MW of
power generation will be sold to ESKOM, the national utility of South Africa, which will
enhance the bankability of the Inga-3 BC development. The proposed split of power sales will
enable attracting private investments which have otherwise been elusive in power generation in
the past decades.
40. The Republic of South Africa (RSA) has shown strong interest for the low-cost and clean
energy that could be produced at Inga. On November 2011, the Ministers of Energy from DRC
and RSA signed a Memorandum of Understanding on the phased development of Inga. During
the October 2013 State visit of President Zuma to Kinshasa, the governments of South Africa
and the DRC signed a treaty on Inga governing the electricity trade between the two countries.
The power sold to ESKOM will be a low-carbon alternative to meet power demand growth
compared to thermal generation. Without electricity imports, South Africa has few alternatives to
construct new coal power plants.
Project management
41. The GoDRC is setting up a ring-fenced development authority (Agence pour le
Développement et la Promotion d’Inga – ADEPI) to manage and monitor Inga development, and
to help mobilize private participation and public financing. ADEPI will be set up by the end of
2014. The ADEPI will be created by law as an autonomous entity reporting to the Prime
Minister’s office with a Board of Directors that represents various Inga development
stakeholders 3. ADEPI is expected to start its operation before the end of 2014 with staffing
gradually building up from approximately 15 staff to about 30 staff. In addition to staff, ADEPI
will benefit from external strategic advisers. ADEPI annual budget would be in the range of
US$2-3 million, including external support. All ADEPI staff, including its director, will be
recruited competitively with the help of a specialized recruitment firm. All contracts will be
renewable based on performance assessments carried out by a specialized firm.
42. Interim institutional arrangements have been set up to continue the preparation of Inga 3
BC development until the ADEPI is in place, including the establishment of an Inter-ministerial
Commission for Inga Development chaired by the Prime Minister (Commission pour le
Développement du Site d’Inga - CODESI), an inter-ministerial technical committee (Comité de
2
Include 600MW firm capacity and 400MW non-firm capacity.
3
The establishment of a high level committee with a membership of internationally recognized leaders to further
help raise the profile and the credibility of the Inga 3 BC development is currently being discussed.
9
Facilitation d’Inga - CFI), and a technical unit in the MRHE (Cellule technique Inga 3 - CGI3).
CODESI will oversee the implementation of the TA project. CFI will do the technical work for
CODESI. CGI3 will implement the TA project.
Project structuring
43. The very large amount of financing needed for the Inga 3 BC development in the weak
business environment of the DRC requires that special attention be paid to the institutional
structuring of the project. The construction costs of Inga 3 BC development and associated
transmission lines are estimated at approximately US$ 11 billion (including the transmission
lines beyond the DRC borders). The total cost including financing costs could reach US$14
billion. The level of investment is so high that neither the public sector nor the private sector
alone could bear the full cost of development of the project. On the one hand, public financing
reduces the project’s cost but it is limited by the DRC’s debt ceiling and concessional financing
limits. On the other hand, private financing faces financial and country risks constraints. The
private sector can also bring relevant technical and managerial capacities into Inga 3 BC
development that would otherwise not be available within GoDRC.
44. The SAPP transmission lines will be developed by SAPP countries, under the leadership
of the Republic of South Africa (RSA). Several options are still being considered to evacuate the
power towards RSA, including : (i) the sole reinforcement of the existing SAPP system, and (ii)
a mix between the reinforcement of the existing SAPP system and a new DC line transiting part
of the energy directly to Witkop in South Africa.
45. The GoDRC has conducted a systematic review of an array of public/private options for
the infrastructures within its territory (see figure below).
Public Public
Intake, Canal,
2.6
Dam Private SPV
Private SPV
Private with minority
SPV shareholding by
GoDRC Private SPV
Power Station 3.6 Private SPV
46. The GoDRC has expressed its preference for a project structuring option in which public
financing for the Inga 3 BC development (likely to come from donors) would be used to finance
the dam, the water intake, and the canal (“common infrastructure”). The GoDRC has also
indicated that the option might be adjusted based on market tests. The preferred project
structuring consists of two sub-developments: (a) the intake, canal and Bundi dam will be
10
developed and financed by a public entity contracting out works to one or several Engineering,
Procurement and Construction (EPC) contractor(s), and (b) the power station and the
transmission lines in DRC will be developed, designed, financed, constructed, and operated by a
private consortium under a concession contract.
47. The GoDRC selected this option as its preferred one as it balances public and private
financing needs and is one of the options that could protect the DRC sovereign rights over
private and foreign interests on the Inga site subsequent developments. The next phase of the
Inga site development, Inga 3 Haute Chute (HC), will involve the heightening of the Bundi dam.
Hence, control of the Bundi dam should remain with DRC through ownership or as part of the
developers’ obligations in a PPP agreement. Given costs of the same order of magnitude as Inga
3 BC development, and its complexity, Inga 3 HC could reasonably not be developed earlier
than ten years after Inga 3 BC development commissioning. The preferred option could be
adjusted, based on study results and market testing, and taking into account that (a) DRC rights
over private and foreign interests in the development of subsequent Inga phases need to be
protected, (b) interface risk could be reduced by entrusting engineering and construction
supervision of common infrastructure to the concessionaire under a project management contract
or a minority cross shareholding, (c) tentatively committed public financing needs to be secured
to reduce need for private financing.
49. The GoDRC has decided to continue the process to select a developer for the powerhouse
and transmission lines in the DRC. The project design has changed since the launch of the
developer selection process. Therefore, the three prequalified consortia will be allowed to
reconfigure including bringing new partners into their consortium during the selection period. In
order to compete, firms will have to become members of one of the pre-qualified consortia. The
GoDRC and its strategic advisors are currently developing the Request for Proposal (RFP) with
the objective to launch it early 2015, to select a developer by mid-2015. The RFP will include a
reference project design, information on the applicable fiscal regime, and preliminary results of
the geological testing. The selection will be followed by a period of exclusive collaboration with
the developer resulting in the attribution of concession for the power station and transmission
lines in DRC to a Special Purpose Vehicle (SPV) by the end of 2016.
50. In the current structuring option, in parallel with the selection of the developer, the
government will prepare the detailed design of the common infrastructure, and select the EPC
contractor for the construction of the facilities. It is expected that the EPC contract for the
common infrastructure will be awarded simultaneously with the concession for the power house
and the transmission lines to the private developer.
4
One of the consortia includes a firm which is currently under a 10 year cross-debarment sanction by the WBG,
another one includes a firm which has been temporarily suspended.
11
51. A timeline of the process till financial closure is included in Annex 2.1. The selection
processes might need to be adjusted if the structuring option is readjusted or if the competitive
process does not result in multiple bids of sufficient quality.
53. Activities will be coordinated with support provided by other development partners. The
proposed operation – with parallel co-financing from IDA and AfDB - will support the GoDRC
to develop the Inga BC development on its territory. The GoDRC will benefit from a team that
brings together expertise from across the World Bank Group. The preparation of the
development of the transmission lines in the SAPP countries will be financed by the
Development Bank of Southern Africa - DBSA- (outside of the scope of this operation).
C. Project Components
54. The TA project consists of two components: (a) Inga 3 BC development support, and (b)
mid-size hydropower development support.
Component A – Inga 3 BC development support (total cost US$80.6 million; of which IDA
US$47.5 million and AFDB US$33.4 million)
55. This component will build on the feasibility study for the development of the Inga site
and associated interconnections financed in 2010-13 by the African Development Bank (AfDB).
It will finance complementary studies, transaction advice and procurement support, and
institutional support and sector strengthening. The scope of activities that will be financed by the
TA is flexible and can be amended to allow for adjustments of the allocation of activities and
responsibilities between the public and private sector for the Inga-3 BC development
Sub-component A1: Studies (total cost US$20.0 million; of which IDA US$12.5 million)
56. This subcomponent will finance the preparation of complementary studies identified in
the feasibility study. This includes: technical studies to complete the reference project design,
social and environmental studies and panels, and economic studies, including power supply-
demand analysis.
57. Technical studies will include geological and geotechnical investigations on site to
confirm the foundation conditions for the Bundi dam, a study of the sedimentation in the canal, a
study of the Congo River water intake to confirm the design and maximum capacities of the Inga
3 BC canal and water intake, and a study of the impact of Inga 3 BC development on the
operation of Inga 1 and Inga 2, especially during the low river flows. Based on the various
complementary studies, the feasibility study will be refined and transformed into a reference
design that will form the basis for the selection of the concessionaire. The cost of the detailed
12
design studies for the power plant and transmission lines in DRC will likely be borne by the
concessionaire.
58. The subcomponent will finance social and environmental (E&S) studies to update and
complement the preliminary ESIA which was prepared as part of the feasibility study. These
additional studies will include an ESIA of the Inga BC hydropower complex with a particular
focus on collection and analysis of baseline data (particularly on biodiversity), a cultural
resources management framework, as well as the Environmental and Social Impact Assessment
and the associated Resettlement Action Plan (ESIA/RAP) for the transmission lines in DRC. The
TA will also finance the definition of a community development plan that will address long
unresolved environmental and social issues dating back several decades at the time of
development of Inga 1 and Inga 2, and the preparation of a resettlement action plan for the Camp
Kinshasa settlement. The sub-component will also finance two panels of experts. The
Environmental and Social panel will consist of two members (an environmental and a social
expert). The Dam Safety panel will have five members (a dam specialist, a geologist, a
hydrologist, an expert in sedimentology and an expert in electro mechanics). These two panels
will serve during the life of the proposed TA project but might be extended for the construction
phase of the Inga-3 BC development. Finally, the subcomponent will include the preparation of a
Strategic Environmental Assessment that will explore the strategic environmental and social
linkages with the proposed investments including how climate change may affect Inga 3 BC
development viability.
59. A number of economic studies will be financed to ensure that the additional generation
capacity of Inga 3 BC development translates into better services for households and small and
medium enterprises. For instance, a study of the productive demand in the Bas Congo will
analyze the possibility of developing electricity consumptive activities in the vicinity of Inga.
Other studies might include a master plan on generation, transmission, and distribution that will
allow SNEL to prepare its development plan to accommodate the additional production coming
from Inga 3 BC, and tariff studies for Inga 3 BC development, in particular a study of electricity
market prices for generation in RSA and alternative power generation options.
Sub-component A2: Transaction advice and procurement support (total cost US$39.5 million;
of which IDA US$19.0 million)
60. The second subcomponent includes technical, legal, and financial assistance for the
structuring of the Inga 3 BC development. This includes support on the development of
legislation, finalization of the structuring option, and transaction support for the selection of the
concessionaire for the power house and the transmission lines, advice on power sales, and
support for the bidding process of the common infrastructure.
61. This subcomponent will bring support and expertise to the GoDRC on the preparation of
the law that will set the framework for the development of Inga 3 BC and subsequent phases. It
will include support in designing the ADEPI mandate, and the fiscal regime – including water
tariffs – applicable to the project stakeholders that will maximize the economic rent generated by
the project captured by the State.
62. This subcomponent will provide the GoDRC with experienced strategic, financial,
transaction, and procurement expertise for the financial/institutional structuring of the Inga 3 BC
13
development. This subcomponent will include support to market test solutions and will be
flexible to allow for adjustments along the way responding to signals from the market. Special
attention will be paid to interface risks. Mitigation measures that will be explored include (a)
entrusting engineering and construction supervision of common infrastructure to the
concessionaire under a project management contract (“Contrat de maîtrise d’oeuvre”) and (b)
including the O&M for the common infrastructures (after construction) to the developer as part
of its concession contract with an option for early termination of the O&M contract for the
common infrastructures in case the Bundi dam is heightened before the end of the concession
period.
63. The subcomponent will finance expertise to finalize the selection and contract award of
the concessionaire for the power house and transmission lines. The subcomponent will finance
advisory services to ADEPI on design of fair risk sharing conditions in the concession
agreement. In addition, advisory services will support GoDRC negotiations in order to obtain the
most appropriate conditions for GoDRC and negotiate public shareholding conditions, if any.
64. This subcomponent also will include the analytical work necessary to finalize the
agreements associated with the Inga treaty signed between DRC and RSA on a number of
aspects, such as tariff setting, interconnection arrangements, and the interface with SAPP.
Advice on the sales arrangements of the power produced by the Inga 3 BC development will be
included. This advice will be focused on the mobilization of anchor customers and the
structuring of Power Purchase Agreements (PPAs).
65. In addition, the subcomponent will finance detailed design, bidding documents,
assistance for procurement, and financing arrangements, for the common infrastructure (intake,
canal, and dam).
Sub-component A3: Institutional support and sector strengthening (total cost US$21.4
million; of which IDA US$16.0 million)
66. This subcomponent will finance the establishment and operationalization of ADEPI. This
includes preparatory activities to structure ADEPI, such as studies on organization and staffing,
as well as assistance for staff recruitment. This subcomponent will also finance the cost of
recruitment processes, contractual staff, office equipment, operational costs, the organization of
workshops of ADEPI, and the development and the implementation of a consultation and
communication strategy for the Inga 3 BC development.
67. The subcomponent will finance in-house consultants and individual advisors to enable
ADEPI to efficiently fulfill its mandate to complement external advice provided by consultancy
companies.
68. This subcomponent will also finance the design and establishment of the public
management structure to supervise the construction of the common infrastructure.
14
COMPONENT B – Mid-size hydropower development support (total cost US$25.6 million
of which IDA US$25.6 million)
69. The component aims to develop midsize hydropower projects (with capacity between 10-
100 MW) by selecting potential projects, performing prefeasibility studies, accompanying
bidding processes, and evaluating the possibilities for carbon finance. The component will result
in feasibility studies and bidding documents, and support to GoDRC to select private developers
and award concessions for three mid-size hydropower projects.
Sub-component B1: Mid-size hydro development (total cost US$19.1 million; of which IDA
US$19.1 million)
70. The sub-component will finance analysis of the institutional, regulatory, and legal
framework for the development of mid-size hydro projects and the preparation of the additional
legal texts and regulations to accompany the electricity law to regulate participation of the
private sector in the development of mid-size hydropower project.
71. This sub-component will support increasing the GoDRC’s limited technical and
economic information on mid-size hydropower sites. Producing appropriate technical and
economic information on selected sites will improve the prospects of mobilizing public and
private financing for the development of these sites.
72. Activities will start with the preparation of a short list of thirty projects that will be
studied up to prefeasibility level. The thirty projects will be selected from a long list of sixty two
projects already identified by the MRHE. In a second step, three projects will be selected for
feasibility studies using a multi-criteria evaluation. The sub-component will support site
investigations, feasibility, environmental and social studies and preparation of technical
specifications and bidding documents for three hydropower sites. Other donors might support the
feasibility phase of other hydropower sites based on the outcome of the multi-criteria evaluation
(outside the scope of this operation). The third step is transaction advice to MRHE for the
selection of and contract negotiations with private developers for the three sites resulting in the
signature of concession agreements.
Sub-component B2: Carbon finance market development (total cost US$1.0 million; of which
IDA US$1.0 million)
73. This sub-component will: (i) assess the eligibility for carbon finance for Inga 3 BC
development and mid-size hydropower projects; and (ii) develop of CDM Program of Activities
(PoA). The sub-component will finance advisors to the GoDRC on how carbon finance
operations work in general and an assessment of prospects, options and requisites for carbon
finance, and the implications on hydropower project design.
Sub-component B3: Institutional strengthening to CGI3 (total cost US$5.5 million; of which
IDA US$5.5 million)
74. This subcomponent will support the operation of the CGI3. It includes consultants’ costs,
office equipment, operational fee, counselors, organization of workshops, and communication.
15
D. Project Financing
Lending Instrument
75. The proposed TA project will be an Investment Project Financing in the form of an IDA
Grant in the amount of US$73.1million.
77. The TA project will be financed through parallel financing from IDA and AfDB
(US$33.4 million). AfDB financing for its Inga Site Development and Electricity Access Support
Project (PASEL) was approved on November 20, 2013 including US$7.5 million from a Fragile
States Facility (FSF) grant; and US$59 million from an African Development Fund (ADF)
credit 5.
78. Donor financing will follow the procurement and financial management policies of the
respective donor and no contracts will be financed by more than one donor.
79. Development Finance Institutions have established a close and inclusive coordination
platform, with regular audio conferences held since November 2012, with participation of DRC
counterparts since March 2013. DBSA will finance studies required for the transmission lines
and substation expansion and electricity dispatch and imports modalities for the electricity
produced by the Inga-3 BC development and sold to South Africa and SAPP countries. DBSA
will use funds from the DBSA/AFD Convention and other DBSA funds (not included in this
operation). USAID is considering providing technical assistance to ADEPI.
80. The IDA-financed TA project will benefit from the wide experience of all parts of the
WBG in the structuring and financing of large hydropower projects and other infrastructure
public private partnerships. The project is ambitious and complex and attracting public and
private sector financing will be a challenge. WBG hands-on implementation support under the
IDA TA project will be provided through a team that is led by IDA – which has the fiduciary
oversight responsibility for the TA project – and will bring in expertise from other parts of the
World Bank Group. Once the exclusive collaboration agreement has been signed, IFC may play
a structuring and arranging role for the consortium that is selected.
81. Other donors and DFIs, including EIB and AFD, are part of the donor coordination
platform as they are interested in the Inga 3 BC development and are considering financing of
the project during the construction phase.
5
Out of the US$66.5 million approved by AfDB on November 2013, only US$33.4 million is presented as part of
the proposed project, representing essential activities required to achieve the PDO.
16
Table 1: Project Costs and Financing Plan (in USS million)
Project Components Project cost IDA financing
AfDB
US$ %
financing
million
A Inga 3 BC development support 80.9 47.5 59 33.4
A.1 Studies 20.0 12.5 63 7.5
A.2 Advice and procurement support 39.5 19.0 48 20.5
A.3 Institutional strengthening 21.4 16.0 75 5.4
B Mid-size hydro development support 25.6 25.6 100
B.1 Mid-size hydropower 19.1 19.1 100
B.2 Carbone finance market development 1.0 1 100
B.3 Institutional strengthening 5.5 5.5 100
Total Project Costs 106.5 73.1 69 33.4
83. Lessons learned from World Bank supported projects such as Nam Theun 2 in Laos,
Bujagali in Uganda, Felou in Mali, and Lom Pangar in Cameroon have been incorporated in the
project design. Lessons learned around the world show that the World Bank’s role in
hydropower extends well beyond lending, to include technical assistance, knowledge sharing,
policy dialogue, economic and sector work, and the range of support provided during project
preparation 6. Mirroring this global experience, alternatives and design options were considered
during project development and could be adjusted over time as more information becomes
available from various studies and market tests.
84. Hydropower is a natural resource, which similar to extractives, can serve as a potent
driver of development. But experience in DRC and elsewhere has demonstrated that natural
resources endowments, if not well managed, can disappoint. The Inga-3 BC development
incorporates lessons learned from the extractive sector in DRC to introduce principles of
competition, transparent contracts, and transparent disposal of revenues, and enhanced role of
Civil Society Organizations (CSOs) on supporting demand side accountability platforms. It thus
applies measures included in the Economic Governance Matrix agreed between the GoDRC and
the World Bank.
