THE DEMOCRATIC REPUBLIC OF CONGO’S INFRASTRUCTURE: A CONTINENTAL PERSPECTIVE

# **Challenges**

Only a tiny fraction of the DRC’s hydropower potential is developed, and much of that has fallen into disrepair. Only 2,540 MW of the 100,000 MW potential has actually been developed as installed capacity, and only 1,100 MW of this meager capacity is actually in functioning order. There are two interconnected power systems in the country. This first connects the Inga site in Bas Congo to Kinshasa and Brazzaville, as well as to Katanga and on to Zambia. The second interconnects the two Kivu Provinces with Rwanda and Burundi. Both systems are dilapidated and need extensive rehabilitation.

As a result, power supply is heavily constrained and subject to blackouts, placing major limitations on private sector activity. About 40 percent of firms in the DRC own and operate their own backstop generator to shield themselves from frequent power interruptions, which cause significant production losses. This is one of the higher percentages of generator ownership in Africa (although the ratio exceeds 80 percent in Nigeria). The Platt’s power generation database indicates that almost half of the installed generation capacity in the DRC is owned and operated by private companies for the purpose of selfsupply—one of the highest ratios anywhere in Africa. Timber mills in the Kinshasa area spend up to 63 cents per kWh to run diesel-powered backup generators when needed. This represents a major constraint in the conversion of logs to higher-value timber products for export. In the Katanga region, mining companies depend primarily on power from the Inga hydro plant, but due to dilapidated infrastructure, supplies are highly unreliable, with 19 interruptions reported on average per month. Overall, the Katanga region is estimated to have a power supply deficit of 900 MW. Due to these deficiencies, mining companies have developed their own local hydroelectric schemes at a cost of around of 10 cents per kWh, compared with an estimated long-run marginal cost for grid electricity of less than 4 cents per kWh.

To turn this situation around, huge investments in new generation and transmission capacity are needed. Just meeting the country’s domestic power demands for the coming decade calls for the refurbishment of the entire existing generation stock, plus a 35 percent expansion of installed generation capacity, to reach about 3,000 MW overall. Developing the DRC’s export potential would call for the installation of a further 7,600 MW. As shown in table 2, just to develop its potential as a power exporter, the DRC would need to invest some $750 million per year over the next decade, tying up 8.8 percent of GDP—a formidable proposition.

Furthermore, the weak financial performance of the power utility SNEL has led to a hemorrhage of resources in the sector. Compared with other African power utilities, SNEL displays very high levels of inefficiency (table 3), though its performance is typical for fragile states. Distribution losses are 40 percent compared with a best-practice benchmark of 12 percent. At the same time, only 40 percent of revenues billed are collected by the utility, and government institutions are particularly guilty of nonpayment. As a result, SNEL faces exceptionally high hidden costs of 595 percent of revenues, meaning that the utility has at its disposal barely 20 percent of the revenues that it should. Due to the relatively low cost of power production, cost-recovery does not appear to be a major issue for the utility, even though DRC’s tariffs are among the lowest in Africa. But the fact that the leading institution in the sector is in such a weak financial condition is evidently holding back the implementation of urgently needed investments in power generation capacity and the realization of the country’s potential as a power exporter.

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