The Grand Inga Dam: Solution to Africa’s “energy apartheid?”

The Grand Inga Dam: Solution to Africa’s “energy apartheid?”

A look at one of the most ambitious megaprojects in the modern era which could unlock Africa’s potential and uplift millions out of energy poverty. 

Megaprojects in emerging markets have often led to high returns for investors and dramatic economic development for host countries. In other cases, they have been marred with problems and underwhelming returns at all levels. While it is too early to determine the outcome of the Grand Inga Dam, what is certain is its status as one of the most audacious projects ever undertaken.

The Grand Inga Dam is part of a decades-long dream to harness the power of the world’s deepest river and the centerpiece of a grand vision to develop a continental energy grid within Africa. The project site is located near the Congo River, within the Western region of the Democratic Republic of Congo (DRC).

Upon completion, Grand Inga would become the largest hydropower facility in the world and boast a capacity of 42,000 megawatts (MW). In comparison, the current record holder, China’s Three Gorges Dam, has a capacity of 22,000 MW. Unsurprisingly, such ambitions come at a cost; in the case of Grand Inga, the total estimate is a staggering $80 billion. The project is set to occur in six phases, with full completion expected in 2022.

Who is involved?

Given the sheer scale of the Grand Inga Dam, several institutions have become stakeholders in the project. The World Bank, European Investment Bank, and African Development Bank have committed over $70 million towards conducting feasibility studies.

ESKOM, South Africa’s state-owned utility and Africa’s largest power company, has signed a purchasing power agreement and is aggressively advocating for the project.

The DRC has issued a call for tender and three consortia from Spain, China, and South Korea-Canada. In a striking turn of events, the US government is partnering with China to help finance the project. The two powers have traditionally wielded development aid as a means to cultivate soft power abroad.

Potential windfall for stakeholders

The Grand Inga would be a boon for the DRC, which has an electrification rate of less than 11%. Power issues have long plagued the mining sector, which is a critical part of the Congolese economy. Grand Inga could alleviate these issues and significantly boost mining output. The DRC economy could earn a windfall through the sale of surplus power across the continent.

For Africa, the project could generate the political and financial capital necessary to establish a continental wide grid that can provide stable energy and spur economic growth. Jin Yong Kim, President of the World Bank, echoed these sentiments by declaring that the project could signal the “end of African energy Apartheid.” The DRC poses an exceedingly risky investment climate, and executing a project there could embolden international investors and attract further investment into Africa.

At the international level, Grand Inga could set a precedent for cooperation in international development and a paradigm shift that allows for great powers to see development as more than a zero-sum game. Increased cooperation within the field could lead to new opportunities and regimes that allow for the investment to occur where it may not have been feasible.

Economic development could spur the growth of new markets across Africa, and provide the key to unlock Africa’s massive potential to global investment.

Significant challenges remain

Despite the enticing potential of the Grand Inga, the biggest challenge is answering who will be willing to invest in the DRC. The country sits at the bottom of most investment climate indexes, which is not surprising given decades of rule under a dictator and a series of conflicts.

In fact, the concept of the Grand Inga Dam was actually proposed back in the 1970s when the DRC outlined a project agreement with South Africa, but everything was scrapped when the country became engulfed in war.

Detractors have also pointed out the massive potential for ecological damage, flooding, and displacement of local communities. Others have contended that it would be more efficient to implement several hybrid, decentralized electricity schemes instead of investing into one risky megaproject.

The project timeframe has also been criticized given that it seeks to accomplish everything in less than a decade. It is worth noting that China’s Three Gorges Dam took eleven years to build.

International Rivers, an environmental NGO and outspoken critic of the project, summarized the daunting nature of the project by noting that, “Africa’s poorest nation plans to build the largest and most expensive hydropower dam.”

Current project status

In a negative turn of events, two of the three leading consortia in the bidding process have been dismissed.

The China International Water and Electric Corporation was ruled out after it was found to have submitted fraudulent information about its work experience on previous tenders. The South Korea-Canada consortium, consisting of SNC Lavalin, Posco, and Daewoo, was also forced to pull out after SNC was banned from World Bank tenders for engaging in questionable practices in Asia.

In early 2014, the World Bank decided to develop the first phase of the Grand Inga as a private investment through its International Finance Corporation (IFC), instead of as a public sector project. The World Bank did approve a $73 million grant for the project, but not without some controversy.

However, the project still has traction, as the US Agency for International Development (USAID) worked with the IFC and a few Chinese companies to broker a deal for the first phase. The fact that the two powers are willing to partner together speaks volumes for what the project entails from the standpoint of potential financial returns.

For now though, the Grand Inga remains just a slightly tangible dream.

About Author

Sam Doo

Samuel is an IR professional interested in the crossroads of geopolitics and investigative research. He was previously a graduate associate at OPIC, a U.S. developmental finance institution that provides political risk insurance and financing options for emerging market investments. He also previously worked for INTERPOL. He holds a MA from George Washington University and a BA from the University of Michigan.