85. The TA project will help DRC to better negotiate contracts with investors and power
offtakers in order to capture the resource rent that is the difference between revenues and
generation cost. The project will provide world class advice to the GoDRC for contract
6
World Bank Group (2009), Directions in Hydropower.
17
negotiations which would otherwise be characterized by asymmetric capacity and information
between the parties. The presence of the World Bank and other donors will help balance the
relative bargaining power between the GoDRC, investors, and offtakers. Additional revenues
generated by Inga 3 BC will allow for increased GoDRC expenditure on energy access, social
services, and public goods with the Bank’s ongoing support to Public Financial Management in
DRC (see para 30).
86. The TA project takes into account the lesson learned that governments in developing
countries are by no means monolithic. It will help establish ADEPI, an enclave institution to
create some functionality within a challenging governance environment and wider political
economy dynamics. The experience of water/power development and management authorities
worldwide has provided useful insights for the design of the proposed ADEPI. Strong
organizations and individual leadership at higher level is needed for decisive action and to ensure
initial success. Successful water and power management organizations are clearly and strongly
protected by laws and regulations (treaties in the case of international entities or bi or
multinational projects) that state their responsibilities, rights, accountabilities and domain of
influence. The structure of the November 2013 Policy Letter (see Annex 8) takes into account
experiences from the Nam Theun 2 Hydroelectric Project in Laos and the Lom Pangar
Hydropower Project in Cameroon. In both cases, the Policy letter definition of clear
commitments and related indicators by the government in greater detail than may have been
possible in the financing agreements. These commitments formed the basis for IDA’s
engagement in the project and set out clearly what IDA should expect from the government
during implementation. A Policy Letter has a lesser legal standing than an agreement. However,
as in the case of Nam Theun 2, Lom Pangar, and other projects, the policy letter signed by a high
governement official signals the strong political commitment to the project. In the case of Inga-3
BC development, the Policy Letter was signed by the Prime Minister.
87. Experience with large hydropower shows the necessity of the allocation of sufficient
resources and time for preparation of feasibility studies and associated safeguard instruments. It
is extremely important to take an interdisciplinary approach while assessing the environmental
and social impacts of natural resources projects. Experience teaches that taking short cuts to
reach short term deadlines leads to delays in the medium term. The proposed operation will help
avoid delays due to lack of proper financing for various studies and other preparatory activities.
It will also help to build capacity in the GoDRC to manage the subsequent phases of hydropower
developments at Inga.
89. Experience on private sector participation in the energy sector in Africa points toward the
importance of clear, transparent, and balanced contractual arrangements between Government,
18
the private sector, off-takers, and regional partners. Only with a strong contractual framework
can the PPP arrangements lead to more efficient design, construction and operation arrangements
than if developed purely by the public sector. The project also addresses the strong need for
systematic development of human capacity and institutional strengthening, particularly within
Government for managing both the sector as well as government interaction with specific
investments and stakeholders.
92. For high risk projects such as the proposed TA project, experience recommends that
donor preparation and supervision teams be adequately resourced and staffed, and include field-
presence. Project preparation has involved strong cooperation between the various project
donors, leveraging strengths and presence on the ground. This has not only helped mobilize
adequate financial resources but has also assured the presence of a multi-disciplinary team with a
dual perspective of integrated water resources management and energy development and
expertise on private sector participation as well as a range of social, economic, and
environmental issues. The same approach will continue going forward. All donors are committed
to making available adequate resources and staffing to ensure adequate supervision and
implementation support. On the IDA side, project supervision will continue to involve a large
inter-disciplinary team of field- and headquarter-based experts.
93. Several alternatives were considered for the project design. This includes a series of
studies over the past decade that examined alternatives to develop the hydropower potential at
the Inga site – including Grand Inga, Inga 3 Tunnel, and Inga 3 BC. Secondly, various off-takers
for the power generated at the site where considered. Alternative structuring options were
evaluated using a set of objective criteria. Also, a number of alternatives for the selection of the
developer were considered. Going forward, the TA project will help the GoDRC to evaluate
alternative solutions for aspects of the Inga-3 BC development in an organized manner, starting
with major decisions and moving to more detailed levels over time.
94. The project also incorporates lessons from the implementation of the SAPMP and
PMEDE projects, which highlighted the need to enhance SNEL’s corporate governance and
operational and financial performance as one of the Inga 3 BC development off-takers, as well as
the need to appropriately assess and account for governance and political economy
considerations in electricity sector interventions in the DRC.
19
IV. IMPLEMENTATION
A. Institutional and Implementation Arrangements
95. The GoDRC is setting up a ring-fenced development authority (Agence pour le
Développement et la Promotion d’Inga – ADEPI) to manage and monitor the series of
hydropower developments at Inga, and to help mobilize private participation and public
financing. The set-up of ADEPI will be completed by the end of 2014. Until then, interim
arrangements include the establishment of an Inter-ministerial Commission for Inga
Development (Commission pour le Développement du Site d’Inga - CODESI) that will lead the
necessary development activities, with the technical support of the Inga Facilitation Committee
(Comité de facilitation d’Inga - CFI). While, day to day project implementation will be carried
out by a unit in the Ministry of Hydraulic Resources and Electricity (Cellule Technique Inga 3 -
CGI3).
97. The CODESI will meet at least twice per year, in addition to convening in extraordinary
sessions at the discretion of the Chair. It will be regularly informed on project progress. The
main tools for reporting to the CODESI will be quarterly financial and narrative reports by the
project implementation unit with help from their advisors.
98. The Inga 3 BC and mid-size hydropower development TA project will have two
executing agencies – the MRHE and ADEPI. During the first phase of the project, MRHE will
implement the entire project. ADEPI, once established, will take over as an implementing agency
for component A (Inga 3 BC Development Support) while Component B (Mid-Size Hydropower
Development Support) will continue to be implemented by MRHE for the entire project period.
99. Given the lack of technical and managerial capacity in MRHE, the use of a small Project
Implementation Unit (CGI3) is deemed appropriate. CGI3 will: (i) coordinate project activities;
(ii) carry out financial management and procurement; (iii) prepare annual work plans and
budgets; (iv) liaise with various government departments, (v) liaise with donors; (vi) ensure
monitoring and evaluation (M&E) and reporting, and (vii) monitor and ensure safeguards
compliance.
100. CGI3 is headed by a project coordinator which reports to the CODESI. The project
coordinator has already been selected and is responsible for overseeing and coordinating day-to-
day project implementation, including monitoring and reporting. After the establishment of
ADEPI, the responsibility of the project coordinator for CGI3 will be taken over by the ADEPI
director.
20
101. The PIU will be staffed by a small number of specialists, some of whom will be recruited
using donor financing. At present, CGI3 staffs include a procurement specialist, a financial
management specialist, and an environmental specialist. Six additional specialists will be
contracted competitively in CGI3 and be financed through the TA project. The recruitment of
procurement and financial management specialists is an effectiveness condition.
102. At the end of 2014, the ADEPI will take over the implementation responsibility of
component A from CGI3. After ADEPI has been created, CGI3 will focus on the implementation
of component B. Staff recruited during the first phase will be able to apply for positions in
ADEPI or stay in CGI3 and focus on component B subject to a satisfactory assessment of their
performance.
ADEPI's Board of
CODESI Directors
CFI
Components A&B
Before
ADEPI After ADEPI Creation
Creation
103. A Project Implementation Manual (PIM) will establish roles and responsibilities as well
as on the technical, administrative, financial and accounting procedures, procurement
arrangements, and the safeguard procedures. Finalization of the PIM is a condition of
effectiveness. An environmental and social roadmap has been prepared which sets out the
sequencing/timing of the various environmental and social safeguard instruments to be prepared
in connection with the activities related to the development of the Inga 3 BC development and
the future investment operation. The roadmap – together with the PIM – will guide project
implementation and its monitoring will help to ensure the appropriate sequencing of various
activities supported by the TA project.
21
105. The CGI3 and the ADEPI will submit quarterly reports to the donors and the Ministry of
Finance no later than forty five days after the end of each quarter. The quarterly reports would
cover updates on procurement activities, financial management and disbursements, as well as
implementation issues and associated action plan, progress on development indicators and
targets, and status of financing covenants. Data collecting and reporting responsibilities will be
described in the PIM. The main sources of information for this monitoring and evaluation will be
reports from advisors and consultant.
C. Sustainability
106. The TA project will support the establishment and operations of the ADEPI, under an
adequate corporate governance framework. A well-functioning ADEPI will contribute to the
sustainability and transparency of Inga site development. It will ensure that O&M arrangements
and financing arrangements (in the form of water royalties) are designed to sustain Inga 3 BC
development and subsequent investments into Inga site development.
107. The project will contribute to the sustainability of mid-size hydropower development in
the DRC by supporting the establishment of appropriate institutional, financial, and regulatory
arrangements, as well as promoting private and local participation in the development and
operations of related infrastructure.
108. The GoDRC has demonstrated its commitment (see policy letter in annex 8) to develop
the Inga site under arrangements that will enhance project efficiency and cost-effectiveness and
maximize project rent for the DRC as well as its regional benefits.
109. From an environmental and social point of view, Inga 3 BC development and the
subsequent phases of Inga site development are expected to have limited environmental and
social impacts compared to the amount of energy produced and the proposed project will finance
the studies that will define comprehensive mitigation measures for all expected impacts.
Stakeholder Risk H
Implementing Agency Risk
- Capacity H
- Governance H
Overall Preparation Risk H
Project Risk
- Design H
- Social and Environmental S
- Program and Donor L
- Delivery Monitoring and Sustainability S
Overall Implementation Risk H
22
B. Overall Risk Rating Explanation
110. The Inga 3 BC development is a complex project implemented in a fragile country and a
difficult sector context. However, the potential benefits of the project outweigh its high risk.
111. The TA project intends to mitigate the risks associated with the Inga 3 BC development.
Indeed, the quality of preparation is determinant of the success of such a large infrastructure
project. The TA project’s risk is rated high.
112. Risks associated with the Inga 3 BC development fall in two categories. Firstly, the
project faces the technical, financial, political, environmental and social risks usually associated
with large hydropower development in developing countries. Secondly, the project’s risk profile
is increased by the additional risks associated with the political fragility and the weak
governance environment of the DRC.
113. The TA project will help to mitigate the environmental and social anticipated adverse
impacts, anticipated geological and hydrological risks associated with the Inga-3 BC
development:
• Dam safety aspects, environmental and social impacts of the dam and of the T-lines will be
assessed thoroughly, following international standards, through studies financed by the TA
project.
• Geological risks will also be assessed in addition to the assessment made as part of the
feasibility study. A geological/geotechnical baseline report (the key document that defines
the allocation of financial risk between the government and the private sector involved in the
construction and operation with regard to subsurface conditions) will be developed by the TA
project. It will contain baselines that describe geological and geotechnical conditions
anticipated (or to be assumed) to be encountered during construction.
• The hydrological risk (i.e. the dam not producing the estimated amount of MW because of
changing hydrology) will also be assessed through the TA project.
• A risk – which is not under the control of the GoDRC – is that the transmission lines from
Katanga to South Africa are not prepared to good practice standards. This includes the risk of
the routing of the T-lines not taking into account environmental or social concerns. The
Financing Agreement includes suspension events that will allow the World Bank to suspend
the project in the case international good practice is not followed by other actors in the
development of the transmission lines outside DRC.
114. Mitigating the risks associated with the political fragility and the weak governance
environment of the DRC is at the core of the TA project:
• The project includes several mitigation measures against the risk of rent capture by investors
and off takers. The project will help establish ADEPI which will help increasing the
professional and autonomous management of the development of the series of hydropower
developments at Inga. It supports the GoDRC in implementing principles of competition and
transparency. The project will support the design of balanced contracts between public and
private stakeholders and regional off-takers and ensuring a transparent selection of a private
developer. The provision of world class advisors to the GoDRC will help overcome the
capacity and information asymmetry often seen between parties in large infrastructure and
23
natural resources transactions in Africa. The presence of the World Bank and other donors
will help balance the relative bargaining power between the GoDRC, investors, and off-
takers. It will facilitate CSOs to play the role of demand side watchdogs by bringing the
development process of Inga-3 BC development into the open.
• There is a risk that the various transactions linked to the Inga-3 BC development will not
come to financial closure. The amounts required are large and the country itself presents
many risks including political risks. Public financing of technical, environmental, and social
impact studies, geological and hydrological studies following international standards and
transaction advice (also financed by the TA project) will reduce the risk of not reaching
financial closing.
115. The risks associated with the TA project itself are mainly related to the risk of the
GoDRC not following international good practice in the preparation of the Inga-3 BC
development. This would not only mean that the project development objective would not be
reached but also could expose the World Bank to considerable reputational risks. If the
preparation of the project according to international good practice faces delays, there is a risk
that some in the GoDRC will argue to prioritize speed over quality of preparation. As a result,
Inga 3 BC development might be constructed at a higher cost and/or the rent associated with the
site captured by the investor developer. Despite the legal and transaction advice financed by the
TA project, political considerations might cause the GoDRC to agree on a low electricity price
with South Africa.
116. Several measures are in place to mitigate the risk of diversion from international good
practice. The early indication of various DFIs that public donor financing will be available to
partly finance the infrastructure investments of the Inga-3 BC development reduces this risk. The
Policy Letter sent by the Prime Minister to the President of the World Bank forms a “compact”
between IDA and the GoDRC and outlines the conditions of engagement. The signature of the
policy letter by the Prime Minister (PM) was an appraisal condition and the discontinued
adherence to the content of the letter a suspension event in the financing agreement (see box
below and Annex 8 for the Policy Letter). In addition, the financing agreement includes legal
covenants regarding the timely set up of ADEPI.
117. Other risks associated with the TA project include fiduciary risks related to the financial
management and procurement capacity of the two implementing agencies (CGI3 and ADEPI).
Mitigation measures include the preparation of a PIM, the competitive recruitment of the FM and
procurement teams in both CGI3 and ADEPI, the installation of accounting software in both
implementing agencies and close and intensive supervision of the project, in particular on
procurement and financial management aspects.
24
VI. APPRAISAL SUMMARY
A. Economic Analysis
118. Primary beneficiaries of the Inga BC 3 development and therefore of the proposed TA
project will be households and enterprises in DRC, South Africa, and other countries in the
Southern Africa region, who will gain access to less-expensive, more stable, and cleaner energy
supply.
119. Technical assistance under the proposed Project is critical to help achieve and maximize
the benefits associated to the development of DRC’s large hydropower potential. The studies
financed under sub-component A1 will contribute to improve the design of Inga 3 BC
development and provide a solid knowledge basis on the site’s ground conditions and project
various technical aspects, reducing the risk of cost overruns during construction and supporting a
more informed selection of potential contractors. Transaction advice and procurement support
under sub-component A2 are expected to promote effective competition for the concession for
the Inga 3 BC power plant and help the Government negotiate a concession agreement and PPAs
that strike the right balance between development outcomes and return to investors. Institutional
support and sector strengthening under sub-component A3 will help create a more sustainable
business model and improve the investment climate for the development of Inga’s next stages.
121. The proposed TA project has an intrinsic rationale for public provision, because of its
nature – technical assistance – and its scope. Strengthening Government’s technical, institutional,
regulatory and project implementation capacities is essential to ensure that hydropower resources
are efficiently and sustainably used, with benefits equitably shared by the society at large.
122. The World Bank can bring significant added value to the proposed TA project in light of
its experience in supporting large hydropower development, including through some of the larger
and more critical projects in Africa and other developing regions. The Bank’s institutional and
regulatory support, transaction advice and/or risk mitigation can help raise project bankability
and reach financial closure in a timely and efficient manner, especially in countries relatively
new to PPPs and with low regulatory capacity. The Bank has also been at the forefront in
supporting regional power integration in Africa and is well positioned to convene clients, the
private sector and development partners to leverage consensus and investments for large-size
regional projects.
25
B. Technical
123. The complexity of the Inga 3 BC development is mostly caused by financial and
institutional factors. The proposed TA project is not overly complex from a technical point of
view, as it mainly entails studies and advisory support. The feasibility studies and environmental
and social assessments for mid-size hydropower do also not pose any major technical challenges.
124. The technical definition of the TA project is anchored in the findings and
recommendations of the AfDB-financed Inga feasibility study. The task team has advised the
GoDRC in the supervision of the consultants carrying out the feasibility study. The studies are
technically appropriate and comply with international quality standards. A detailed option
assessment was carried out on how to develop the hydropower potential at the Inga site. The
alternative of a project with a tunnel (Inga 3 Tunnel) was studied in some detail and was found
unviable given: (a) that the option does not optimize the use of the hydropower potential at Inga,
and (b) the high geological risk of constructing extensive underground works in an area where no
site investigation has been undertaken. The preliminary (prefeasibility level) designs retained for
the construction of the Inga 3 BC powerhouse and the transmission line are technically sound.
125. Pending aspects (geological and geotechnical investigations, sedimentation studies) will
be addressed during the TA project implementation, thereby reducing the construction risks. The
requests for proposal for the developer of the power house and the transmission lines will include
a reference project design that will be based on the feasibility study and incorporate the findings
of the complementary studies. The TA project will also finance the feasibility and design studies
for the common infrastructures (water intake, canal, and dam).
126. The task team has worked closely with the GoDRC on the definition of the public private
structuring option for the project. It has found the retained option (public financing and
management of the common infrastructure and a concession for the power house and
transmission lines) appropriate in the circumstances and technically sound.
128. The task team has appraised the governance environment in which the project will be
implemented and analyzed governance and corruption risks. The main findings of this appraisal
include the risk of GoDRC not following international good practice in the preparation of the
Inga 3 BC development and day-to-day fiduciary risks related to the financial management and
procurement capacity of the two implementing agencies (CGI3 and ADEPI) and procurement
risks. Project proceeds will mainly finance contracts for consultancy services and training.
Extensive follow up will be needed to ensure that outputs are properly measured and to avoid
procurement irregularities and lapses in internal control. “Guidelines on Preventing and
Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA and Grants”
dated October 15, 2006 (the Anti-Corruption Guidelines) will apply to the project.
26
129. A set of governance and anti-corruption actions have been agreed with the GoDRC. The
project has zero tolerance for corruption, collusion and fraud. Any suspicion of such practices
shall warrant immediate investigation with severe penalties for any party found culpable of such
practices. ADEPI and CGI3 staff will be selected based on merit and will be provided with
training and supported by highly qualified technical consultants, particularly in fiduciary areas.
The process of staff selection will be followed closely by the World Bank. During supervision,
the Task Team will look out for inappropriate or suspicious practices. Enhanced supervision
needs will be defined by the Task Team according to the practice identified. The enhanced
supervision team will include the fiduciary team (Financial Management and Procurement
Specialist) and whatever additional skill mix is warranted according to the alerts detected.
D. Financial Management
130. The overall financial management (FM) risk of the TA project is rated substantial. The
proposed FM arrangements including the mitigation measures for the Project are considered
adequate to meet the Bank’s fiduciary requirements under Operations Policy 10.00. An
assessment of the proposed FM arrangements and implementing agencies found a substantial
residual FM risk after mitigation measures. FM arrangements are described in detail in Annex 3.
