US embassy cable - 04KINSHASA2062

C O N F I D E N T I A L KINSHASA 002062 
 
SIPDIS 
 
E.O. 12958: DECL: 11/09/2014 
TAGS: ENRG, EINV, ECON, PREL, PGOV, CG 
SUBJECT: WIDESPREAD INTEREST IN INGA DAM DEVELOPMENT 
 
Classified By: Econoff Peter Newman for reasons 1.4 b/d 
 
1. (C) Summary: The Ministry of Energy continues to receive 
proposals for the development of Inga Dam. The most recent 
developments have been an MOU signed with Eskom of South 
Africa and negotiations with MagAlloy (with Reynolds Group 
participation). The MOU signed with Eskom is one step closer 
to the formalization of the Western Corridor (Westcor) 
project. It is not yet official and binding, awaiting 
Presidential approval. MagAlloy does not yet have an 
agreement with the GDRC but is negotiating for participation 
in a consortium for the rehabilitation of Inga I and Inga II 
in return for guaranteed supply to a potential magnesium 
smelter in Pointe Noire, Congo-Brazzaville. Reynolds Group is 
also currently in negotiations to participate in the 
consortium. End summary. 
 
2. (C) DRC Minister of Energy Jean-Pierre Kalema Losona 
signed a MOU with Eskom (South African electricity 
parastatal) for the Western Corridor (Westcor) development 
project in mid-October. (Note: Westcor is a international 
group formed by the electricity companies of the RSA, 
Botswana, Namibia, Angola, and the DRC. Its objective is the 
development of Inga to export electricity to Southern Africa. 
End note.) The MOU concerns only the future development of 
Inga III and Grand Inga. Inga III would bring the system's 
total installed capacity to 3,500 MW, while Grand Inga, 
though only a possibility in the very long-term, would raise 
the installed capacity to 40,000 MW. The MOU has an exit 
clause that was written to allow for annulment of the MOU 
with 30 days notice (NFI). The MOU is not official and 
binding as far as the GDRC is concerned, until the Economic 
and Finance Commission (EcoFin) and President Kabila sign off. 
 
3. (SBU) The Ministry of Energy is attempting to corral all 
players in the rehabilitation of the pre-existing Inga I and 
Inga II dams into one consortium. Reynolds Group (with 
partner Rusal) and MagAlloy are now jointly pursuing an 
agreement for rehabilitation of Inga I and II with SNEL 
(National Electric Company) and the Ministry of Energy in 
exchange for dedicated lines to their potential metal plants 
in Pointe Noire. Ambassador Herman Cohen, acting as a 
consultant to Reynolds Group, indicated to econoff that 
Reynolds and MagAlloy will commence negotiations on Nov 22 to 
work out a joint approach to SNEL. The are willing to 
rehabilitate eight turbines at Inga but need to negotiate a 
long-term electricity price to make the project viable. 
MagAlloy will need 175 MW and Reynolds will need 500 MW. 
 
4. (SBU) MagAlloy recently issued a press release stating 
that it has signed a preliminary agreement with SNEL 
(National Electric Company). Reynolds and MagAlloy have also 
taken on SNC-Lavalin (a Canadian electric engineering firm), 
Eskom (RSA), Fluor Daniels, Trans Africa Projects (RSA) and 
the IDC as partners. Ambassador Cohen indicated that the 
group hopes to have an agreement with SNEL by the end of 
2004. (Note: Any deal would have to be approved by the EcoFin 
and the President. Furthermore, the Minstry of Energy is 
planning an international conference on Inga Dam for December 
2004 where it will consider various proposals for Inga I and 
Inga II rehabilitation. End note.) 
 
5. (C) Comment: Eskom and SNC-Lavalin are well positioned to 
have their proposal approved to develop the Inga Dam system. 
They have strong support in the Presidency and will likely 
try to hinder the entry of other energy firms. Reynolds and 
MagAlloy are in a more difficult position and it may well be 
necessary for them eventually to include Eskom and 
SNC-Lavalin as partners in order to have their proposals 
favorably considered. End comment. 
MEECE