China and Congo butt heads over 15-year-old $17 billion deal
The Democratic Republic of Congo’s state auditor has requested an additional $17 billion in investments from a 2008 infrastructure-for-minerals agreement with Chinese investors, which is presently being renegotiated.
The Chinese embassy in Congo stated on Friday that the state auditor’s report was “full of bias” and did not match reality.
The current administration of the DRC has revisited the deal struck by his predecessor, Joseph Kabila, in which Sinohydro Corp (SINOH.UL) and China Railway Group Limited agreed to build roads and hospitals in exchange for a 68% stake in Sicomines, a cobalt and copper joint venture with Congo’s state mining company Gecamines.
The Chinese investors committed to spending $3 billion on infrastructure projects under the Sicomines deal, but the state auditor – Inspection Generale des Finances (IGF) – demanded that commitment be increased to $20 billion to reflect the value of the mining concessions contributed by Gecamines to the deal.
A request for a response from a Sicomines representative was not immediately returned. He previously defended the agreement, claiming that it had fuelled growth in Congo and that Sicomines would spend more as output expanded.
According to the IGF report, Sicomines has so far invested $822 million on infrastructure projects. The auditor also demanded an “urgent” $1 billion investment from Sicomines, as well as a promise to hiring Congolese for 50% of infrastructure projects.”
The IGF asked for the “renegotiation of the Convention to modify and balance the obligations and benefits of both parties and bring them into line with the value of their respective contributions” among a list of 16 requests.
In addition, the auditor asked that Gecamines be granted a larger interest in Sicomines. It presently owns 32% of the company.
Last month, Congo’s Finance Minister, Nicolas Kazadi, told Reuters that the government expected to strike a deal on the Sicomines transaction this year.
Congo stopped a tax exemption on Sicomines in September, exempting the company from paying import duties. According to two authorities, the suspension is still in effect.