131. The CGI3 fiduciary team and, from 2014, the ADEPI fiduciary team will be in charge of
fiduciary aspects for Component A of the project, whereas CGI3 will be in charge of fiduciary
aspects of Component B throughout project implementation. The CGI3 FM team and later the
ADEPI FM team will be each composed of qualified and experienced Financial Manager
supported by one accountant/ treasurer, all selected on a competitive basis. The FM teams will be
responsible for: (i) the design and establishment of the project's computerized financial
management system; (ii) the approval of disbursements of funds to services providers,
contractors and consultants; (iii) maintaining up-to-date accounting records and ledgers; (iv) the
recording of financial transactions; (v) financial reporting; (vi) submission of audit reports; and
(vii) ensuring that a proper internal control system is in place to achieve accountability at all
levels.
132. The FM teams will be both further strengthened through the recruitment (on a
competitive basis) of an Internal Auditor. The Internal Auditor will review the Financial
Management Reports submitted by the Project’s different stakeholders, and will carry out regular
internal audit controls. This will include the verification of eligibility of expenditures ex-post as
well as physical inspection of works and goods acquired by the Project.
133. The Project’s internal control and appropriate segregation of duties and responsibilities
will be defined in the administrative, accounting and financial chapter of the PIM. Accounting
software with multi-projects, multi-sites, and multi-donors features will be procured.
E. Procurement
134. The procurement risk of the TA project is rated high, given the country risk and the
complexity of the procurement of the project.
27
135. For Component A, procurement activities will be carried out by the MRHE through
CGI3, and subsequently the ADEPI fiduciary teams. MRHE through CGI3 will be in charge of
procurement activities for Component B of the project
136. By effectiveness, the Procurement Unit of CGI3 will be staffed with a procurement
specialist recruited on a competitive basis. The procurement specialist will lead the procurement
process, provide on-the-job training to other procurement staff (including any other staff
assigned by the Ministry), and set up an acceptable procurement system. S/he will also: (i)
reinforce the integrity and internal review of the procurement process; and (ii) develop and
strengthen capacity within CGI3.
137. ADEPI will be staffed with specialized procurement specialists who will be recruited
competitively.
139. The project supports the development of a large hydropower project in a weak
governance environment. The consultations and communication strategy pays special attention to
a number of contentious issues related to the Inga 3 BC development including country
capacities, perceptions of corruption, choice of technology, resettlement, environmental and
social considerations, and low investor confidence. As can be expected for a project of this size
and importance, media interest by international, regional and local media outlets has been
significant including from international civil society organizations. In the preparatory phases,
stories about the project have appeared in a large number of international outlets.
140. A participatory process at local and provincial levels, including dialogue with private
sector, civil society representatives, and development partners has validated the project scope.
The consultative approach has established an ongoing, accessible dialogue with potentially
affected populations and other stakeholders so that their views could be fed-forward in decision-
making processes relating to the TA project. The results of the consultations confirm broad
support for the TA project and the Inga 3 BC development.
141. The terms of reference prepared for safeguards studies have been disclosed and have
been the subject of two public hearings in Kinshasa and Matadi. Participants included men and
women from civil society (particularly churches and faith groups), local and international NGOs,
academia, project affected persons at the Inga site, youth organizations, DRC environmental
authorities at provincial and national levels, and other government’s entities. Participants’
contributions were recorded by the project unit, and relevant proposals/amendments will be
made to the TORs.
28
142. Going forward, the communication strategy will take a proactive approach to
consultations, continuing stakeholder engagement and strengthening capacities of DRC’s local
institutions are key pillars of the strategy. Throughout project implementation, transparency will
be emphasized.
144. The table below summarizes the eight safeguards policies triggered by the project.
7
Subsequent phases of the series of Inga hydropower developments are expected to have a larger footprint as the
Bundi reservoir elevation is increased and a dam will be constructed across the Congo River. The reservoir that will
be created over time by the Inga site subsequent phases will eventually cover about 40 km2, and raise water levels as
far as 180 km upstream.
29
triggered as the 2.6 km2 in the Bundi valley where the dam and the canal will be constructed, is
covered by forest. The transmission lines will also go through forested areas. The area to be
cleared for the intra-DRC transmission line will be 100 meter wide and cross 1850 km of the
country. OP/BP 4.37 (safety of dams) is triggered to ensure that safety aspects (mainly
geotechnical aspect) are taken into account during the construction. OP/BP 4.11 (Physical Cultural
Resources) is triggered as many studies show that DRC is a cultural rich country. As a result, the
construction of the Inga 3 BC infrastructure may impact physical cultural resources. The ESIAs
will include a Cultural Heritage Management Framework (CHMF). Finally, the Congo River
being an international waterway, OP/BP 7.50 (international waterways) is triggered. The twelve
other riparian countries of the Congo River basin were notified about the project on November 4,
2013, in compliance with this policy. The notification requested that comments to the proposed
activities be conveyed by December 6, 2013. No response was received, and the Bank
determined to move ahead with the processing of this operation.
147. Social policies. OP/BP 4.12 (Involuntary Resettlement) is triggered as the development
of Inga 3 BC hydropower complex and transmission lines in DRC will induce land acquisition.
OP/BP 4.10 (Indigenous People) is triggered to cover potential impacts to be induced by the
construction of the transmission line which may traverse areas inhabited by Indigenous People.
An Indigenous Peoples Planning Framework (IPPF) will be prepared for the section of the
transmission line within the DRC borders.
148. The TA project will finance a number of technical and E&S assessments as a sound basis
to feed into the decision making process for the development of Inga 3 BC development and
three mid-size hydropower projects. Environmental assessments planned include ESIAs for the
Inga 3 BC development (including a cumulative impact assessment of Inga 3 BC and Inga 3 HC
developments), for the transmission lines in the DRC, and for the mid-size hydropower projects.
The assessments will include substantial environmental and social baseline information on the
Inga 3 BC development site.
149. An “E&S roadmap” has been agreed with the Government (see table 3 in Annex 3). This
roadmap describes the coordination and sequencing of the safeguard documents and
environmental and social studies to be financed under the project and the feasibility studies,
design and bidding documents they relate to. The requirement to implement the Project in
accordance with the E&S roadmap will be a legal covenant in the Financing Agreement.
150. Ten ToRs related to environmental and social safeguard policies for impacts within DRC
were disclosed in-country and the Bank’s Info-shop on June 28, 20138. All ToRs have been
drafted in compliance with both World Bank safeguards policies and with the World Bank
performance standards for projects involving private sector participation. The applicable
safeguards regime for different components of the Inga 3 BC development (common
8
ToRs for the following studies have been disclosed: (1) ESIA for Inga 3 BC development hydropower complex, (2)
ESIA for Inga 3 BC transmission line from Inga to the border with Zambia, (3) ESIA for mid-size hydropower
projects, (4) Environmental and social expert panel, (5) Dam safety expert panel, (6) RAP for the Inga 3 BC
hydropower complex, (7) RAP for the transmission line from Inga to the border with Zambia, (8) RPF for the mid-
size hydropower projects, (9) IPPF for the transmission line in the DRC, and (10) Assessment Framework for
Physical and Cultural Resources.
30
infrastructure, powerhouse, transmission lines) will be determined during the TA project. Public
consultations were held on July 3, 2013 in Kinshasa and on September 3, 2013 in Matadi (Bas
Congo province where the Inga 3 BC development will be located). The results of the
consultations confirmed a broad support for the TA project and for Inga 3 BC development.
ToRs will be re-disclosed to reflect comments received during the consultations and reflect the
evolving project structuring.
151. Two additional studies (Community development plan for project affected persons and
resettlement action plan for Camp Kinshasa) will be financed by the TA project. These studies
will address historically pending E&S issues related to Inga 1 and Inga 2, built in the 1970s and
80s, without Bank funding. The ToRs for the studies have been disclosed to ensure transparency.
152. The GoDRC will use its best effort to ensure that TORs for ESIA, IPPF and RAPs for the
transmission lines outside DRC will be shared in a timely manner with the Bank for review and
input. Outside of DRC the transmission lines are considered associated facilities per the
definition of the World Bank safeguards policies which requires that the Bank is satisfied with
the quality and scope of the safeguards instruments prepared for these infrastructures.
153. The project preparation has emphasized the critical role of safeguards compliance. The
Inga 3 BC developer will have to comply with the environmental and social safeguards
requirements of the Inga 3 BC development project, including environment-related design,
construction specifications, as well as environmental rules for civil works contractors. If any part
of the dam or associated facilities were to be prepared without compliance with the above
triggered Bank safeguards policies and agreed implementation arrangements, the Bank will not
be able to participate in the possible future financing of the Inga 3 BC development .
31
Annex 1: Results Framework and Monitoring
DEMOCRATIC REPUBLIC OF CONGO
Inga 3 BC and Mid-Size Hydropower Development Technical Assistance Project
Project Development Objective (PDO): The PDO is to contribute to the sustainable development of Inga 3 BC and selected mid-size hydropower projects.
Cumulative Target Values Responsibility Description (indicator definition etc.)
Core
Unit of Data Source/
PDO Level Results Indicators Baseline Frequency for Data
Measure Methodology
2014 2015 2016 2017 2018 Collection
Indicator one: Establishment of the CGI3/ADEPI The establishment of ADEPI includes the
Inga Development Authority Y/N N N Y Y Y Y quarterly quarterly Prime Ministry development of technical and fiduciary capacities
reports and the provision of a budget for operating costs.
Indicator two: Availability of the ADEPI The bidding documents will have to be compliant
bidding documents for the Inga 3 Y/N N N N Y Y Y quarterly quarterly ADEPI with WB environmental and social safeguards and
BC development reports other sustainability consideration.
Indicator three: Availability of the The bidding documents consist of a request for
CGI3 quarterly
bidding documents for the selection proposal, reference project, fiscal regime, and
Number 0 0 0 1 2 3 quarterly and annual MRHE/CFI
of developers for mid-size environmental and social specifications.
reports
hydropower projects
INTERMEDIATE RESULTS
Intermediate Result (Component A): Inga 3 BC development through a PPP is promoted
Intermediate Result indicator one: ADEPI The Exclusive Collaboration Agreement will be
Signature of the Exclusive Y/N N N Y Y Y Y Once quarterly ADEPI signed between ADEPI and the selected developer.
Collaboration Agreement reports
Intermediate Result indicator two: These include studies resulting from the 12 ToRs
Consultant
Availability of finalized E&S studies Number 0 0 5 9 12 12 Once CGI3 which have been disclosed in June 2013.
firms
for Inga3 BC
Intermediate Result indicator Three PPAs with SNEL, Mining companies and
Three: Power Purchase Agreements Minutes of RSA, as approved by ADEPI.
Number 0 0 0 2 3 3 quarterly ADEPI
(PPAs) negotiated and publicly meetings
disclosed
Intermediate Result (Component B): Medium size projects are promoted through PPP
Intermediate Result indicator One ESIA, RAP and ESMP per site for each of
Consultant
One: Availability of E&S studies for Number 0 0 0 3 6 9 annual CGI3 three mid-size hydropower sites
firms
mid-size hydropower projects
A CDM program of activity is a standardized
document that describes a set of a measures and/or
Intermediate Result indicator
Consultant policies leading to anthropogenic GHG emission
Two: CDM Program of activities Y/N N N N Y Y Y annual MECNT
firms reductions through a number of CDM Program of
developed
Activities which are the specific measures through
which emissions reductions are generated.
32
Annex 2: Detailed Project Description
DEMOCRATIC REPUBLIC OF CONGO
Inga 3 BC and Mid-Size Hydropower Development Technical Assistance Project
1. This annex consists of two parts. Firstly, it describes Inga 3 BC development. It then
presents the proposed technical assistance operation.
3. The Grand Inga scheme was first studied at the prefeasibility level in 1974. Although the
study looked at a staged development approach, the commissioning of the first units at Grand
Inga would require the construction of a large dam across the Congo. The costs of the scheme
were prohibitive. For this reason, the study proposed a preliminary phase before Grand Inga
would be built, called Inga 3 Tunnel.
4. Inga 3 Tunnel would capture water from the Congo waters in the vicinity of Inga 1 and
Inga 2 intake and carry it through large tunnels to a power station. There has been no consensus
on the viability of the Inga 3 Tunnel option given the high geological risk of constructing
extensive underground works in an area where no site investigation has been undertaken.
Moreover, the Inga 3 Tunnel did not optimize the Inga site as it would push back the start of the
Grand Inga project and the water flow used for Inga 3 Tunnel could generate more energy if used
at Grand Inga, because of the significant head differential between the two sites.
5. Despite these open questions, the GoDRC launched a selection process for a private
developer for the Inga 3 Tunnel project in October 2010. The selected private developer was to
develop, invest, construct, and operate the project with BHP Billiton as a minority partner and
main off-taker of the electricity generated. The bidding process thus envisaged a purely domestic
project.
7. The prefeasibility study proposed a phased approach to developing the Inga hydropower
potential, consisting of a number of developments over time. The first phase was identified as
Inga 3 Basse Chute (BC), consisting of a dam creating a reservoir in the Bundi valley fed by a
33
canal that draws water from the Congo river at Kianda, upstream of the Sikila island, and
transfers the water in the Bundi valley through a canal.
8. The next stage following the Inga 3 BC development would be the Inga 3 HC
development, involving the construction of a dam across the Congo River, the heightening of the
Bundi dam and the construction of spillways and saddle dams along the waterway. The head
would rise from 92-98 m to 127-152 m. The Inga 3 HC development would benefit from the
raising of the head and would not involve the installation of new units, as the initial units would
be designed to operate under two different head ranges. The heightened Bundi dam being an
integral part of the pool of infrastructures creating the Inga 3 HC reservoir, its ownership and
management should be controlled by the public sector from the outset.
9. Each subsequent project would represent an increment of 6 to 7,000 MW that could each
be built in less than 7 years with a decreasing economic cost from US$2.1 cents/kWh down to
less than US$1 cent/kWh allowing DRC to export electricity across the whole continent along
new electricity highways. Each project would be developed under PPP mechanisms with
manageable amounts of public and private financing requirements. Key donors agree that this is
a realistic approach for the Inga dream to become a reality 9.
10. The phased approach was adopted as the way forward at a workshop in October 2011 and
served as a basis for the feasibility study. The feasibility study was completed in the fall of 2012.
The official presentation took place in Kinshasa in September 2013. Official representatives
from South Africa, Zambia, Nigeria, South Sudan, and Egypt attended the presentation. The
scope of the feasibility study was to:
• analyze the projections of energy demand and supply in the DRC and the
main interested power pools;
• carry out a prefeasibility study of the Grand Inga hydroelectric scheme;
• collect the feedback on existing developments (Inga 1 and 2);
• analyze the proposed Inga 3 BC development;
• make further progress in environmental assessments;
• reflect on the institutional and organizational framework required to carry out
future development projects.
B. Inga 3 BC Development
11. The Inga 3 BC development will have a 4,800 MW installed capacity (and 4,000 MW
firm capacity). The development includes a 12 km open-air intake canal, a 100m high dam on the
Bundi River, and associated transmission lines to export 2,500 MW to South Africa and supply
the balance to the Katanga mining industry and other domestic demand through the national
utility SNEL. Total estimated project cost is US$11billion without financing costs. The Inga 3
BC development will not require the building of a dam across the Congo River.
12. The feasibility study included a preliminary environmental and social assessment which
concluded that the environmental and social negative impacts of the Inga 3 BC development
9
The staged development of the Inga Site is sometimes confusingly also referred to as “Grand Inga”.
34
were manageable and small relative to the amount of planned energy generation, due to the
limited surface area of the reservoir to be created on the Bundi River.
13. The feasibility study did not investigate the geological and geotechnical aspects of the
site. The Inga 3 BC development will require the construction of a canal and a dam in a complex
geotechnical environment. The continuous movements observed at Shongo and Inga 2 dams are
still being investigated and demonstrate the complexity of the geotechnical environment. It is
essential for this transformative project to start with the best possible level of information and
data to avoid subsequent implementation delays and undermining investors’ confidence in the
project. For this reason, the preparation of a Geological Baseline Report is required.
14. Sedimentation is an issue on the Inga 1 and Inga 2 schemes. Special attention will have to
be paid in the design of the Inga 3 BC development on the sediment management techniques to
be put in place in order to prevent sedimentation in the reservoir and in the canal and to flush
sediments during high flows.
15. Transmission lines are another major component of the project. The current concept plans
for a HVDC transmission line from the Inga site to Katanga and a HVAC transmission line
connecting the converting station in Katanga to the SAPP system. The extent and nature of the
extension/reinforcement of the SAPP system still need to be studied. The HVAC transmission
line will allow an easier dispatch of electricity along the way to South Africa and other SAPP
countries.
Project management
16. The GoDRC is setting up a ring-fenced development authority (Agence pour le
Développement et la Promotion d’Inga – ADEPI) to manage and monitor Inga development, and
to help mobilize private participation and public financing. The set-up of ADEPI will be
completed by the end of 2014. Until then, interim institutional arrangements have been set up to
continue the preparation of Inga-3 BC development, including the establishment of an Inter-
ministerial Commission for Inga Development chaired by the Prime Minister (Commission pour
le Développement du Site d’Inga - CODESI), an inter-ministerial technical committee (Comité de
Facilitation d’Inga - CFI), and a technical unit in the MRHE (Cellule technique Inga 3 - CGI3).
17. The Inga Development and Promotion Authority (ADEPI) will be responsible for the
implementation of the Inga 3 BC development and the subsequent hydropower developments at
the Inga site. The ADEPI will be the authority that awards concession contracts.
18. The ADEPI will be created by law as an autonomous agency that is not subordinate to a
sector ministry. It will employ high-level competitively recruited personnel. It will be run by a
Board of Directors whose members are distinguished individuals from the government, civil
society, and the private sector. Recognized firms and experts will periodically review the
Agency’s technical and financial performance. Review findings will be published. All members
of the Agency’s staff will be hired under short-term contracts that will be renewed depending on
performance reviews carried out by a recognized human resource firm.
35
Institutional structuring
19. The GoDRC has decided to use a Public Private Partnership model to realize the Inga 3
BC development. Given DRC’s overall country risk, there are limits in the mobilization of both
public and private financing. Public financing faces debt ceiling and concessional financing
limits, and both public and private financings will face financial and country risk constraints. The
main risk mitigation measures include the export of a considerable part of the generated power to
a creditworthy entity, probably to South Africa, as well as the contractual terms of the
concessions, and the guarantees which GoDRC will need to find to secure its obligations in the
frame of the concession agreement. The allocation of revenues to secure both public and private
financiers will need to be designed appropriately to reflect this.
20. A range of options for allocating the risks and respective roles of public and private
parties in the financing and O&M of hydropower and transmission line investments for the Inga
3 BC development were defined (see figure below).
Figure 4: Institutional structuring options for the Inga 3 BC development
Public Public
Intake, Canal,
2.6
Dam Private SPV
Private SPV
Private with minority
SPV shareholding by Private SPV
Power Station 3.6 GoDRC Private SPV
21. The GoDRC – in consultation with its advisors, donor agencies, and candidate private
developers – defined a number of criteria to select the prefered structuring option. An important
criterion was the protection of the sovereign rights over private and foreign interests in the
development of the whole Inga site (including during subsequent development stages of the site).
Common infrastructures to be used throughout the series of Inga hydropower developments
should therefore remain under DRC’s control, be it through ownership or as part of the
developers’ obligations in the concession agreement. Other criteria that were considered in the
selection of the structuring option include: (i) its financial feasibility, for both public and private
financing; (interface risks, especially the most critical one between the dam and the power plant;
(iii) impact on the proposed price per kWh for various offtakers; and (iv) the implementation
timeframe.
