By Socrates Djemba
Socratesse Djemba, a student in Lewis & Clark Law School's LL.M program, interned with GEI this summer. Socratesse is originally from the Democratic Republic of Congo, and his blogs reflect on energy insecurity and policy in the DRC.
As
my previous post described, the majority of the population in the Democratic
Republic of Congo (DRC) lives without electricity. This inadequacy is
attributable to many challenges, such as lack of funds to construct appropriate
transmission lines and to assure maintenance of equipment. The overarching problem, however, is the lack
of effective energy regulation and policy. An inadequate policy framework
explains why a country with the potential to produce over 100,000 MW of electricity
has installed capacity less than 2,500 MW so far.
Commentators
attribute many of the DRC’s energy problems
to ineffective state-owned monopolies. According to Emery
Mukendi, the legal framework that has governed the electricity
sector in the DRC is essentially composed of antiquated, disparate, out-dated
and unsuitable legal instruments that have not kept pace with the evolution of
the sector. In addition, the government has
retained a monopoly in electricity sector for more than 40 years. In
1972, the Congolese government established the SNEL (National
Society of Electricity) as the state-owned agency to generate, transmit,
distribute, and trade electric power. Undoubtedly, this monopolistic situation
in the electricity market has failed to provide the entire population with
access to electricity.
While
article 48
of the Congolese Constitution of 2006 guarantees
access to electricity as an inviolable right, I wonder how much the government is
aware of its flagrant violation of the Constitution.
Fortunately,
the Ordinance-Law of July 7, 2008, launched the process of transforming
Congolese national enterprises that have not reached their goals. Under the
ordinance, SNEL triggers the criteria for being transformed into
"commercial corporation" in which the government will be "the
majority shareholder" among other shareholders, including private
operators. As a result, SNEL should lose its monopoly over producing and
distributing electricity.
More
recently, President
Kabila signed into law the Act number 14/011 of 17 June 2014 to
govern the electricity sector, which adopts the following fundamental
principles:
- The liberalization of the sector and the
opening of the electricity market to any operator;
-
The allocation of concurrent powers in this area between the central
government, the provinces and decentralized territorial entities;
-
The erection of any hydroelectric or geothermal site as an inalienable site of
public interest;
-
The environmental protection requirement for all development projects in this
sector; and
-
The State's obligation to promote the electrification of rural and suburban
areas, in order to increase the electricity access rate throughout the country;
ensuring the protection of both the operator and the consumer.
As
a result of this act, the monopoly regime will be replaced by a more competitive
energy sector. In addition, the central government has lost its role as the
single regulator of the energy. Local governments now have the autonomy to
manage their natural resources and to engage in energy markets in accordance
with the law. Also, the government is no longer the only actor who bears the
burden of providing access to electricity because private investors are among
the main actors in electricity sector. Article
25 of the new statute on electricity allows investors to
propose new tariffs of electricity for review. While article 77 established a
regime of freedom to any person to develop a private power plant with a
capacity not exceeding 50 kW, article 81 authorizes the government to delegate
to a third party the management of its electricity utilities. The promotion of
public-private partnership is one of the significant innovations brought by
this new legislation.
Should
the Congolese population cheer these reforms? Is this legislative success
enough to bring back hope and satisfaction? The SNEL Director of Transmission
Department, Mr.
Alex Kadiayi, announced that the process of
SNEL's transformation into a commercial company is complete. Has this
transformation ever changed anything? Doubt persists and population still lives
in the shadows.
Brazil’s
experience could offer some indications of how the DRC may perform. Brazil is
also a developing country with a population of more than 200 million
inhabitants and an area of 8,515,767 km2. Brazil
has an installed capacity of more than 75,000 MW of hydropower, but it aims to
reduce its reliance on hydropower by promoting alternative
renewables, such as ethanol and wind. Moreover,
Brazil's energy policy encourages private generation and distribution
electricity to large users. The government retains the exclusive right to
supply electricity to residential users. Generally speaking, distribution
of electricity is dominated by private companies,
as supplemental actors. It would not be a surprise to hear that nearly 100%
of the Brazilian population has access to electricity, and the rate of outages
is very low.
Brazil
may also offer a cautionary tale, for while Brazil has a great potential to
produce hydropower and other types of renewable energy, it is still an importer
of electricity in order to meet the high demand of its population. The DRC also
has incredible potential to produce renewables without needing alternative
energy from fossil fuels. The Congolese population is growing, and the
country's installed capacity of power has remained the same for decades.
To
ensure the DRC can produce and deliver power for this growing population and to
meet the 2025 goal
of 60% electrification rate, the Congolese government should
provide a number of incentives for construction of transmission lines for
renewables in order to increase its installed capacity. For example, operations
of transmission lines could be exempted from service taxes. The importation of
equipment for renewable power plants should also be exempted from port taxes.
Rather than merely rely on hydropower, the DRC should also promote alternative
renewable sources of energy, such as geothermal, solar, and ethanol.
In
the United States and other countries with high electrification rates,
affordability and reliability are pillars of energy policy and supply. The
problem with the DRC is that ratemakers blindly follow affordability and
undermine reliability. Imagine a scenario where the government sells
electricity to other countries, but the local population does not have reliable
access to electric power produced in its own country. Fortunately, new laws now
criminalize some practices in electricity sector. For instance, article
122 of the Congolese new electricity legislation provides for
imprisonment and a fine ranging from $1000 to $500,000 for anyone who interrupts
the supply of electricity to consumers without valid cause. In this case, the
population should have opportunity to bring claims against the government and
private suppliers, and obtain relief.
The
changes to the DRC’s energy laws
should improve competition in energy sector. Monopoly and hegemony in energy
sector did not produce their fruits we expected, so perhaps private operators
will play a better role, particularly if their rights and investment were
guaranteed.
