Hunton Andrews Kurth LLP
  July 19, 2013 - Virginia

Cooperation Amid Conflict, IFC's Handshake
  by Hunton & Williams

It sounds too good to be true: three countries with a history of conflict, finding creative ways  to split resources from a shared river that can deliver much-needed hydropower to the citizens of all three nations. There are no loopholes and no secret ways for one nation to gain the advantage, even when it comes to taxes. The umbrella organization that is promoting the project has sponsored a treaty governing the management of the river and the catchment area that supplies it with water, and is in the process of establishing an independent international regulatory authority that will regulate the use of this shared resource. 

For the Democratic Republic of Congo (DRC), Rwanda, and Burundi, this sort of creative cooperation amid conflict makes reconstruction possible. Energie des Grands Lacs (EGL), the international organization that operates under the auspices of the Economic Community of the Great Lakes Countries (CEPGL), has promoted this reconstruction since the late 1970s, first with the development of the Ruzizi II hydroelectric project, and now by promoting the Ruzizi III hydroelectric project, which will be developed as a public-private partnership. Those behind the Ruzizi initiative point to four important reasons this post-conflict project has flourished: the mounting need for power and for replacing high-cost gas-oil based generation with lower cost sources; the precedent set by past 
initiatives; the cross-border coordination; and the tariff tailored specifically for the needs of the parties involved. 

THE NEED FOR LOW-COST CAPACITY
The power systems of Burundi, the eastern DRC, and Rwanda are mainly based on gas-oil fired units. The cost of gas-oil based generation is especially high in the Great Lakes region due to huge transport costs from Kenyan and Tanzanian ports. Most of the alternative economical hydro sites are small and Ruzizi III is the largest and lowest cost option in the region, along with methane gas extracted from Lake Kivu for the generation of base load electricity. Increasing demand for electricity has been fueled by economic growth and ambitious electricity access programs financed by donors. As a result, the region is facing a rapidly increasing shortage of capacity and energy



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