22. Following several working sessions organized with GoDRC, their advisors, and donors
interested in the project, the number of institutional structuring options was progressively
narrowed down to the preferred option. The retained option was the one recommended in
feasibility study as the preferred choice, essentially on the basis of the need to preserve DRC’s
strategic control over common infrastructures while finding a balance between public and private
financing (option 2). This preferred option could be adjusted based on studies results and market
testing.
36
23. In this option, the intake, canal and Bundi dam are developed and financed by a public
entity while the power station and the transmission lines in DRC are developed, designed,
financed, constructed and operated by a single Special Purpose Vehicle (SPV).
24. Common infrastructure will be publicly owned and financed. The detailed design and the
bidding documents for the selection of the EPC contractor(s) for the construction of the common
infrastructures will be handled by the public sector.
25. The developer in charge of the construction of the power station and the transmission
lines only, will perform the detailed design of these facilities under the review of the GoDRC
and prepare the construction of the power plant and the transmission lines. The GoDRC and
main off-takers could be minority shareholders in this SPV.
26. Several measures are under consideration to reduce interface risks. One possibility would
be to entrust the overall engineering and construction supervision to the private SPV under a
project management contract (“Contrat de maîtrise d’oeuvre”). Another option is to include the
O&M for the common infrastructures (after construction) to the private SPV as part of its
concession contract with an option for early termination of the O&M contract for the common
infrastructures in case the Bundi dam is heightened before the end of the concession period.
The process till financial closure
27. As outlined above, the GoDRC – in cooperation with BHP Billiton, launched an
international call for Expressions of Interest for potential developers/investors in 2010 for the
Inga 3 Tunnel project. The consortium Orrick-Rambaud-Martel/Lazard/Tractebel Engineering
was engaged by the GoDRC to advise on the legal, technical, and financial aspects of the project,
in particular those relating to the selection of a private developer and the implementation of the
various steps leading to the creation and implementation of an SPV under Congolese law.
28. Six consortia were prequalified in June 2011. Three consortia from China, Korea/Canada
and Spain presented proposals on October 15, 2011 10. Two out of three prequalified consortia
have paid the US$1million deposit requested by the GoDRC to cover the remuneration of its
advisors. Selection of the successful bidder was to be made on the basis of experience, financial
capability and proposed strategy for project structuring and financing. However, as the feasibility
study financed by the AfDB progressed, it became clear that the nature of the project had to
change from the tunnel option to the current Inga 3 BC design. It also became clear that the
information and selection criteria contained in the original Memorandum of Information
underlying the process were not sufficient to allow a transparent and objective selection, leading
to a balanced partnership in terms of allocation of benefits and risks between the DRC and the
selected consortium. The selection process was put on hold.
29. The GoDRC published in February 2012 an addendum to the project information
memorandum for the potential developers/investors and expected the selection process to
continue, under a form of competitive dialogue involving the three prequalified consortia, on the
10
One of the consortia includes a firm which is currently under a 10 year cross-debarment sanction by the WBG,
another one includes a firm which has been temporarily suspended.
37
basis of more detailed information. In February 2012, BHP Billiton announced their withdrawal
from the project. This has slowed the process but has not stopped it thanks to the fast pace of
demand growth expected in the DRC and in neighboring countries.
30. The Prime Minister confirmed in January 2013 the intention of his government to
continue adapting the ongoing process of selecting a private developer. The DFIs have
communicated clearly that the ongoing selection process does not conform to the procurement
guidelines and that DFIs public sector windows will not be able to finance the government equity
in the SPV formed by the selected developer. They also have indicated that the selection of the
developer should be on the basis of economy and efficiency criteria in order to allow access to
DFI guarantees and/or private sector window financing.
31. The process to financial closing will consist of several phases. Firstly, the structuring
option will be validated through market testing and if necessary adjusted. Then a developer will
be selected. The selected developer will sign an exclusive collaboration contract with the
GoDRC by mid-2015. A period of exclusive collaboration with the selected developer will focus
on the detailed design of the powerhouse and transmission line, preparation of the construction,
preparation and negotiation of the concession agreement, preparation and negotiation of power
purchase agreements, securing of financing, and the establishment of the SPV. The exclusive
collaboration period will conclude with the award of a concession for the power station and
transmission lines in DRC to the private SPV by the end of 2016. The private SPV will probably
include minority shareholding by GoDRC, RSA and/or mining companies.
32. The GoDRC and its strategic advisors are developing the RFP for the selection of a
private developer which is to be published early 2015. The RFP will include a reference project,
the results of the geological baseline survey, and the fiscal regime applicable. In the case of data
gaps, the RFP will also include formula for a transparent adjustment of the bid price once data
will be available. The RFP will provide an opportunity to the three prequalified consortia to
reconfigure, including integrating new partners to allow the developer to adapt to changes in the
project design since prequalification. No new consortia will be pre-qualified, which means that,
in order to compete, firms will have to become members of one of the already pre-qualified
consortia.
33. In parallel with the selection of the developer, the GoDRC will prepare the detailed
design of the common infrastructures, the preparation of the technical specifications and bidding
documents, and conduct the selection of one or more Engineering Procurement and Construction
contractor(s) for the construction of the facilities. It is expected that the EPC contracts for the
common infrastructures will be signed at the same time the concession is awarded to the private
developer.
34. A timeline of the process to financial closure is provided in the table below 11.
11
In May 2013, the GoDRC announced its objective to have a groundbreaking ceremony for Inga 3 BC in October
2015 (during the 2016 presidential election campaign). Start of works will not be possible under any of the defined
alternative structuring options and development processes by October 2015. In the following timeline, the
commissioning of the first unit is expected by mid-2021, i.e. six months later than the date of commissioning stated
in the policy letter (end of 2020) - See annex 7.
38
39
Annex 2.2: Detailed Technical Assistance Project Description
35. The project will finance a flexible suite of technical assistance to support the GoDRC in
the sustainable development of Inga 3 BC and several mid-size hydropower sites using a public-
private partnership approach. TA activities include the provision of strategic advice and expertise
to the GoDRC, complementary studies, capacity building, and institutional strengthening. All
these activities will create the basic conditions to attract private financing, select private
developers, mobilize public funding and negotiate PPAs.
36. Activities will be coordinated with support provided by other development partners. The
proposed operation – with parallel co-financing from IDA and AfDB - will support the GoDRC
to develop the Inga BC development on its territory. The GoDRC will benefit from a team that
brings together expertise from across the World Bank Group. The preparation of the
development of the transmission lines in the SAPP countries will be financed by DBSA (outside
of the scope of this operation).
Project Components
37. The TA project consists of two components: (a) Inga 3 BC development support, and (b)
mid-size hydropower development support.
41. Technical studies: Various studies have been identified in the feasibility study. These
studies are needed in order to refine the knowledge of the ground conditions in the canal and at
the dam site, approach more precisely the hydraulic and sediments issues linked to the water
intake on the Congo River, and provide the input data necessary to complete the reference
design. Studies to be financed include:
• Geological & geotechnical investigations on site to confirm the foundation condition for the
Bundi dam. A full geological and geotechnical survey campaign was recommended by the
consultant and will cover the entire area of the Bundi Dam and Inga 3 BC power plant. This
new data will confirm the geological and geotechnical characteristics of the green schistose
40
rock and improve the design of the Inga 3 BC water intake, canal, dam, and power plant.
• Study of the sedimentation in the canal. Measurement is critical in the analysis and
understanding of sediment phenomena. Installation of a continuous suspended particles
measuring device to gather information on the nature of the sediments and their
concentration has been recommended. A continuous measuring device for the concentration
and for the particle size distribution of the sediments will be installed, coupled with regular
sampling (physical and chemical analysis).
• Study of the Congo River water intake. This Numerical and Scale model will be used to
confirm the design and maximum capacities of the Inga 3 BC canal and water intake on the
Congo River. Additional bathymetric measurements and river velocity profile measurements
will be conducted in the area of the future water intake for at least two significantly different
river flows. These measurements will help to calibrate the models. The model will also serve
as the basis for the design of an intake that limits the entry of sand into the Bundi Valley and
for the two deflectors to be constructed in front of the Inga 3 BC water intake. These
deflectors will serve to accelerate the speeds, put the sediment back into suspension and
thereby facilitate their evacuation via the power plant.
• Study of the impact on the operation of Inga 1 and Inga 2, especially during the low flows
on the river. The water intake for the Inga 3 BC development will have an impact on the
water level in the Congo River that may affect the ability of Inga 1 and Inga 2 intake to
operate during the low flow season. It will be necessary to refine the quantification of this
impact, not only in terms of hydraulic regime but also in terms of the potential generation
loss for Inga 1 and Inga 2, in order to decide between: (i) the implementation of a hydraulic
release from the Inga 3 BC canal to Inga 1 and Inga 2, and (ii) the setting up of an energy or
financial compensation mechanism between the two entities.
• Study of the transmission line Kolwezi to the border with Zambia. This is an update of the
feasibility study as the new design has been changed from the original design that planned
for a HVDC transmission line from Kolwezi to Witkop (RSA).
• Development of the reference project. This activity will refine the feasibility design based
upon the results of the complementary studies and define a project description that will serve
as a reference for the selection of the developer for the power house and the transmission line
42. Social and Environmental studies. These studies will review, update and complement
the ESIA prepared as part of the feasibility study. It will also include the preparation of baseline
data, a cultural resources management framework, and cover the ESIA/RAP T-lines DRC and
the issues linked to historically pending environmental and social issues related to Inga 1 and
Inga 2. In addition, the component will finance a Strategic Environmental Assessment that will
explore the strategic environmental and social linkages with the proposed investments and in
particular, the climate change dimension that may affect the viability of the said investments.
43. Panels of Experts (Environmental/Social and Dam Safety). In accordance with OP 4.37,
two separate panels of experts will be recruited for the duration of the TA. The Environmental
and Social Experts panel will have two members (one environmental and one social expert). The
Dam Safety panel will have five members (one dam specialist, one geologist, one hydrologist,
one expert in sedimentology and one expert in electro mechanics). A single Dam Safety panel for
41
Inga 1 and Inga 2 (for which a five-member panel has been operational since 2011) and for the
Inga 3 BC development is being considered.
44. Economic studies. A number of sector studies will be financed to ensure that the
additional generation capacity of the Inga 3 BC development translates into better services for
households and small and medium enterprises. The studies will include:
• Study of the productive demand in the Bas Congo, in order to analyze the possibility of
developing electricity consumptive activities in the vicinity of Inga.
• Tariff studies, including (i) in-depth analysis of the integrated resource plan for electricity of
the RSA and identification of alternative generation options to the Inga 3 BC development
for RSA; (ii) study of electricity market prices for generation in RSA and in particular of
alternative power generation options (public and private projects - IPPs); and (iii) study of
the rates paid by mining and domestic consumers for their supply of energy (whether
connected to the grid or not).
• Master plan / demand characterization for the Inga 3 BC development. This activity will
analyze the projected growth of power generation and national interconnected network
(Réseau National Interconnectée) and simulate the existing network and growth prospects.
The plan will also determine the energy expected from Inga in Katanga and in Bas-Congo /
Grand Kinshasa.
42
• Support to the preparation and negotiation of PPAs and concession contract. Support
will be provided to GoDRC in order to monitor negotiations of PPAs between the private
SPV and the off-takers and ensure its compliance with the terms of the bilateral treaty on
Inga. Advisory services will be focused on the structuring of PPAs and on the preparation
and negotiation of the concession agreement, including the design and negotiation of risk
sharing arrangements relating to, inter alia, tariffs, royalties and taxes regime and public
shareholding.
• Detailed design, bidding documents, assistance for procurement, financing
arrangements. The TA will finance these activities for the common infrastructures. The
corresponding studies for the power plant and the transmission lines in DRC will likely be
borne by the private developer. The corresponding studies for the transmission lines in the
SAPP countries will be borne by the Republic of South Africa or other financiers (outside the
scope of this operation).
47. This subcomponent will also finance the design and establishment of the public
management structure to supervise the construction of the common infrastructures.
48. This component will include three subcomponents: Mid-size hydro development, carbon
finance market development, and institutional strengthening of CGI3.
12
The following positions have been identified: the Director, a Concession Specialist, a Procurement Specialist, a
Financial Specialist, a Communication Specialist, an E&S Specialist and a Hydropower Engineer.
43
SUB-COMPONENT B1: Mid-size hydro development
49. The sub-component will finance analysis of the institutional, regulatory, and legal
framework for the development of mid-size hydro projects and the preparation of the additional
legal texts and regulations to accompany the electricity law to regulate participation of the
private sector in the development of mid-size hydropower projects.
50. This sub-component will support increasing the GoDRC’s limited technical and
economic information on mid-size hydropower sites. Producing appropriate technical and
economic information on selected sites will improve the prospects of mobilizing public and
private financing for the development of these sites.
44
54. The development of a CDM Program of Activities would facilitate the Government’s
registration of a CDM Program which would allow public or private project developers of
individual hydropower sites to join the program and obtain carbon benefits. Carbon finance
enhances the competitiveness and attractiveness of hydropower projects. A programmatic
approach would facilitate the joining of several hydropower developments under a single carbon
finance operation. The program will be eligible for generating compliance grade emission
reductions in the European Market as DRC is classified as a Least Developed Country. Some of
the hydropower developments could also potentially fit into the pipeline of Ci-Dev (Carbon
Initiative for Development), a new World Bank carbon instrument.
SUB-COMPONENT B3: Institutional strengthening of CGI3
55. CGI3 is the operational entity in charge of the development of Inga 3 BC until the
effective commissioning of ADEPI. In parallel, CGI3 will manage the activities linked to the
development of mid-size hydro projects. Eventually, after the creation of ADEPI, CGI3 will
remain with the mandate of implementing the studies for mid-size and rural electrification
projects.
This activity covers the operation of the CGI3 for the development of mid-size hydropower
projects. It includes the non-civil servant personnel costs, the office equipment, the operational
fee, the counselors, the organization of workshops and communication.
45
Annex 3: Implementation Arrangements
DEMOCRATIC REPUBLIC OF CONGO
Inga 3 BC and Mid-Size Hydropower Development Technical Assistance Project
3. The CODESI will meet at least twice per year, in addition to convening in extraordinary
sessions at the discretion of the Chair. It will be regularly informed on project progress. The
main tools for reporting to the CODESI will be quarterly financial and narrative reports by the
project implementation unit with help from their advisors.
4. The Inga 3 BC and mid-size hydropower development TA project will have two
executing agencies – the MRHE and ADEPI. During the first phase of the project, MRHE will
implement the entire project. Once the ADEPI is established, it will take over as an
implementing agency for component A (Inga 3 BC Development Support) while Component B
(Mid-Size Hydropower Development Support) will continue to be implemented by MRHE for
the entire project period.
5. Given the lack of technical and managerial capacity in MRHE, the use of a small Project
Implementation Unit is deemed appropriate. CGI3 is a technical cell in the MRHE which has
been set up in July 2013 to conduct the preparation of the TA project until the establishment of
ADEPI. During the first year of project implementation, CGI3 will be the project’s sole
implementing agency. CGI3 will: (i) coordinate project activities; (ii) carry out financial
management and procurement; (iii) prepare annual work plans and budgets for submission to the
46
CODESI and IDA; (iv) liaise with various government departments, (v) liaise with donors; (vi)
ensure M&E and reporting, and (vii) monitor and ensure safeguards compliance.
7. CGI3 will be staffed by a small number of specialists, some of whom will be recruited
using donor financing. At present, CGI3 staffs include a procurement specialist, a financial
management specialist and an environmental specialist. These fiduciary specialists have been
seconded from the PMEDE and SAPMP project implementation units (CDP-SNEL and UGES-
SNEL). The fiduciary staffs are experienced in handling IDA-financed operations and have
received training on all fiduciary and control systems and responsibilities, including the
identification and mitigation of integrity risks. Seven additional specialists will be contracted
competitively in CGI3 and be financed through the TA project (hydropower engineer,
environmental specialist, social specialist, communication specialist, procurement specialist,
financial management specialist, and accountant / treasurer). The recruitment of procurement and
financial management specialists is an effectiveness condition.
8. At the end of 2014, the ADEPI will take over the implementation responsibility of
component A from CGI3. The ADEPI will be created by law as an autonomous entity reporting
to the Prime Minister’s office with a Board of Directors that represents various Inga development
stakeholders. The ADEPI Board of Directors will have a larger representativeness than CODESI,
which is limited to Government representatives. ADEPI is expected to start its operation before
the end of 2014 with staffing gradually building up from approximately 15 staff to about 30 staff.
In addition to staff, ADEPI will benefit from external strategic advisers. ADEPI annual budget
would be in the range of US$2-3 million, including external support. All ADEPI staff, including
its director, will be recruited competitively with the help of a specialized recruitment firm based
on TORs and qualification acceptable to IDA. All contracts will be renewable based on
performance assessments carried out by a specialized firm.
9. After ADEPI has been created, the project implementation unit in MRHE (CGI3) will
focus on the implementation of component B. Staff recruited during the first phase will be able
to apply for positions created in ADEPI or stay in CGI3 and focus on component B subject to a
satisfactory assessment of their performance during the first phase.
47
Figure 5: Inga 3 BC and Midsize Hydropower Development TA’s Institutional Arrangements
ADEPI's Board of
CODESI Directors
CFI
Components A&B
10. Several ministries play a regulatory, supervisory, or supporting role for the project. These
include: The Office of the Prime Minister which will be chairing CODESI, the Ministry of
Finance who will be part of CODESI and will intervene in the design of the fiscal regime for the
Inga 3 BC development, the Ministry of Planning and the Ministry of Economy who will be part
of CODESI and will intervene in the choice of the three mid-size hydro projects, the Ministry of
Environment who will be part of CODESI and oversee the preparation of the E&S studies and
their implementation and last but not least the Ministry of Hydraulic Resources and Electricity
(MRHE) who will be part of CODESI and will host CGI3.
11. A PIM is being prepared by international consultants. The PIM will provide guidance on
roles and responsibilities as well as on the technical, administrative, financial and accounting
procedures, procurement arrangements, and the safeguard procedures. Finalization of the PIM is
a condition of effectiveness. Then during implementation, carrying out the project in accordance
to the PIM and the E&S roadmap is a covenant.
13. The Country Financial Accountability Assessment, the Public Expenditures Review , and
Public Expenditure and Financial Accountability (PEFA 2008 and 2012 have shown an
unsatisfactory economic and financial control environment including weak budgeting
48
preparation and control, financial reporting, external audit and human resources. In-depth
structural reforms are consequently required in the areas of economic governance, public
expenditure management, financial sector and public enterprises to strengthen capacity in the
public administration.
14. The overall country fiduciary risk is rated High. The Government of DRC, with the
support of the donor community, has prepared an Economic Governance Matrix. Progress on the
Matrix is discussed every month with the WB. Actions from the Matrix that have been
implemented include series of Public Financial Management (PFM) reforms in budget
preparation and execution, adhesion to Treasury forecasts, preparation of regular budget
execution reports, and simplification of the national budget classification system. The first
critical step of these PFM reforms is the adoption in July 2011 of a new PFM organic Law and
the adoption of a new Procurement Law in December 2008. Additional decrees are being
finalized to further clarify the organic Law.
