The European Investment Bank (EIB) has signed its first contracts in the Democratic Republic of Congo (DRC) since 1986. The Bank has lent EUR 110 million to the DRC Government to benefit the Société Nationale d’Électricité (SNEL), the public electricity company, for the rehabilitation and expansion of existing facilities at and around the Inga hydropower plants. The EIB has also agreed to clear the arrears of the former debt of Gécamines (Générale des Carrières et des Mines), the last DRC borrower to receive an EIB loan for the rehabilitation of the company’s copper and cobalt production facilities.
The EIB projects clearly illustrate the European Union’s commitment to support the DRC government’s efforts to establish political stability and encourage economic development, especially during the current international financial crisis. The EIB’s principles of good governance and sustainability will help to promote a sound public sector business environment.
Plutarchos Sakellaris, EIB Vice President responsible for lending operations in Africa, the Caribbean and the Pacific (ACP), said on the occasion of the signature ceremony in the presence of the DRC Finance Minister, Mr Matenda Kyelu, “The EIB is very pleased to resume operations in the Democratic Republic of Congo with the Inga hydropower plant - a project of such crucial importance for the economy. We believe strongly that the road to real economic development for the DRC lies with support to the rehabilitation, improvement and expansion of basic infrastructure. We will continue to work with our Congolese counterparts under the principles of mutual understanding and transparency for our common goals.”
Inga Hydropower Plant
The Inga plants are at the heart of the DRC’s energy generation capacity and the rehabilitation project will allow for the provision of reliable and cost-efficient electricity in the DRC and surrounding countries. This will satisfy both local and regional energy needs, bringing electricity to first-time customers in the poorest areas of Kinshasa and strengthening the capacity of the South African Power Pool (SAPP). The EIB’s loan will finance the construction of the second transmission line between Inga and Kinshasa and the rehabilitation of three substations in the Katanga region.
The DRC government and its financial partners are currently working on a series of measures to reform the utility company SNEL to introduce international best practices. In the mean time the country has urgent energy needs which should be addressed in part thanks to the Inga project; the EIB counts on the commitment of the DRC to ensure the organisations good management during the reform period.
In addition to the EUR 110 million loan, SNEL will benefit from a 2% interest rate subsidy from the EIB in line with the recommendations of the Highly Indebted Poor Country (HIPC) initiative.
Gécamines Debt Clearance
The EIB is an active subscriber and contributor to the IMF/World Bank HIPC initiative which entails coordinated action by the international financial community to ensure that no poor country faces a debt burden it cannot manage. By deciding to clear outstanding debt to Gécamines, the EIB is honouring its commitment to the DRC under the HIPC initiative.
The Bank has proposed an arrears clearance mechanism which comprises a gradual reduction of that debt by the Bank through its HIPC contribution.
This arrears recovery plan will enable the EIB to lend again to the DRC public sector, such as SNEL, which is a key step in the Bank’s commitment to reduce poverty and promote economic growth in the country.
The contract signatures took place in Luxembourg with representatives from the Finance Ministry, SNEL and Gécamines present. The ceremony marked the conclusion of over two years of discussions and negotiations with the Congolese authorities. Other financiers of the Inga project include the World Bank and the African Development Bank.
Background notes:
EIB Activity in Africa, Caribbean and Pacific
The European Investment Bank (EIB) is instrumental in implementing the EU’s development and economic cooperation policy in countries outside the Union. The EIB has been a development partner in many African, Caribbean and Pacific (ACP) countries since 1963 through a series of lending mandates from the European Council. The current mandate is based on the Cotonou Agreement of June 2000.
EIB loans in the ACP regions support the alleviation of poverty and the development of sustainable economic growth. The Bank lends from two sources – EIB own resources and the Investment Facility, a revolving fund financed by the EU Member States through the European Development Fund. In 2007, the EIB invested EUR 869 million in the ACP region.
Since 1970, the EIB has lent EUR 270 million to support industry, infrastructure, financial services and small enterprises in the Democratic Republic of Congo.
The EIB projects clearly illustrate the European Union’s commitment to support the DRC government’s efforts to establish political stability and encourage economic development, especially during the current international financial crisis. The EIB’s principles of good governance and sustainability will help to promote a sound public sector business environment.
Plutarchos Sakellaris, EIB Vice President responsible for lending operations in Africa, the Caribbean and the Pacific (ACP), said on the occasion of the signature ceremony in the presence of the DRC Finance Minister, Mr Matenda Kyelu, “The EIB is very pleased to resume operations in the Democratic Republic of Congo with the Inga hydropower plant - a project of such crucial importance for the economy. We believe strongly that the road to real economic development for the DRC lies with support to the rehabilitation, improvement and expansion of basic infrastructure. We will continue to work with our Congolese counterparts under the principles of mutual understanding and transparency for our common goals.”
Inga Hydropower Plant
The Inga plants are at the heart of the DRC’s energy generation capacity and the rehabilitation project will allow for the provision of reliable and cost-efficient electricity in the DRC and surrounding countries. This will satisfy both local and regional energy needs, bringing electricity to first-time customers in the poorest areas of Kinshasa and strengthening the capacity of the South African Power Pool (SAPP). The EIB’s loan will finance the construction of the second transmission line between Inga and Kinshasa and the rehabilitation of three substations in the Katanga region.
The DRC government and its financial partners are currently working on a series of measures to reform the utility company SNEL to introduce international best practices. In the mean time the country has urgent energy needs which should be addressed in part thanks to the Inga project; the EIB counts on the commitment of the DRC to ensure the organisations good management during the reform period.
In addition to the EUR 110 million loan, SNEL will benefit from a 2% interest rate subsidy from the EIB in line with the recommendations of the Highly Indebted Poor Country (HIPC) initiative.
Gécamines Debt Clearance
The EIB is an active subscriber and contributor to the IMF/World Bank HIPC initiative which entails coordinated action by the international financial community to ensure that no poor country faces a debt burden it cannot manage. By deciding to clear outstanding debt to Gécamines, the EIB is honouring its commitment to the DRC under the HIPC initiative.
The Bank has proposed an arrears clearance mechanism which comprises a gradual reduction of that debt by the Bank through its HIPC contribution.
This arrears recovery plan will enable the EIB to lend again to the DRC public sector, such as SNEL, which is a key step in the Bank’s commitment to reduce poverty and promote economic growth in the country.
The contract signatures took place in Luxembourg with representatives from the Finance Ministry, SNEL and Gécamines present. The ceremony marked the conclusion of over two years of discussions and negotiations with the Congolese authorities. Other financiers of the Inga project include the World Bank and the African Development Bank.
Background notes:
EIB Activity in Africa, Caribbean and Pacific
The European Investment Bank (EIB) is instrumental in implementing the EU’s development and economic cooperation policy in countries outside the Union. The EIB has been a development partner in many African, Caribbean and Pacific (ACP) countries since 1963 through a series of lending mandates from the European Council. The current mandate is based on the Cotonou Agreement of June 2000.
EIB loans in the ACP regions support the alleviation of poverty and the development of sustainable economic growth. The Bank lends from two sources – EIB own resources and the Investment Facility, a revolving fund financed by the EU Member States through the European Development Fund. In 2007, the EIB invested EUR 869 million in the ACP region.
Since 1970, the EIB has lent EUR 270 million to support industry, infrastructure, financial services and small enterprises in the Democratic Republic of Congo.