One of the most innovative highlights of the new EITI’s requirements is the addition of detailed and reliable data, from extractive industries companies and governments, presented comprehensively. In this regard the 4th requirement states a general list of the types of payments and revenues to be covered by the EITI reports.
While the size of the revenue stream appears to be a determinant criteria for selection, it is equally important, during the reporting process, to consider the revenue streams which help to assure a level playing field, and thus shine light on the potential niches for corruption in the sector. One of those revenue streams is provided by national power utility companies.
In the DRC, the electricity generated by hydropower sources is controlled by the national utility company SNEL (Societe Nationale d’Electricite), which is also a major player in the copper and cobalt rich province of Katanga. Recently, electricity supplies in the region have been under increasing pressure, accumulating a deficit of over 300 megawatts. During mid year, SNEL announced a supply cut of as much as 20% to its biggest consumers, due to low water levels at the Inga dam, located in Western DRC 225km southwest of Kinshasa. Subsequently, Tenke Fungurume, the world’s largest cobalt project in the DRC advised its customers that its cobalt hydroxide shipments would be reduced by some 40% in the third quarter. Energy shortages have also limited the production of the Big Hill cobalt and copper smelter, owned by the Group Forrest and Gecamines, to around 35% of its operating capacity.
To make up for part of the shortfall, mining companies are importing electricity from the neighboring Zambia, or beginning to install their own power generating facilities. However, these alternatives are costly and unsustainable in the long run, which is why companies are also helping SNEL to refurbish its turbines. The failure of SNEL to meet its contractual obligations has led to an energy crisis. Knowing that restoring their energy-dependent mineral production to nominal capacity is critical for mining companies, it will be interesting to unearth more about the quantity of energy promised to each company, compared to the amount they actually receive, and at what cost.
Today, specific energy supply agreements are not made known publically in the DRC. Therefore, full transparency over the quantity of energy received, and energy fares paid by mines drawing power from SNEL and ZESCO (Zambian Electricity Company) is needed. In addition, the disclosure of the contracts between mining companies and SNEL or ZESCO and between SNEL and ZESCO is essential to ensure that in the current crisis in which companies are beginning to take matters into their own hands, everyone is still playing by the same rules. By probing electricity payments made and received by all parties and comparing them with production figures, as is made possible by the new 4th requirement, it would become easier to assess the prevailing potential for corruption practices between mining companies and the SNEL in DRC.
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Mobutu Sese Seko Zaire
I built that dam as Mobutu Sese seko