15. The 2012 PEFA took stock of the areas of progress and revised the existing PFM strategy
plan accordingly. This will pave the way for a new PFM Technical Assistance operation. In that
vein, an assessment of the use of the country national PFM systems has been undertaken in April
2013 with the aim to identify areas in which these systems could be relied upon for the
implementation of Bank-financed projects.
16. The Bank’s principal concern is to ensure that project funds are used economically and
efficiently for the intended purpose. The risk assessment (see table below) includes: (i) the risk
associated with the project as a whole (inherent risk), and (ii) the risk linked to a weak control
environment of the project implementation (control risk).
49
procedures including adequate
fiduciary requirements. Training
sessions will also be provided.
Project level H Use of highly qualified and S
The resources of the project experienced FM team and robust
may not reach all FM arrangements.
beneficiaries and used for the
intended purposes.
CONTROL RISK H S
Budgeting S Annual work plan and budget S
Delays and weak budgetary prepared each year. The PIM will
preparation, execution and define the arrangements for
control leading to budget budgeting and budgetary control.
overruns and delay in the
implementation of the project
activities.
Accounting S (i) Install accounting software and M
(i) Lack of reliable customized to generate the financial
accounting system and (ii) reports of the project.
Weak knowledge of the
financial management (ii) Implement training sessions on
procedures of IDA. agreed accounting procedures.
Internal Controls and H S
Internal Audit
Specific aspects of the new Preparation of the project’s FM
project may not be Procedures in the PIM with
reflected in the FM appropriate arrangements for
procedures and internal controls.
procurement internal controls.
Funds Flow H Organize frequent controls in order S
(i) Risk of misappropriation to help to prevent and mitigate the
of funds, and use for non- risk of diversion of funds.
eligible purposes (ii) Weak
capacity in the disbursement Ensure monthly submission of the
procedures of IDA could withdrawal application.
affect the disbursement rate.
Financial Reporting M M
Delay and difficulties in the (i) Purchase of adequate
submission of acceptable computerized accounting system.
Interim Financial Reports
(IFRs) to IDA due to weak
capacity of the FM team.
External Auditing M Recruit independent external auditor M
Scope of the audit may not based on agreed ToRs developed in
cover key issues; poor line with International Accounting
performance of the external Standards.
auditor; or delays in
submission of audit reports
Fraud & Corruption H PIM will describe specific safety H
Possibility of circumventing mechanisms that enable individual
the internal control system persons and NGOs to denounce
with colluding practices as abuses or irregularities will be
bribes, abuse of prepared in addition to the robust
administrative positions, mis- FM arrangements designed to
50
procurement. mitigate the fiduciary risks.
The TOR of the Internal Auditor
will comprise a specific chapter on
corruption auditing.
Overall FM risk S S
Financial Management Action Plan to reinforce the control environment for CGI3
Issue Remedial action recommended Responsible Completion
body
18. Staffing and Training: CGI3 and ADEPI staffing will be adequate and commensurate
with the extent of the activities under the project, including maintaining accounting records
relating to project financed transactions and preparation of the project’s financial reports. For
both implementing entities, the FM function will be carried out by a team composed of (i) a
qualified and experienced Financial Manager, in charge of the supervision of the overall FM
activities of the project; (ii) an experienced Accountant; and (iii) a Treasurer. The team will have
the overall FM responsibility over, budgeting, accounting, reporting, disbursement, internal
control and auditing. CGI3 and ADEPI’s accounting staff will have their capacity reinforced
over the project implementation by the rolling out of the training plan, which includes among
others, training on IDA disbursement procedures, training on OHADA accounting principles and
its implication for a donor-financed operation, and training on IDA financial reporting
arrangements.
19. Budgeting: The Project will prepare an annual work plan and budget for implementing
project activities taking into account its objectives. The work plan and budgets will identify the
activities to be undertaken and the role of respective parties in implementation. Annual work
plans and the budgets will be consolidated into a single document with the support of the FM
team, which will be submitted to CODESI during the first year and then to CFI and ADEPI’s
51
board of Directors for approval, and thereafter to IDA for no objection no later than November
30 of each year proceeding the year the work plan should be implemented.
20. Accounting Policies and Procedures: The accounting systems and policies as well as
the administrative and financial procedures will be documented in the PIM. It will be used by (i)
the project staff as a reference manual, (ii) IDA to assess the acceptability of the project
accounting, reporting, and control systems, and (iii) the auditors to assess project accounting
systems and controls and to design specific project audit procedures. The PIM and accounting
software should facilitate the project implementation and support the project’s requests for
funding and meet its reporting obligations to fund providers. The PIM will include the following:
(i) segregation of duties, (ii) physical control of assets, (iii) authorization and approval, (iv) clear
channels of command, (v) arithmetic and accounting accuracy, (vi) integrity and performance of
staff at all levels, (vii) supervision. Specific procedures will be documented for each significant
accounting function. They will be written to depict document and transaction flows and will
cover the flow of funds, record keeping and maintenance, the chart of accounts, formats of
records and books of account, authorization procedures for transactions, planning and budgeting,
financial reports (including formats, linkages with chart of accounts and procedures for
reviewing them).
21. Internal Control and Internal Auditing: The project entities will have an adequate
number and mix of skilled and experienced staff while the internal control system will ensure the
conduct of an orderly and efficient payment and procurement process, and proper recording and
safeguarding of assets and resources. The internal control will be described in the PIM with
appropriate segregation of duties and responsibilities. Internal audit functions will be carried out
by an international consultant in Internal Audit recruited on a competitive basis. The internal
auditors will report directly to their Coordinators and Steering Committees. They will undertake
periodic assessments on the strengths and weaknesses of the internal control system at all levels.
All control deficiencies or circumvented practices identified will be communicated in a timely
manner to the senior management of CGI3 and ADEPI for immediate corrective action as
appropriate. Deficiencies will also be communicated to the Bank.
22. IDA will supervise the design of arrangement for internal control during preparation of
the project’s Administrative, Accounting and Financial procedures and will closely monitor
financial management activities to identify in advance potential delays in the preparation of the
financial and audit reports and undertake corrective measures.
23. Designated account: Two new Designated Accounts (DAs), one for each component of
the project, will be opened in a commercial bank on terms and conditions acceptable to IDA
under the fiduciary responsibility of CGI3 and ADEPI. The ceiling has been set to USD 1.5
million for the first designated account (“DA-A”) and to USD 0.850 million for the second
account (“DA-B”). These DAs will pay project expenditures eligible for IDA financing.
24. The two Designated Accounts will be managed by CGI3, the project implementation unit
in MNRE, during the first year of project implementation. After ADEPI (“Agence pour le
Development d’Inga”) has been created for the implementation of component A, the
responsibility for managing DA-A will be transferred to ADEPI while CGI3 will continue to
52
manage component B and DA-B. The Authorized Signatory Letter will be revised to reflect
responsibilities for the withdrawal of financing proceeds under component A and component B.
Disbursement arrangements
IDA
Transactions based
Direct payment
Commercial bank
2 Designated Accounts (CGI3 and ADEPI)
Legend:
Transfers of funds
Flow of documents (invoices, good receipt notes, purchase order, contract)
Payment to suppliers
26. Disbursement of funds to the stakeholders: The Project will make disbursements to
service providers and suppliers of goods and services in accordance with the payment modalities,
as specified in the respective contracts/conventions. In addition to these supporting documents,
the Project will consider the findings of the internal audit unit while approving the payments.
The implementing agencies, with the support of their internal audit units, will reserve the right to
53
verify the expenditures ex-post, and refunds might be requested for non-respect of contractual
clauses. Misappropriated activities could result in the suspension of financing for a given entity.
27. Disbursement of Funds to others Service Providers and Suppliers: The FM teams will
make disbursements to service providers, contractors and suppliers of goods and services for
specified activities. Payments will be made based on terms and conditions of each contract.
28. Disbursements by category: The grant will be disbursed 100 percent of eligible
expenditures (inclusive of taxes) in line with Country Financing Parameters (CFP) for DRC. The
proceeds of the grant have been allocated as follows:
29. Financial Reporting and Monitoring: Financial reports will provide quality and timely
information on Project performance to Project management, and relevant stakeholders. Formats
of the various periodic IFRs to be generated from the financial management system have been
developed using the World Bank’s Financial Management Practices in WB-financed Investment
Operations. The quarterly IFR includes (i) the statements of sources and used funds, and
utilization of funds per category, (ii) the updated of the procurement plan, (iii) the physical
progress, (iv) expenditure types and implementing agent, showing comparisons with budgets;
(iv) Designated Account activity statements and explanation notes to the IFR; (v) and the
summary of missions of internal audit as well as implementation status of the recommendations
of internal or external audit and supervision missions. The IFR will be prepared and submitted to
IDA, 45 days after the end of each quarter. In compliance with International Accounting
Standards and IDA requirements, the Project will produce annual financial statements. These
include: (i) a Balance Sheet that shows Assets and Liabilities; (ii) a Statement of Sources and
Uses of Funds showing all the sources of Project funds, expenditures analyzed by Project
component and category expenditures (iii) a Designated Account Activity Statement; (iv) an
Implementation Report containing a narrative summary of the implementation progress of the
Project; (v) a Summary of Withdrawals using Statement of Expenditures transactions-based
disbursement), listing individual withdrawal applications by reference number, date and amount;
and (vi) Notes related to significant accounting policies and accounting standards adopted by
management and underlying the preparation of financial statements. The financial statements
will be submitted for audit at the end of each year or other periods to be stated.
13
As stated in the financing agreement.
54
30. External Auditing: The accounts of the Project will be audited on annual basis by an
independent auditor recruited under ToRs acceptable to IDA. The external audit reports will be
submitted to IDA within six months after the end of each financial year. The project financial
statements and internal control system will be subject to external annual audit by an independent
external auditor which will be recruited on ToRs acceptable to IDA. The external auditor will
give an opinion on the annual financial statements in accordance with auditing standards of
IFAC. In addition to audit reports, external auditor will also produce a management letter on
internal control to improve the accounting controls and compliance with financial covenants
under the financing agreement. The project will be required to submit, no later than June 30 of
each fiscal year, the annual audited financial statements. In line with the new access to
information policy, the project will comply with the disclosure policy of the Bank of audit
reports (for instance making available to the public without delay after receipt of all reports final
financial audit, including audit reports qualified) and place the information on its official website
within one month after acceptance of final report by IDA.
B. Procurement
General
31. Procurement for the project will be carried out in accordance with the World Bank’s
“Guidelines: Procurement under IBRD Loans and IDA Credits “dated January 2011
(Procurement Guidelines); and “Guidelines: Selection and Employment of Consultants by World
Bank Borrowers” dated January 2011 (Consultant Guidelines) and the provision stipulated in
Financing Agreement. The various procurement actions under different expenditure categories
are described in general below. For each contract to be financed under the Financing Agreement,
the various procurement or consultant selection method, the need for pre-qualification, estimated
costs, prior review requirements, and time frame have been agreed between the borrower and the
Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as
required to reflect the actual project implementation needs and improvements in institutional
capacity. The implementing entities, as well as contractors, suppliers and consultants will
observe the highest standard of ethics during procurement and execution of contracts financed
under this project. “Guidelines on Preventing and Combating Fraud and Corruption in Projects
Financed by IBRD Loans and IDA and Grants” dated October 15, 2006 (the Anti-Corruption
Guidelines) shall apply to the project.
32. For all contracts which are not advertised internationally, the Bank may authorize the use
of the national institutions and regulations that comprise the law including its texts of
application, the institutions set up for the control and regulation and the institutions responsible
for procurement activities implementation. The national competitive bidding procedures
currently in force in the DRC deviate slightly from the World Bank Procurement Guidelines
National Competitive Bidding (NCB) procedures for procurement of works, goods and services
(other than consultants services). They have been already reviewed and appropriate
modifications have been proposed to assure economy, efficiency, transparency, and broad
consistency with the provisions included in Section I and paragraphs 3.3 and 3.4 of the Bank
Procurement Guidelines.
55
Requirements for National Competitive Bidding
33. National Competitive Bidding may be used subject to using the open procedure (“appel
d’offres ouvert”) set forth in the Recipient’s Public Procurement Law No 10/010 dated April 27,
2010 (the “PPL”) and the Manual of Procedures of the PPL as per Recipient’s Decree No 10/22
dated June 2, 2010 (the “Manual of Procedures”); provided however that such procedure shall be
subject to the provisions of Section I and Paragraphs 3.3 and 3.4 of Section III of the
Procurement Guidelines and the additional following modifications:
a) Standard Bidding Documents: All standard bidding documents to be used for the Project
under NCB shall be found acceptable to the World Bank before their use during the
implementation of Project;
b) Eligibility: Eligibility of bidders and acceptability of their goods and services shall not be
based on their nationality and/or their origin; and association with a national firm shall not be
a condition for participation in a bidding process;
d) Criteria for Qualification of Bidders: Qualification criteria shall only concern the bidder’s
capability and resources to perform the contract taking into account objective and measurable
factors. Such criteria for qualification of bidders shall be clearly specified in the bidding
documents;
e) Bid Evaluation and Contract Award: A contract shall be awarded to the substantially
responsive and lowest evaluated bidder provided that such bidder meets the qualification
criteria specified in the bidding documents. No scoring system shall be allowed for the
evaluation of bids, and no “blanket” limitation to the number of lots which can be awarded to
a bidder shall apply. The criteria for bid evaluation and the contract award conditions shall be
clearly specified in the bidding documents;
h) Fraud and Corruption: In accordance with the Procurement Guidelines, each bidding
document and contract shall include provisions stating the World Bank’s policy to sanction
firms or individuals found to have engaged in fraud and corruption as set forth in the
Procurement Guidelines;
56
i) Inspection and Audit Rights: In accordance with the Procurement Guidelines, each bidding
document and contract shall include provisions stating the World Bank’s policy with respect
to inspection and audit of accounts, records and other documents relating to the bid
submission and contract performance;
k) Modifications of a Signed Contract: Any change in the contract amount which, singly or
combined with all previous changes, increases the original contract amount by 15% (fifteen
percent) or more must be done through an amendment to the signed contract instead of
signing a new contract.
34. Procurement of Goods. Goods procured under this project will include office
equipment, vehicles and other equipment for the implementing entities, CGI3 and ADEPI.
Procurement will be done under International Competitive Bidding (ICB) or NCB using the
Bank’s Standard Bidding Documents for all ICB and National Standard Bidding, or Documents
agreed with or satisfactory to the Bank. Small value goods may be procured under shopping
procedures. Direct contracting may be used where necessary if agreed in the procurement plan
in accordance with the provisions of paragraph 3.7 to 3.8 of the Procurement Guidelines.
36. Single Source Selection (SSS) may be employed with prior approval of the Bank and will
be in accordance with paragraphs 3.8 to 3.11 of the Consultant Guidelines. All services of
Individual Consultants (IC) will be procured under contracts in accordance with the provisions of
paragraphs 5.1 to 5.6 of the Guidelines.
37. Operating Costs: Operating costs shall consist of operations and maintenance costs for
vehicles, office supplies, communication charges, equipment, utility charges, travel expenses, per
diem and travels costs, office rental, training costs, workshops and seminar and associated costs,
among others. Operating costs will not include salaries of civil servants.
38. Training and Workshops: Training and workshops will be based on capacity needs
assessment. Detailed training plans and workshops activities will be developed during project
57
implementation, and included in the annual work plan and budget for Bank’s review and
approval.
Implementation arrangements for procurement and assessment of the agencies capacity to
implement procurement
39. Guiding principles of the implementation of the procurement: Government has decided to
mainstream the implementation of the project into the existing entities and structures such as line
ministries. Implementation of the project will be framed by the following principles: (i)
responsibility and accountability; (ii) equity and (iii) performance-based agreements. An
assessment of the capacity of the ADEPI to conduct procurement activities under the TA project
will be conducted after it is fully establishment. The assessments will review the organizational
structure for implementing the project, functions, staff skills and experiences, adequacy for
implementing the project, and the interaction between the project’s staff responsible for
procurement and the other government’s relevant entities for administration and finance.
40. The overall unmitigated risk for procurement is high. Proposed corrective measures to
mitigate the risk are summarized in the following table and will be updated and complemented as
necessary at time of CGI3’s capacity assessment.
Procurement Risk Mitigation
Action Plan for Strengthening Procurement Capacity
Procurement Plan
41. The borrower has developed a Procurement Plan for the first 18 months of the project
implementation which provides the basis for the procurement methods. This plan has been
agreed between the borrower and the Bank during negotiations. It will be disclosed in the
project’s database and on the Bank’s external website. The Procurement Plan will be updated
annually or as required to reflect the actual project implementation needs and improvements in
institutional capacity.
58
Table 2: Simplified Procurement Plan
Contract
Procurement Contract Estimated
# Description of the assignment completio
category signing amount
n date
Component A : Inga 3 BC development support 47.5
Component A1 : Technical study and E&S studies 12.5
1 Geological & geotechnical investigations Services June-14 May-15 3.0
Inga 1 and Inga 2 historically unresolved issues and RAP Camp
2 Services Feb-14 Jan-15 1.4
Kinshasa
Strategic Environmental Assessment, Cultural resources
3 management framework, Indigenous People Planning Services Feb-14 Jan-15 2.4
Framework
ESIA/RAP Inga 3 BC hydropower complex, including the
4 Services June-14 June-15 1.4
collection of E&S baseline data
5 ESIA/RAP T-lines in DRC Services Sept-14 Feb-15 1.0
6 Panel of Experts (Environmental/Social) Services Apr-14 Mar-18 1.3
7 Panel of Experts (Dam safety) Services Apr-14 Mar-18 2.0
Component A2 : Advices and procurement support 19.0
Support to the preparation of the law on Inga (incl. study on rent
8 Services Feb-14 Aug-16 4.0
allocation) and to the preparation and negotiation of PPAs
Detailed design, bidding documents, assistance for
9 procurement, financing arrangements for common Services Oct-14 Jul-16 15.0
infrastructure
Component A3: Institutional strengthening to ADEPI 16.0
10 Study on ADEPI structuring and staff recruitment support Services Feb-14 Aug-14 2.0
11 Recruitment of individual consultants for ADEPI Services Jan-15 Dec-17 7.2
12 Office equipment for ADEPI Goods Jan-15 Feb-15 0.6
13 Operational costs for ADEPI Operating costs Jan-15 Dec-18 2.2
non-consulting
14 Organization of workshops and trainings for ADEPI Jan-15 Dec-16 0.5
services
15 Recruitment of a communication company Services Jan-15 Dec-16 1.5
Recruitment of consultants to structure and implement the
16 public management arrangements for the Common Services Jan-16 Nov-18 2.0
Infrastructures
Component B : Mid-size hydropower development support 25.6
Component B1 : Mid-size hydro 19.1
Analysis of the institutional, regulatory and legal framework for
17 Services Apr-14 Oct-16 2.0
the development of mid-size hydro projects
Review of 62 projects, pre-feasibility for 30 projects, multi-
18 criteria evaluation, selection and preparation of ToR for three Services Apr-14 Mar-15 3.6
feasibility studies
Detailed feasibility studies for 3 selected projects, and
19 Services Jun-15 May-16 7.5
preparation of specs & bidding documents
20 ESIA/RAP for 3 selected projects Services Jun-15 May-16 3.0
Support to the private investors' selection process for the 3
21 Services Nov-15 Dec-16 3.0
projects
Component B2 :Carbon finance market development 1.0
22 Development of carbon finance mechanism Services Jun-15 May-16 1.0
Component B3 :Institutional strengthening to CGI3 5.5
23 Individual consultants for CGI3 Services Feb-14 Dec-17 2.8
59
Contract
Procurement Contract Estimated
# Description of the assignment completio
category signing amount
n date
24 Office equipment for CGI3 Goods Feb-14 Mar-14 0.4
25 Operational costs for CGI3 Operating costs Feb-14 Dec-17 1.0
non-consulting
26 Organization of workshops and trainings for CGI3 Feb-14 Dec-16 0.6
services
Development and implementation of the communication
27 Services Feb-14 Dec-16 0.7
strategy
TOTAL 73.1
Contracts Subject to
Contract Value
Prior Review (US$
Expenditure Category Threshold Procurement Method
thousands)
(US$ thousands)
2. Goods 1,000 or more ICB All
below 1,000 NCB Contracts above 500 and
two First contract under
NCB
Less than 200 but above QCBS, LCS, FBS All consultancy
100 assignments contracts
Individuals 100 or more IC All
Less than 100 IC None
No threshold Single Source Selection All
All TORs regardless of the value of the contract are subject to prior review.
