March 8 (Bloomberg) -- South Africa has struck a hydropower deal with the Democratic Republic of Congo that will secure electricity equivalent to 5 percent of the country’s installed capacity, an official said.
The two nations today finalized the agreement for South Africa to take 2,500 megawatts from the first phase of the Inga plant, Ompi Aphane, a deputy director-general in South Africa’s Department of Energy, said by phone today from Johannesburg. The remaining 2,300 megawatts will go to mining companies in Congo’s southern Katanga province, he said.
“One of the biggest realities we’re confronted with is that we cannot continue being reliant on cheap coal,” said Aphane, who helped negotiate the deal. “There are cheaper, cleaner options that need to be opened up.”
South Africa is trying to increase its electricity supply to help growth in the continent’s largest economy, where power outages in 2008 shut most of its mines and smelters. The country was among suitors that included BHP Billiton Ltd., the world’s biggest mining company, that tried and failed to develop a new plant on the Congo River.
The off-take agreement, which may be ratified this year after going through South Africa’s parliament, will allow Congo to secure the $10 billion in funding required for the first stage, which may take as long as seven years to finish, Aphane said.
“In terms of the financing we think that phase one is not a big project,” he said. “There is the political will on both sides and that’s 80 percent of the problem.”
The plant will be built in seven phases at a cost of $80 billion and ultimately produce 39,800 megawatts, Aphane said. It will be constructed 140 miles (225 kilometers) southwest of Congo’s capital, Kinshasa, near the site of two partially functioning plants dating from the 1970s.
Congo’s Minister of Hydraulic Resources and Electricity Bruno Kapanji declined to comment on the treaty before it’s made public, he said by mobile phone text message.
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