43. Contract Management and Expenditure Reports. As part of the Procurement
Management Reports (PMR), the CGI3 and then the ADEPI will submit contract management
and expenditure information in quarterly reports to the World Bank. The procurement
management report will consist of information on procurement of goods, works and consultants’
services and compliance with agreed procurement methods. The report will compare
procurement performance against the plan agreed at negotiations and, as appropriate, update at
the end of each quarter. The report will also provide any information on complaints by bidders,
unsatisfactory performance by contractors and information on contractual disputes, if any.
60
Environmental and Social (including safeguards)
44. The project is rated environmental category A. Eight safeguards policies are triggered.
The TA project will finance ten technical and environmental/social assessments as a sound basis
to feed into the decision making process for the development of Inga 3 BC and the mid-size
hydropower projects. Environmental assessments planned include Environmental and Social
Impact Assessment (ESIAs) for the Inga 3 BC development (including review of cumulative
impacts of Inga 3 BC and Inga 3 HC developments), for the transmission lines in the DRC, and
for the mid-size hydropower projects. The ESIAs will include a Cultural Heritage Management
Framework (CHMF).
45. In addition, and while this is not a safeguard requirement, the TA will finance two
additional social assessments: a Community Development Plan for project affected persons and a
RAP for Camp Kinshasa / villages. These studies will address historically pending
environmental and social issues related to Inga 1&2, built in the 1970s, without Bank funding.
46. An “E&S roadmap” has been agreed with the Government and sets out the
sequencing/timing of the various environmental and social safeguard instruments to be prepared
in connection with the activities related to the Inga 3 BC development. The purpose of the
roadmap is to detail the sequencing of all environmental and social studies and safeguards
instruments, and the feasibility studies, engineering and design studies and bidding documents
they feed into the roadmap is presented in Table 3 below.
47. The transmission lines outside of DRC that will be built as a direct result of the Inga 3
BC development will be considered associated facilities. GoDRC will use its best effort to ensure
that all terms of reference for any safeguards instrument prepared in connection with the
Transmission Line in SAPP are consistent with the Bank’s Environmental and Social Safeguards
Policies and submitted for Bank’s prior review and comment.
61
Table 3: Environmental and Social Roadmap
62
Table 4: Social policies triggered
Policy Detailed Explanations
Indigenous Peoples OP/BP There are no indigenous people settlements at the Inga 3 BC development area or its
4.10 immediate area of influence. The transmission lines may cross areas inhabited by
indigenous people. An IPPF will be prepared and disclosed for the section of the
transmission line within the DRC borders.
The presence of indigenous people along the corridor of the associated transmission
line beyond the DRC border will have to be confirmed. If this is the case an
Indigenous People’s Framework (IPF) will have to be prepared (not financed by the
TA project).
The TA project will finance a social impact assessment and a resettlement action plan
focusing on the Inga 3 BC development site and on the transmission lines in DRC 14
The ToR for the RAP of Inga 3 BC development will serve to update and complete
Involuntary Resettlement the initial RAP prepared by AECOM-RSWI/EDF, which was commissioned by the
OP/BP 4.12 GoDRC with African Development Bank (AfDB) financing.
In addition, a social assessment and census and the possible resettlement of about
7,000 – 10,000 persons at Camp Kinshasa located within SNEL concession will be
financed and E&S issues raised by communities affected by Inga 1 and Inga 2
construction will be assessed and addressed if confirmed(not a safeguard requirement
but important studies).
14
According to the Feasibility Study (AECOM/EDF, October 2013), no resettlement is needed by the development
of Inga 3 BC hydropower complex, whereas 84 households need to be resettled along the T-line within DRC. These
figures will be confirmed by the ESIAs financed by the proposed project.
15
The spatial and temporal dimensions of the cumulative impact assessment are based on what is known about the
on-going and proposed development projects within the project area in the reasonably foreseeable future. The
development of Inga 3 BC and Inga 3 HC will take well over a decade. The size, scope, and, nature of future
63
Policy Detailed Explanations
Moreover an Environmental and Social Impact Assessment (ESIA) will also need to
be prepared for the transmission lines extending beyond the territory of DRC (outside
the scope of the TA project).
Environmental ESIAs for the mid-size hydropower projects will be prepared in accordance with
Assessment OP/BP 4.01 operational policy OP4.01 once the sites of these projects are known.
Finally, an environmental and social expert panel will be set up to advise DRC on the
environmental and social aspects of this project in accordance with OP/PB 4.01 for
projects which are classified “A”.
Natural Habitats The initial ESIA carried out as part of the Inga feasibility study mentions that four
OP/BP 4.04 IUCN Red List mammal species have been identified in the Inga area: Chimpanzee
(Endangered); Hippopotamus (Vulnerable); Bay Duiker (Least Concern); Sitatunga
(Least Concern). Regarding the presence of chimpanzees, local people report the
continued presence of chimpanzees in forested areas beyond the left bank of the river
at a level adjacent to Inga, and in the hilly areas beyond the right bank just upstream
of Inga extending to Luozi. Considering the small footprint of the Inga 3 BC
development which falls within the current SNEL concession area, it is not expected
that there will be an impact on the above mentioned species. Subsequent possible
developments might (HC and beyond) have significant impacts but as mentioned
above, this is beyond the scope and impact boundaries of the Inga 3 BC.
However, more details will be provided by the proposed ESIA regarding the presence
of these species, in particular chimpanzees, the potential impact on them of the
development of Inga 3 BC, measures to mitigate this impact, and if possible the
measures to improve the protection of these species.
Aquatic biodiversity: The Inga zone of the Congo River is rich in diversity of fish
species. One assessment states that 146 fish species have been identified in the Inga
area, of which only the African Butter Catfish (Schilbemystus) is included in the Red
List (Least concern in Central Africa). However, the assessment also states that four
fish species have been identified as endemic to this part of Bas-Congo. The ESIA for
Inga 3 BC development hydropower complex will reflect the Red List concern
regarding the impact of Inga 3 BC development on these species.
The initial ESIA also notes (i) the presence of endemic species of micralestes and
micropanchax, which could be threatened by the development of the series of Inga
hydropower developments, and (ii) that it is “certain” that a number of species,
particularly those adapted to the deepest parts of the river (up to 100m deep) remain
to be discovered. In presenting the report, the consultant also noted the dearth of
information on the possible presence and behavior of migratory fish species, which
would be particularly impacted especially during the subsequent Inga 3 HC
developments.
hydropower developments beyond Inga 3 HC projects are not yet reasonably defined and available information does
not allow to consider them meaningfully in a cumulative impact assessment.
64
Policy Detailed Explanations
Given the importance of the aquatic diversity in the Inga area, it would be appropriate
to initiate as soon as possible long-term support for scientific research that will guide
efforts to mitigate these impacts in both the medium-term (i.e. for the Inga 3 BC
development) and the long–term (i.e. Inga 3 HC development and subsequent
hydropower developments at Inga), in collaboration with international research
centers who are or have been involved in researching the aquatic biodiversity of Bas-
Congo. The ESIA of Inga 3 BC hydropower complex, for which ToRs have been
prepared, will take into account these aspects of biological diversity. The project
includes financing for a supplementary biodiversity study, should it be required.
Forests OP/BP 4.36 There is 2.6 km2 of forest in the area concerned by the Inga 3 BC hydropower
development. Moreover, the transmission lines could have potential impacts on the
forest even if they will use the same corridor as existing lines. The ToR for the ESIA
for the construction of the Inga 3 hydropower complex and the ToR for the ESIA of
the transmission lines routes from Inga to the Zambia border, include provisions to
address forestry concerns.
Pest Management This policy is not triggered under the project.
OP/BP 4.09
Physical Cultural Resources Many studies carried out in DRC indicate that the country is rich in cultural
OP/BP 4.11 resources. Moreover, the transmission line will cross at least two countries (Zambia
et Zimbabwe) before arriving in South Africa. In order to protect potential cultural
resources which could be affected by the project, ToRs for ESIA for Inga 3 BC
hydropower complex and the ESIA for the transmission line from Inga to the border
with Zambia include provisions for the preparation of CHMF. The TORs for an ESIA
submitted for the transmission line outside DRC will also need to reflect these
considerations.
Potential cultural heritage issues related, for instance, to graves, fetishes, sacred trees,
altars of traditional religion, and other cultural assets that might be affected,
particularly by the transmission lines, will be reviewed as part of the CHMF.
Safety of Dams The Inga 3BC development will include a 100 m high dam in the Bundi valley, a
OP/BP 4.37 canal, and a water intake. The TA project will support the consolidation of the
geotechnical knowledge of the area and the preparation of a preliminary geotechnical
baseline report.
A dam safety panel of experts for Inga 1 and Inga 2 has been in place since March
2011. It comprises five specialists (geotechnical, concrete, sediment, dam, electro-
mechanical) who conduct at least bi-yearly visits to the site and produce associated
reports.
The Dam Safety panel for the proposed project will have the same composition.
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Table 6: Other relevant Safeguards Policies
Institutional arrangements
48. At national level, the DRC has a legislative and regulatory framework which is conducive
to good environmental management. In addition, DRC has signed a number of international
treaties and conventions. However, implementation capacity is weak. Environmental policies and
their compliance are governed by the Ministry of Environment, Conservation and Tourism
(Ministère de l’Environnement, de la Conservation de la Nature et du Tourisme - MECNT) – .
The MECNT has three departments in charge of environmental monitoring and management: i)
Le Groupe d’Etudes Environnementales du Congo (DRC Environmental Studies group GEEC);
ii) le Centre National d’Information sur l’Environnement (Environmental Information National
Center - CNIE); and iii) La Cellule Réglementation et Contentieux Environnementaux
(Environmental Regulation and Disputes’ Cell - CRCE). The GEEC is responsible for
safeguards compliance of all projects in the country. The unit is understaffed and has limited
capacity. Despite several donor-funded capacity building initiatives, the unit still largely relies on
donor funds to carry out its field supervision duties.
49. The CGI3 will manage Component A until ADEPI is established and Component B
throughout the project, and therefore recruit environmental and social experts based on TOR and
qualification acceptable to IDA. ADEPI will manage Component A, and will recruit
environmental and social experts able to deal with all relevant environmental and social
questions, based on TOR, experience and qualification acceptable to IDA.
Consultation process
50. This TA operation has been submitted to an extensive consultation process, with
institutional stakeholders as well as with the public, both at the local level and national level.
Also extensive discussions have taken place between the GoDRC’s potential co-financiers of this
operation, particularly on the environmental and social aspects. Overall these consultations have
confirmed a solid support for the TA and the Inga 3 BC development.
51. A first public consultation of the TA project was organized in July 2013 in Kinshasa and
a second consultation event was organized in September 2013 in Matadi, not far from the project
site. The conclusion of these consultations events can be summarized as follows:
66
Kinshasa Consultation
52. On July 3rd 2013 in the conference room of the Regideso a meeting took place to present
the outline of the Inga 3 BC development and the ToRs for the various environmental and social
assessment instruments deemed necessary to ensure a sound preparation of the project. Forty
three participants attended the sessions, thirteen of which representing civil society. The rest of
the participants were representatives of institutions and potential project co-financiers.
53. Some of the main issues raised by representatives of the civil society as well as the
responses provided are as follows to:
-What are the expected development contributions of the The project is a first step to provide new
project? electricity access to 7 million people in the
Grand Kinshasa and 2 million people in the
hinterland.
Would it be possible to add the FPIC requirement (free and prior Suggestion adopted.
informed consent of indigenous people)?
Why is it mentioned that the parties in charge of the studies This is only the case for the independent panel of
would be non-Congolese? experts to ensure total independence of views.
Ensure that local population is appropriately consulted This requirement is built in to the approach.
54. Overall, participants appreciated being consulted at such an advanced stage. They were
also given a two week period to transmit in writing their observations after the consultations.
Matadi Consultation
55. On September 3rd 2013 another consultation meeting was held at the hotel Ledya
Conference center in Matadi. This session in Matadi aimed at ensuring that the consultation had
included stakeholders closer to the project site. The event was organized in two sessions along
the lines of the event in Kinshasa. The event was opened by the Minister of Water Resources
and Electricity, the Minister of Environment and Nature Conservation, and the Minister of Land
Affairs.
56. Seventy participants attended the meeting represent a wide array of local stakeholders
including religious leaders, local communities, journalists, parliamentarians, NGOs as well as
local representatives of relevant institutions.
57. The main concerns expressed were related to the benefits that the project would bring to
the local population. Clarifications were provided. Further, in response to the assertion that some
people had started intimidating villagers to force them to leave, assurance was provided that the
rights of the populations would be upheld, and claimants were invited to report such incidents to
the relevant authorities. Overall the participants appreciated the fact that three Ministers attended
the meeting as a testimony of their commitment to the implementation of the highest
environmental and social standards in the context of the preparation and the execution of the
project.
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Project monitoring and evaluation
58. The project-level M&E framework will track progress in implementation and measure
intermediate outcomes. The results framework in Annex 1 outlines key performance indicators,
data collection methods, a timetable for collection, and responsible agencies.
59. CGI3 and ADEPI will submit quarterly reports to the donors and the Ministry of Finance
no later than forty five days after the end of each quarter. The quarterly reports would cover the
progress and updates on procurement activities, financial management and disbursements, as
well as implementation issues and associated action plan, progress on development indicators
and targets, and status of financing covenants. Data collecting and reporting responsibilities will
be described in the PIM. The main sources of information for this monitoring and evaluation will
be reports from advisors and consultant.
Role of Partners
60. On November 20, 2013, the Board of Directors of the African Development Bank
(AfDB) approved US$68 million in financing for the Multinational Inga Site Development and
Electricity Access Support Project (PASEL). AfDB’s support comes in the form of a Fragile
States Facility grant of US$7.7 million and an African Development Fund grant of US$60.6
million16. The AfDB’s financing will use parallel financing arrangements, i.e. using separate
designated accounts but working with the same coordinator and fiduciary teams.
61. The World Bank Group has adopted a unified approach to support a government-led
process for the development of Inga-3 BC. USAID is considering providing technical assistance
to ADEPI. The World Bank Group, AfDB, EIB, DBSA, AFD, KfW, USAID have been meeting
regularly to share information regarding the TA project and the Inga 3 BC development.
16
Out of the $66.5million approved by AfDB on November 2013, only US$33.4 million is presented as part of the
proposed project, representing essential activities required to achieve the PDO.
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Annex 4: Operational Risk Assessment Framework (ORAF)
DEMOCRATIC REPUBLIC OF CONGO
Inga 3 BC and Mid-Size Hydropower Development Technical Assistance Project
Stage: Preparation
Resp: GoDRC and
and implementation Due Date : Ongoing Status: Ongoing
World bank
69
Governance Rating:
High
Description : Risk Management :
• Slow decision making process within the GoDRC could • The project will help establish ADEPI which will increase the professional and autonomous
jeopardize project implementation. management of the development of the series of hydropower developments at Inga. The
• The information and capacity asymmetry between the financing agreement includes legal covenants regarding the timely set up of ADEPI. It supports
GoDRC and developers could lead to unbalanced the GoDRC in implementing principles of competition and transparency. The project will
contracts. support the design of balanced contracts between public and private stakeholders and regional
• Lack of transparency could lead to corrupt practices. off-takers and ensuring a transparent selection of a private developer. The provision of world
• Fiduciary risks are caused by the weak country governance class advisors to the GoDRC will help overcome the capacity and information asymmetry often
environment and the limited capacity of CGI3 and ADEPI. seen between parties in large infrastructure and natural resources transactions in Africa. The
presence of the World Bank and other donors will help balance the relative bargaining power
between the GoDRC, investors, and off-takers.
• Initially, the project coordinator will report to CODESI, chaired by the PM for the first year of
implementation and then to CFI whose composition goes beyond the MRHE.
• The project will facilitate CSOs to play the role of demand side watchdogs by bringing the
development process of Inga 3 BC into the open.
• Financial Management implementation support missions will be frequent and follow a risk based
approach model. Suspicious activities will be investigated.
• Procurement Specialists will carry out two test reviews of procurement action per year.
70
especially Zimbabwe have become a significant bottleneck financing of the transmission lines (T-line) within SAPP.
to the north-south power trade in the SAPP.
Stage:
Resp: GoDRC Preparation/Implemen Due Date : Ongoing Status: Ongoing
tation
Social & Environmental Rating:
Substantial
Description : Risk Management :
• The main E&S risks related to the proposed TA project, is • The TA project will help to mitigate anticipated adverse E&S impacts of Inga 3 BC development
that the various safeguards documents are not of sufficient by financing 12 related E&S studies. There will be strong supervision on the implementation of
quality or that they will be produced too late to be taken these studies. An "E&S roadmap" has been agreed with the Government and sets out the
into account in the design and procurement of the Inga 3 sequencing/timing of the various environmental and social safeguard instruments to be prepared
BC development. in connection with the activities related to the development of the Inga 3 BC development and
• A risk – which is not under the control of the GoDRC – is the future investment operation. The purpose of the roadmap is to detail the sequencing of all
that the transmission lines from Katanga to South Africa environmental and social studies and safeguards instruments, and the feasibility studies,
are not prepared to good practice standards. This includes engineering and design studies and bidding documents.
the risk of the routing of the T-lines not taking into • The Financing Agreement includes suspension events that will allow the World Bank to suspend
account environmental or social concerns. the project in the case international good practice is not followed by other actors in the
development of the transmission lines outside DRC.
71
with RSA on a PPA with low electricity price, giving de commitments that are the foundation of the IDA’s engagement and the discontinued adherence
facto RSA a large share of the project’s rent. to the content of the letter is a cause for a suspension event in the financing agreement.
72
Annex 5: Economic Analysis
DEMOCRATIC REPUBLIC OF CONGO
Inga 3 BC and Mid-Size Hydropower Development Technical Assistance Project
2. The development of the Inga 3 BC hydropower site holds great transformational potential
at both country and regional level. The Inga site is the prime electricity source for DRC; it is also
a possible main source of cost-effective electricity supply for countries in the Southern Africa
region that face energy constraints and have traditionally relied on very expensive thermal
generation. The proposed Inga 3 BC and Mid-Size Hydropower Development Technical
Assistance Project will provide strategic support to the preparation and implementation of Inga 3
BC development, which is the next critical stage in the development of the site.
4. Economic and social growth in DRC hinges upon expanding electricity access by
exploiting the country’s large hydropower generation potential. Lack of electricity access at
household level exacerbates poverty conditions in the country and is a major cause of exclusion
and inequality within the country. Limited or unreliable electricity supply constrains the delivery
of basic social services including health, education, and security and severely affects living
standards. It also prevents informal businesses, which are a primary source of livelihood among
the poor, to grow out of informality and expand. Inadequate power supply frustrates productivity
and competiveness of DRC firms and is a major binding constraint to economic growth led by
the mining and oil sectors. Power shortages mean big losses in terms of foregone production and
cost of self-generation, which are conservatively estimated at 1.7 percent of GDP.
5. Expanded, cheaper and more reliable electricity supply is central to economic and social
growth in the Southern Africa Region. It is estimated that the region may be losing up to 4
percent of GDP annually as result of unmet power demand reducing economic investment,
productivity and employment. With 2,500MW of capacity to be devoted to exports, the Inga 3
BC development is expected to significantly contribute to the development of power trade in the
Southern Africa region. Full expansion of regional power trade leading to displacement of
thermal generation with cost-effective hydropower from DRC could save the region US$1.1
billion annually in power costs and reduce the long run marginal cost of power from US$0.07 to
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US$0.06 per kilowatt-hour or 5 percent overall. The largest benefits would be felt by small
countries with thermal-based systems, which could save as much as US$0.05 per kilowatt-hour
or more than 40 percent of power costs overall. The shift to cleaner energy would also reduce
regional carbon emissions by a significant 41 million tons annually.
6. Full development of Inga’s hydropower potential would turn DRC into a primary power
exporter to the Southern Africa Power Pool and earn the country a more stable stream of income
than the exports of physical resources. This could have a large positive effect on the country
overall macro-economic situation. Technical assistance under the proposed Project is critical to
help achieve and maximize these benefits. The studies financed under sub-component A1 will
contribute to improve the design of Inga 3 BC development and provide a solid knowledge basis
on the site’s ground conditions and project various technical aspects, reducing the risk of cost
overruns during construction and supporting a more informed selection of potential contractors.
Transaction advice and procurement support under sub-component A2 are expected to promote
effective competition for the concession for the Inga 3 BC power plant and help the Government
negotiate a concession agreement and PPAs that strike the right balance between development
outcomes and return to investors. Institutional support and sector strengthening under sub-
component A3 will help create a more sustainable business model and improve investment
climate for the development of Inga’s next stages.
7. The proposed Project has an intrinsic rationale for public provision, because of its nature
– technical assistance – and its scope. Strengthening Government’s technical, institutional,
regulatory and project implementation capacity is essential to ensure that hydropower resources
are efficiently and sustainably used, with benefits equitably shared by the society at large.
8. The studies carried out under the Project will help identify the potential environmental
and social impacts associated to the development of Inga 3 BC and properly mitigate them,
which is primarily a Government’s responsibility. Transaction advice and institutional support
will critically enhance the GoDRC’s capacity to select, contract and supervise the private
concessionaires that will construct and operate the Inga 3 BC power station and the associated
transmission lines as well as the mid-size hydropower projects identified under the proposed
Project. Helping the GoDRC build a solid institutional structure for the Inga 3 BC development
will be particularly critical to avoid regulatory capture by the private sector and preserve the
public interest attached to the project. Dedicated support to ADEPI will be equally important to
strengthen GoDRC’s planning, management and monitoring capacity over the long term for the
development of the series of hydropower developments at Inga.
9. The World Bank can bring significant added value to the proposed Project in light of its
experience in supporting large hydropower development, including through some of the larger
and more critical projects in Africa and other developing regions. In many cases, Bank’s
institutional and regulatory support, transaction advice and/or risk mitigation in coordination
with IFC and the Multilateral Investment Guarantee Agency (MIGA) have been material to help
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raise project bankability and reach financial closure in a timely and efficient manner, especially
in countries relatively new to PPPs and with low regulatory capacity.
10. The Bank has also been at the forefront in supporting regional power integration in
Africa. Regional projects in all four power pools account for a large share of the Bank’s overall
energy portfolio in Africa, including both flagship investment operations and technical
assistance. The Bank is well positioned to convene clients, the private sector and development
partners and leverage consensus and investments. Most of the regional energy projects delivered
in the past few years entail co-financing by multiple donors with the Bank taking a leading role
in coordinating and harmonizing the work of the various partners. Many regional projects have
been developed through complex PPPs, some through the establishment of SPVs involving
multiple countries, with the Bank providing critical support to align political economy
incentives, build political consensus and overcome regulatory barriers.
Methodology
11. An economic analysis of the Inga 3 BC development has been carried out to assess its
impact on the welfare of the citizens of DRC and South Africa. Economic benefits and costs and
– more importantly – their distribution among the key stakeholders involved, including DRC and
South Africa households and enterprises, the DRC government and the private developers have
been estimated and will critically depend on the institutional and financial structure of the Inga 3
BC development, which remains to be confirmed.
12. The bulk of the benefits of the Inga 3 BC development are expected to derive from the
additional electricity supply made available to the local market and for exports to South Africa.
In particular, 600 MW of firm electricity from the Inga 3 BC development are expected to be
provided to SNEL 17; 1,300 MW to mining companies in the Katanga region and 2,500 MW to be
exported to South Africa. Expanded and more reliable supply will enable SNEL to accommodate
un-served demand and expand electricity service to utility customers. The shift to more reliable
and cost-effective hydropower supply will earn significant cost savings and raise the productivity
of the mining companies in the Katanga region, that currently rely on expensive thermal
generation. Imports of cheaper hydropower will lower the average cost of electricity to ESKOM
– South Africa’s national power utility.
13. The economic value of electricity supply from the Inga 3 BC development is assessed for
each class of beneficiaries, including SNEL customers, mining companies and South African
electricity customers based on a consumer surplus methodology. Based on this preliminary
economic analysis, the Inga 3 BC development is assessed to be economically viable, with an
economic rate of return (EIRR) of 17.1 percent and a net present value (NPV) of US$7.38 billion
(table 9).
17
Using a conservative approach, an additional non-firm 400 MW to be provided to SNEL has not been considered
in the economic analysis.
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14. The value to SNEL customers is derived from their willingness to pay (WtP) for
electricity. Table 1 presents average WtPs and consumption rates (as percentage of total
consumption) for the various customer segments served by SNEL. WtPs are estimated based on
the cost of energy sources typically used by each group in alternative to grid electricity. The
weighted average WtP among SNEL customers is US$7.87cents /kWh.
15. The value of hydropower supply to mining companies in the Katanga region is derived
from the cost of captive HFO generation (US$12cents /kWh). The economic value of exports is
estimated based on the long run average incremental cost (LRAIC) of electricity in the SAPP
region (US$7 cents /kWh, net of transmission costs) 18.
16. Project capital costs included in the analysis are derived from the Inga feasibility study
financed by AfDB. These include the costs associated to the construction of the common
infrastructure, the power plant, and a new transmission line connecting the power station to the
Katanga region with the associated converter substations, as well as the costs related to the
construction of the regional transmission backbone from the Zambia border to South Africa,
including transmission lines and substations. The construction period is assumed to be 6 years
for the common infrastructure and the power house, to be commissioned in 2022, and 5 years for
the associated transmission lines, to be commissioned in 2021. Investment costs used in the
economic analysis exclude by definition price contingencies and interest during construction.
Ongoing operational and maintenance (O&M) costs vary by the type of infrastructure. O&M
costs for the common infrastructure are estimated to be equal to 1.5 percent of investments costs;
O&M costs for transmission lines are estimated to be equal to 3 percent of investment costs.
O&M costs for the power plant are estimated to be equal to 1 percent of investments cost plus
US$1 per MWh produced. Estimated life span of infrastructure varies significantly between
components from 35 years for power plant and transmission lines to 50 years for the common
infrastructure. The analysis uses a conservatively estimated life time for all infrastructures of 35
years. The analysis uses a discount rate of 10 percent. Both costs and benefits are set up as cash
flow during the construction and the operation period.
18
SAPP Regional Transmission and Expansion Plan Study, 2009 (SAPP Pool Plan 2009). The least cost generation
in the region is expected to comprise a mix of hydro, coal and nuclear plants for base load and mid-range duty, and
pump-storage, oil and gas plants for peaking duty
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Table 8: Inga 3 BC development investments cost by project component
Project component US$ bn (2012)
Power plant 3.6
Common infrastructure 2.6
T-line Inga-Border Zambia 2.3
T-line Border Zambia-SAPP/RSA 2.0
Total Cost 10.5
Source: Inga feasibility study.
17. A sensitivity analysis shows that the Inga 3 BC development remains economically
viable with: (i) cost overruns of 10 percent, (ii) a dispatch rate of the power plant reduced by 10
percent, and (iii) two years delays in construction (Table 10).
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Annex 6: Implementation Support Plan
DEMOCRATIC REPUBLIC OF CONGO
Inga 3 BC and Mid-Size Hydropower Development Technical Assistance Project
Support Plan
2. An implementation support plan (ISP) has been developed on the basis of the nature of
the Project and its high risk profile. The ISP has been designed so as to guarantee efficient and
flexible support to the client and facilitate implementation of the risk mitigation measures
defined in the ORAF. The ISP responds to complexities of the project given a low capacity for
implementation and a challenging environment due to the fragile situation in the country.
3. The Project will be co-financed through parallel financing from AfDB. Financial partners
have established a close, regular and inclusive coordination platform. Joint missions will ensure
adequate consultation, coordination, support and an effective supervision of the overall project
implementation.
4. WBG team members will be based both at headquarters and in the DRC Country Office
to ensure timely, efficient and effective implementation support to the client. IDA’s Procurement
Specialist and Financial Management Specialist are located in Kinshasa and can ensure
continued support, advice and monitoring to the implementing agencies. Formal Implementation
Support missions and field visits will be carried out three to four times a year.
Technical expertise
5. Technical knowledge in hydropower and power transmission and in dam safety will be
provided for a proper assessment of bidding documents for public-financed infrastructure.
Technical skills in infrastructure finance and Private Sector Participation (PSP) in infrastructure
will be made available to monitor the preparation of complex balanced contracts between public,
private, and regional stakeholders to reach a fair sharing for the GoDRC of the economic rent
generated by Inga 3 BC. Technical staff will work closely with the GoDRC and its advisors on
the further development of the project structuring. They will review ToRs and interim and final
outputs of all TA activities. Technical staff will liaise with other donors and stakeholders to
coordinate approaches and crowd in expertise.
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Procurement
6. At least two implementation support missions per year will be organized to carry out post
review of procurement actions. Annual compliance verification monitoring will also be carried
out by an independent consultant and would aim to: (i) verify that the procurement and
contracting procedures and processes followed for the projects were in accordance with the
Financing Agreement; (ii) verify technical compliance, physical completion and price
competitiveness of each contract in the selected representative sample; (iii) review and comment
on contract administration and management issues as dealt with by the implementation entity;
(iv) review capacity of the implementation entity in handling procurement efficiently; and (v)
identify improvements in the procurement process in the light of any identified deficiencies.
Financial management
7. FM missions will be scheduled using a risk based approach model and will include the
following due diligence: (i) monitoring of the financial management arrangements during the
supervision process at intervals determined by the risk rating assigned to the overall FM
Assessment at entry and subsequently in Implementation Status Reports; (ii) carrying out
integrated fiduciary review on key contracts, (iii) reviewing IFRs; (iv) reviewing audit reports
and management letters from the external auditors and following-up on material accountability
issues by engaging with the Task Team Leader, Client, and/or Auditors; (v) the quality of the
audit (internal and external) also is to be monitored closely to ensure that it covers all relevant
aspects and provide enough confidence on the appropriate use of funds by recipients; and, (vi)
physical supervision on the ground, and (vii) assistance to build or maintain appropriate financial
management capacity.
Environmental and Social (including safeguards)
8. The Bank’s project team will pursue close monitoring of environmental and social
management under the Project. Bank staff will review ToRs and interim and final outputs of all
TA activities. Technical staff will liaise with other donors and stakeholders to coordinate
approaches and crowd in expertise.
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Table 12: Skills Mix Required
Number of Staff Number of Trips
Skills Needed Comments
Weeks/year Per year
General supervision and project
22 4
management (TTL)
Hydropower Specialist 15 3
Energy Specialist 15 3
Infrastructure Finance / PSP Specialist 15 3
Economist 4 1
Legal Counsel 4 1
Dam Safety Specialist 4 1
Procurement Specialist 4 Field based
Financial Management Specialist 4 Field based
Environmental Specialist 10 Field based
Social Development Specialist 10 3
Communications Specialist 4 Field based
Administrative support 6 Field based
Disbursement Specialist/analyst 1 Field based
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Annex 7: Policy Letter (in French)
DEMOCRATIC REPUBLIC OF CONGO
Inga 3 BC and Mid-Size Hydropower Development Technical Assistance Project
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Annex 8: English translation of Policy Letter 19
DEMOCRATIC REPUBLIC OF CONGO
Inga 3 BC and Mid-Size Hydropower Development Technical Assistance Project
Cc:
- His Excellency, the President of the Republic, Head of State (With the greatest deference),
Palais de la Nation, Kinshasa / Gombe
- The Vice-Prime Minister, Minister of the Budget
- The Minister of Economy and Trade
- The Minister of Rural and Urban Development, Housing, Infrastructure, Public Works and
Reconstruction
- The Minister of the Environment, Nature Conservation and Tourism
- The Minister of Water and Electricity Resources
- The Deputy Minister to the Prime Minister, responsible for Finance
Kinshasa / Gombe
The Democratic Republic of the Congo (DRC) has abundant and varied natural resources. For
example, the DRC has the second largest copper reserves in the world, one quarter of the world’s
gold reserves, the second largest forest on the planet, an area of arable land that is equivalent to
all of the cultivated land in Brazil and more than half of the fresh water reserves on the African
continent. Furthermore, real GDP growth has averaged 7.3% over the last four years, while
inflation has been contained at less than 10% per year.
Despite these advantages and achievements, the poverty rate stands at approximately 71%. This
is accompanied by one of the lowest electrification rates in Sub Saharan Africa. Only 9% of our
households have access to electricity and more than half of our businesses rely on their own
19
This is a translation of the original letter from the Prime Minister of the Democratic Republic of Congo to the
President of the World Bank in French dated November 12, 2013. The translation is provided as a service to
interested parties. In case of discrepancy between the French original and the translation, the French text shall
prevail.
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generators. Development of the energy sector is critical for sustained and shared growth that
reduces extreme poverty. This development includes developing our enormous hydroelectric
potential of 100 GW, of which 40% is concentrated at the Inga site in the Bas-Congo province.
This makes the Inga 3 BC development of strategic importance for the DRC’s energy policy. The
project will develop some of the hydropower potential of the Congo River, one of the largest
rivers in the world. It will result in a medium-term increase in the supply of cheap electricity for
the country and for the African continent. The Inga 3 BC development will have an installed
capacity of approximately 4.8 GW. It will be the first phase of the series of hydropower
developments in the Grand Inga scheme. The final installed capacity of the scheme will be
approximately 40 GW, which is nearly twice that of the Three-Gorges Dam in China, the world's
largest hydropower plant.
The purpose of this letter, including the details in the annex, is to confirm the determination of
the Government of the DRC to ensure that the country and its population benefit from the Inga 3
BC development. The Government will manage the technical, financial and economic aspects of
the project, along with its environmental and social impacts, efficiently and transparently to
achieve this result. The Government will continue with the necessary institutional, legislative,
and regulatory reforms to establish and maintain a framework that fosters electricity sector
development. This commitment is outlined below using the following six themes:
- Project governance;
- Fiscal framework for the project;
- Allocation of the power produced;
- Structure of the Public Private Partnership and use of public financing;
- The developer selection process; and
- Environmental and social aspects of the project.
Yours truly,
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Annex to the
POLICY LETTER ON THE IMPLEMENTATION OF THE INGA 3 BC PROJECT
As I indicated in my letter, the Government’s policy for the implementation of the Inga 3 BC
development is based on six key commitments:
I. PROJECT GOVERNANCE
Good governance can help optimize to transform natural resources, with which we are richly
endowed, into human development. Good governance is also critical for improving the business
climate. Therefore, good governance is a key concern of the Government. The Government has
recently renewed its commitment to improve the country’s economic governance. To this end, it
released a [governance] matrix that includes measures to enhance transparency and good
governance in the mining industry, measures to improve the management of State-owned
enterprises, and public finance management measures. These measures apply to the energy sector
in general and the [national utility] Société Nationale d’Électricité (SNEL) in particular.
The Inga 3 BC development - and the following phases of the Grand Inga development -
constitutes a major governance challenge for the DRC because of its size and importance for the
future of the African continent. Therefore, we are taking special measures to establish a suitable
legal and institutional framework.
Parliament is currently debating a new Electricity Bill that will introduce private sector
participation in power generation. The Head of State has opted to develop the Inga 3 BC
development as a Public Private Partnership (PPP).
An Inga Site Development Commission (CODESI) has been operating under my direct authority
since June 2013. Its role is to coordinate the work of all of the ministries involved in project
implementation. It will also be responsible for defining the strategic vision and guidelines for the
phased development of the Grand Inga development.
The Government commits to set up the Inga Development and Promotion Authority (ADEPI) by
the end of 2014. ADEPI will be responsible for the implementation of the Inga 3 BC
development and the later phases of the Grand Inga development. It will be the authority that
awards concession contracts.
ADEPI will be an autonomous agency that is not subordinate to a sector ministry. It will employ
high-level competitively recruited personnel. It will be run by a Board of Directors whose
members are distinguished individuals from the government, civil society, and the private sector.
Recognized firms and experts will periodically review the Agency’s technical and financial
performance. Review findings will be published. All members of the Agency’s staff will be hired
under short-term contracts that will be renewed depending on performance reviews carried out
by a recognized human resource firm.
The Government will accompany the establishment of ADEPI with a Grand Inga Act.
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II. FISCAL FRAMEWORK FOR THE PROJECT
The Government is aware of the economic value of the Inga site, which allows for the production
of large quantities of hydropower at one of the lowest costs in the world. The Government also
recognizes that it will need the private sector to develop the site. Therefore, the Government
wishes to establish a fiscal framework for the Inga 3 BC development that provides incentives
for private sector investors and ensures that the Government captures a substantial part of the
rent [of the Inga site]. Under the circumstances, the Government has asked for the support of
Development Finance Institutions (DFIs) to support defining the right balance between
maximizing tax revenues and offering an attractive investment project for the private sector.
First of all, the Government is committed to include a transparent definition of the fiscal regime
for the Inga 3 BC development in the tender documents to select one of the three prequalified
candidate consortia. The Government preliminary position is that the tax revenue from the
project will primarily consist of corporate income tax and a water tariff for using the waters of
the Congo River. The water tariff for the Inga 3 BC development will be rolled out equitably to
all producers of the different phases of the Grand Inga project, taking into account production
costs. The cost of this fiscal burden will be included in the power tariff specified in the power
purchase agreements with the Société Nationale d’Electricité (SNEL), the mining industry in
Katanga, and the Republic of South Africa (RSA).
The annual direct contribution that the Inga 3 BC development will make to government finances
could reach USS 400 million to US$ 500 million, which represents 6 to 7 percent of the current
annual government budget. The Government intends to spend a substantial share of the water
tariff to finance electrification programs targeting regions of the country currently without
electricity. It will also look into the possibility of setting aside some of this revenue for the
development of the next phase of the Grand Inga development (Inga 3 HC). The Inga Act will
define the fiscal framework in detail.
In economic terms, the countries in the South African Power Pool (SAPP) constitute a natural
market for hydropower from Inga. The DRC is already connected to the SAPP network in
Kasumbalesa and Katanga, at its border with Zambia, and it already has a DC transmission line
between the Inga 1 and Inga 2 hydroelectric power plants in Kasumbalesa via Kolwezi. The
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Republic of South Africa has expressed its keen interest in clean energy produced by the Grand
Inga development, and by the Inga 3 BC development in particular, because of its heavy
dependence on fossil fuels,. In October 2013, the Ministers of Energy for the DRC and the RSA
signed a treaty. Following ratification by the Parliaments of both countries, this treaty will
govern their collaboration for the development of the Grand Inga development, including Inga 3
BC with an allocation of 2,500 MW to the RSA.
Furthermore, the mining industry in Katanga is booming, despite power shortages. (copper
production will reach of 750,000 tons in 2013, a 25% increase compared to 2012). Katanga has
one of the largest reserves of copper and cobalt in the world. Future private-sector investors in
the Inga 3 BC development view the DRC’s copper industry, which includes some of the global
leading mining firms, as an additional creditworthy power off-taker.
The [Inga] feasibility study published in September allocated the sale of electricity from the Inga
3 BC development as follows: 2,500 MW to the Republic of South Africa, 1,300 MW to the
mining industry in Katanga, and 1,000 MW to SNEL. The latter breaks down into 600 MW in
firm power and 400 MW in non-firm power, depending on the water level in the Congo River.
The allocation of power from Inga-3 BC is based on a demand forecast for greater Kinshasa and
the projected increase in power generation from Inga1 and Inga 2 once rehabilitation is
completed.
For this reason, the Government intends to allocate public financing to the “common” facilities
under the PPP for the development of Inga 3 BC. This option has three advantages. First, such a
use of concessional public funds will result in lower power production cost of for the populations
of Kinshasa and Bas-Congo than would be possible under any purely private solution. Second, it
ensures strong public oversight of the environmental and social impacts during construction.
Such impacts are always critical when building a dam. Third, by maintaining ownership of the
Inga 3 BC dam through a Public Project Company, the government will be able to maintain
control over the design, construction and operation of this strategic infrastructure. It will be
important to protect the long-term interests of the DRC, including rent allocation, in the
subsequent developments of the Inga site – which include increasing the height of the dam.
The EPC contractors for the "common” facilities will be selected through an international
competitive bidding process in order to comply with DFI procurement rules. The selection
process will also comply with the DFIs’ anti-corruption rules, including those related to
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debarment. The Government calls on DFIs to coordinate their project appraisal and to define
joint supervision procedures in order to commission the dam at the end of 2020.
A private Special Purpose Vehicle (SPV) or concessionaire will be contracted using a concession
contract to develop and privately finance the Inga 3 BC power plant and the transmission lines to
Katanga. The government of the DRC could hold a minority stake private in this SPV. The SPV
will design, build and operate the [power plant and transmission lines] for the duration of the
concession contract. The SPV could be granted responsibilities (excluding financing) of the
"common” infrastructures in order to mitigate risks during construction, in particular interface
risks. It [the SPV] will sell the electricity produced and pay corporate income tax and a water
tariff to the government, as explained above.
The PPP structure could be adapted to match market conditions, notably the perception of
interface risk by private investors and private lenders. In the same vein, the Government could
ask DFIs, in particular as MIGA, to provide political risk insurance. The government commits to
seek a counter-guarantee to mitigate SNEL's commercial risk, in order to maintain the risk for
private investors at an acceptable level.
The Government has contracted an internationally recognized transaction advisor. This adviser
will support the government to supervise the developer’s activities on the basis of the reference
project specified in the feasibility study and the follow-up studies during the exclusive contract
phase.
The Government commits to use objective criteria and a reference project to select a developer
from the three prequalified consortia. Three criteria will be applied to determine the eligibility of
the [proposals of the] candidates: technical capacity during the design and construction phase,
management capacity during the operating phase, and the consortium’s capacity to raise the
necessary financing. The exclusive collaboration contract for the power plant and transmission
lines will be awarded on the basis of the lowest cost price per kWh. This cost does not include
the cost of the common infrastructure, which will be publicly financed. The winning bid cannot
be revised upwards except on the basis of objective criteria resulting from technical studies
which will be defined upfront.
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The final cost price per kWh (including the cost of the common infrastructure) will be
determined once the EPC contractor for the common infrastructure has been selected on a lowest
cost basis. The power purchase agreements with the pre-identified off takers at the same time
will be negotiated in parallel taking into account the opportunity cost of electricity in Kinshasa,
Bas Congo, Katanga and in the SAPP, as well as inflation projections.
If a selection based on cost price per kWh is finally deemed impossible within the project
planning, the Government reserves the right to use the internal rate of return on equity as a
selection criterion. In this situation, the developer will be requested to select EPC contractors
through international competitive bidding.
The environmental and social impacts of the Inga 3 BC development will be modest relative to
MW produced when benchmarked with other dams around the world, according to the feasibility
study. However, the project needs to be accepted by the population of Bas-Congo, including the
households that were resettled for the construction of the Inga 1 and Inga 2 (and claim to have
outstanding entitlements). Furthermore, the upstream and downstream impacts from the dam as
well as the impacts of the transportation lines need to be addressed. The Government fully
subscribes a responsible environmental and social management vision for the Inga 3 BC
development. For this purpose, it has drafted 10 terms of reference for environmental and social
impact studies and two terms of reference for [land] entitlements. These terms of reference have
been disclosed on the official website (www.cate.cd) and published in two official gazettes
(l’Observateur and le Phare) in June 2013. Two public consultations were held in Kinshasa in
July 2013 and in Matadi in September 2013.
The Government commits to work in close collaboration with the DFIs to ensure that the
decision-making process, the detailed design of the Inga 3 BC development, and the project itself
incorporate appropriate environmental and social risk mitigation measures. Specifically, it
commits to set up a panel of environmental and social experts and a dam safety panel. These
panels will be maintained until the impoundment of the Inga 3 BC dam and the construction to
increase the height of the dam. The Government also acknowledges that the transmission lines
to be developed outside of the DRC are an associated infrastructure and it intends to collaborate
with the neighboring countries to ensure that this infrastructure complies with environmental and
social standards.
Finally, the Inga 3 BC development has a local, national and regional importance and visibility.
The Government subscribes to the principles of transparency, freedom of information, and
regular consultation with the affected populations and other project stakeholders. As such, it
commits to engage in a continuous dialogue with all stakeholders about the Inga 3 BC
development and about the main issues facing projected affected people. The Government
commits to disclose key documents concerning the project as the project progresses. It will
continue the periodic consultations with the communities and citizens in the project area that
were initiated during the preparatory phase of the project. These consultations will solicit views
on various issues, such as measures to mitigate social and environmental impacts and project
outcomes.
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MATATA PONYO Mapon
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Annex 9: Indicative project budget
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COMPONENT B - Mid-size hydropower development support 25.6 25.6
Component B1 - Mid size hydro 19.1 19.1
Analysis of the institutional, regulatory, and legal framework for the development of mid-size
hydro projects
2.0 2.0
Review of 62 projects and selection of 30 projects for prefeasibility studies 0.4 0.4
Update/conduction of prefeasibility studies for selected 30 projects 3.0 3.0
Multi criteria analysis to select three projects for feasibility studies 0.2 0.2
Detailed feasibility and E&S studies for 3 selected projects, and preparation of specs & bidding
documents
10.5 10.5
Support to the private developers' selection process for the 3 best projects 3.0 3.0
Component B2 - Carbon finance market development 1.0 1.0
Implementation of carbon finance mechanism 1.0 1.0
Component B3 - Institutional Strengthening 5.5 5.5
CGI3
Individual advisors 1.7 1.7
Staff (consultants) 1.1 1.1
Office equipment 0.4 0.4
Operational costs 1.0 1.0
Workshops and training 0.6 0.6
Communication 0.7 0.7
TOTAL PROJECT COSTS 106.5 73.1 33.4
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Annex 10: Chronogram of actions undertaken by the GoDRC since 2010
2010: Guidelines issued by the Presidency of the DRC for the development of Inga following international best
practices and the use of international tenders.
2010: Establishment of a Steering Committee to ensure the development of the project including the selection of
developer until the constitution of the Project Company;
2010: Recruitment of an international law firm to assist the Steering Committee in the selection process of the
developer in order to ensure transparency in the process.
September 13, 2010: signing of the Ministerial Decree CAB / MIN - ENER / 015/2010 on the establishment and
operation of the Project Steering Committee Inga 3 (CPI3) with the following duties: i) Monitor the performance
and validation studies on the Project; ii) Prepare the various steps leading to the Project; and iii) Liaise between
public and private stakeholders in the Project. More than 35 meetings were held since CPI3’s inception.
October 2010 At the request of BHP Billiton drafting by Tractebel Engineering in France of a conceptual review of
development options for the hydroelectric plant Inga 3 (tunnel option), based on the study conducted by SNC
Lavalin in 2008. This conceptual study and the study of SNC Lavalin provided the basis for the development of the
Request for Expression of Interest and the Memorandum of Information Project (MIP).
October 2010: Launching of the Request for Expression of Interest on the Inga 3 Project for the selection of the
developer.
December 2010: Submission of offers from 9 companies or groups of companies.
April 2011: Notification to 6 shortlisted companies or groups of companies, after receiving final clearance of the
Government Commission of Economy and Reconstruction (ECOREC) and the Presidency of the Republic.
Notification to unsuccessful candidates.
April 2011: Submission of the Memorandum of Information Project (MIP) to the six shortlisted companies or
groups of companies.
August 2011: Sending of an Addendum to inform shortlisted firms of a possible second option for the development
of Inga 3 project with an open channel instead of tunnels.
August 19, 2011: submission of bids by three of six shortlisted companies.
October 10, 2011: Recruitment of an International Law Firm advisor Orrick Rambaud Martel, in joint venture with
Banque Lazard and Engineering Tractebel Engineering to assist the Government, through the CPI3, in the selection
process of a developer.
From 12 to 14 October 2011: Presentation by the Consortium AECOM/ EDF of their pre-feasibility study report on
development of the Inga site and associated transmission lines.
October 15, 2011: Official public opening of the bids of three candidate developers.
October 19, 2011: Selection by the Government of the alternative scheme proposed by the aforementioned study on
the development of Inga 3 with open channel.
November 12, 2011: Signing of a Memorandum of Agreement between the Governments of South Africa and DRC
on the development of Grand Inga development in the DRC for the power supply to South Africa, with a firm
commitment to sign a bilateral treaty within 6 months.
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February 7, 2012: Dispatch to the 3 candidates developers of the Addendum to Supplemental MIP, of the Exclusive
Project Collaboration Agreement to be signed with the preferred bidder for the development of their final bid and of
the draft contract to be signed with the selected developer.
February 8, 2012: Notification by BHP Billiton of its withdrawal from the Inga 3 development
February 20, 2012: Letter to the three candidates informing them of the withdrawal of BHP Billiton and of the
continuation of the process engaged for the selection of a developer for Inga 3.
March 7, 2012: Letter to the three candidates informing them of the agreement of the Government to their request
to postpone the original date of submission of their final bids and announcing consultation meetings to be held
between Government, donors and project stakeholders to redefine the new electricity market following the
withdrawal of BHP Billiton.
From 7 to 8 March 2012: Discussion between the Government (Ministry Energy, Project Steering Committee Inga
3, the main multilateral donors involved in the Inga 3 development (ADB, WB, AFD), the AECOM/ EDF Group
and the Government Councilors (Group ORRICK / Lazard / Tractebel). Resolutions taken by the parties with the
financial support of ADB to participate in: a mission to RSA to determine the energy demand of the RSA that could
be drawn from Inga 3: 19-22 March 2012 and a round table with Katanga Mining companies: 29-30 March 2012
From 22 to 23 March, 2012: Discussion in Pretoria (RSA) between the Ministry of Energy of the DRC, through the
Steering Committee of Inga 3, and the Ministry of Energy of the RSA, the DBSA, the Consultant EDF and the
power company ESKOM South Africa for the determination of the electrical energy demand of the RSA in
reference to the Memorandum of DRC-RSA agreement of 12 November 2011. Resolutions taken by the parties: (1)
Commitment in principle by RSA to import of any excess electricity from Inga; (2) Agreement on the need for an
urgent informative workshop on feasibility studies for development of Inga and priority corridors to South Africa in
general and on the maximum technical capacity of the line to develop in the framework of Inga 3 in particular.
Target date: 1st week of May 2012.
From 29 to 30 March, 2012: Roundtable in Lubumbashi with potential mining customers to get firm commitments
on their electrical energy demands for 2020 and beyond. (MOUs to be signed between the parties concerned) The
discussion on whether the mining industry would like to become an anchor customer was in fact found to be
premature and the meeting only produced a letter of intent from the mining industry saying that they would like to
be kept in the information loop for the development of Inga 3.
From 30 August to 1 September 2012 : Meetings in Paris with the Ministry of Hydraulic Resources and
Electricity, SNEL, the World Bank, the African Development Bank, AECOM/ EDF and Orrick / Lazard Frères /
Tractebel to review the progress of the project and discuss about the next steps.
October 2012: Submission by Aecom/EDF of the feasibility report for the development of the Inga site and
associated interconnections.
October 2012: Mission to Kinshasa by the World Bank, the African Development Bank, the European Bank, the
European Union, the KfW, the Agence Française de Développement, the Development Bank of Southern Africa to
take note of the conclusions of the feasibility study and to review the project development plans.
January 25, 2013: Decision by HE Prime Minister of DRC to continue with the private developer recruitment
process.
March 7, 2013: Initialing by the ministers in charge of energy of South Africa and DR Congo of a treaty between
the two governments on the development of Grand Inga in the DRC for the power supply to South Africa.
March 29, 2013: Signature by HE Minister of Hydraulic Resources and Electricity of two decrees creating the
temporary Inga 3 management cell (CGI3) and the ministry’s facilitation committee.
April 4, 2013: written confirmation by the World Bank Vice President for the Africa Region of the intent to support
the GoDRC in its endeavor to develop the Inga 3 project as a first phase of Grand Inga.
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April 8 to 16, 2013: Mission to Kinshasa by the World Bank, the African Development Bank, the European Union,
the Agence Française de Développement, the Development Bank of Southern Africa to review progress of the
project preparation and to examine their possible respective contributions to the development of the project.
May 16-18, 2013: Meeting organized in Paris by the GoDRC with the MRHE and advisors, external financial
partners (AfDB, AFD, DBSA, EIB, IFC, MIGA and WB), and the candidate developers, to discuss the project
institutional structure and timetable and the private developer selection process.
June 6, 2013: Signature by HE Prime Minister of a decree creating the Commission for the Development of the
Inga site – CODESI.
June 28, 2013: Public disclosure of the 12 TORs for E&S safeguards studies.
June 26 to July 4, 2013: Pre-appraisal mission to Kinshasa by the World Bank, the African Development Bank and
the Development Bank of Southern Africa.
July 22, 2013: Signature by HE Minister of Hydraulic Resources and Electricity of two revised decrees creating the
temporary Inga 3 management cell - CGI3 - and the ministry’s facilitation committee – CFI.
July 24-26, 2013: Meeting organized in Kinshasa by the GoDRC with the MRHE and advisors, external financial
partners (AfDB, AFD, DBSA, EIB, IFC, MIGA and WB), and the candidate developers, to continue discussions on
the project institutional structure and timetable and the private developer selection process.
September 20-21 2013: Official presentation by AECOM/EDF of the feasibility report for the development of the
Inga site and associated interconnections.
October 9, 2013: Appointment by the Minister of Hydraulic Resources and Electricity of a coordinator for CGI3
October 12, 2013: Notification of the project from the Minister of Hydraulic Resources and Electricity to the Congo
River Basin Organization (CICOS)
October 31, 2013: Signature by the Ministers in charge of energy of South Africa and DR Congo of the treaty
between the two governments on the development of Grand Inga in the DRC for the power supply to South Africa.
November 12, 2013: Signature by the Prime Minister of the policy letter for the implementation of the Inga 3 BC
development.
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Annex 11: Documents in the Project File
DEMOCRATIC REPUBLIC OF CONGO
Inga 3 BC and Mid-Size Hydropower Development Technical Assistance Project
Legislation
Ministerial Decree CAB / MIN - ENER / 015/2010 on the establishment and operation of the
Project Steering Committee Inga 3 (CPI3), September 13, 2010;
Prime Minister Decree 13/09 creating the Commission for the Development of the Inga site –
CODESI, June 6, 2013 ;
Ministerial Decree CAB/MIN/RHE/033/2013 creating the temporary Inga 3 management cell
(GGI3), July 23, 2013;
Ministerial Decree CAB/MIN/RHE/032/2013 creating the ministry’s facilitation committee
(CFI), July 23, 2013;
Technical studies
Study conducted by SNC Lavalin in 2008;
Conceptual review of development options for the hydroelectric plant Inga 3 (tunnel option),
based on the. (Tractebel Engineering), October 2010;
Feasibility study, Study of Inga hydroelectric site development and associated power
interconnections, AECOM/EDF, September 2013;
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2 TORs for Inga 1&2 historically pending issues: (1) Community development plan for
project affected persons during the construction of Inga 1&2, (2) RAP for Camp Kinshasa,
built during the construction of Inga 1&2, disclosed on June 28, 2013;
Notification of the project from the Minister of Hydraulic Resources and Electricity to the
Congo River Basin Organization (CICOS), CAB/MIN/RHE/CATE/Mund/1014/13, August
26, 2013;
Notification from CICOS to riparian States (30 letters to the 12 riparian countries: Angola,
Burundi, Cameroun, Congo, Gabon, Malawi, Uganda, CAR, Rwanda, South Sudan,
Tanzania, and Zambia), November 4, 2013 ;
Miscellaneous
Notification by BHP Billiton of its withdrawal from the Inga 3 development; February 8,
2012;
Memorandum of Agreement between the Governments of South Africa and DR Congo on
the development of Grand Inga in the DRC for the power supply to South Africa, November
12, 2011;
Treaty between the two governments on the development of Grand Inga in the DRC for the
power supply to South Africa, October 31, 2013;
Communications and consultation plan for the Inga-3 TA project, July 2013.
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Annex 12: IBRD 40513 - Map of Inga 3 BC Common Infrastructures
DEMOCRATIC REPUBLIC OF CONGO
Inga 3 BC and Mid-Size Hydropower Development Technical Assistance Project
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