The Public Investment Corporation (PIC) plans to lead investment in energy projects in Africa by buying into South African shale gas projects and helping to fund what could be the world’s biggest power generation complex in the Democratic Republic of Congo (DRC).
The continent’s largest money manager, with R1.6 trillion under management, would buy stakes in energy companies operating in Africa, chief executive Elias Masilela said last week.
“We have taken the decision that we will play the lead in the energy space,” Masilela said. “Energy is one of the biggest barriers for the continent and if we don’t deal with it, it is going to deal with us.”
The PIC’s focus on energy comes as South Africa explores developing shale projects in the Karoo and efforts to develop the Inga hydropower complex on the Congo River are revived.
The PIC, which mostly manages government workers’ pensions, is the biggest shareholder in Sasol, the world’s largest fuel-from-coal producer, as well as JSE-listed oil explorers SacOil Holdings and Camac Energy.
Eskom implemented rolling blackouts last month for the first time in six years, shutting shops and factories, after heavy rains disrupted coal supplies.
The potential for shale gas to transform South Africa’s energy supply meant the PIC would probably invest in it if “it makes commercial and sustainability sense”, Masilela said. The PIC defended Eskom’s use of coal, criticised for the pollution it causes, because it was investing in ways of cutting emissions as well, he said.
“We’d like to think that shale is going to be a replacement for what Eskom is relying on as a source of power,” Masilela said.
Critics of hydraulic fracturing, which blasts water, chemicals and sand into shale rock to release gas, say it risks polluting ground water.
The government has supported shale-gas drilling in the Karoo. Explorers including Royal Dutch Shell hope to tap up to 390 trillion cubic feet of gas resources, the world’s eighth-biggest, according to estimates from the US Energy Information Administration.
The African Development Bank was trying to put together a group of investors to fund the DRC’s $12 billion (R126bn) Inga 3 hydropower project, Masilela said.
“We’d be interested, but at the right level,” he said. “There’s no way a single investor could handle Inga. It’s too big, too many risks and it would rely to a large extent on political diplomacy.”
In June last year US President Barack Obama pledged $7bn over five years from US institutions to double access to electricity in sub-Saharan Africa. The PIC was one of the partners of Obama’s Power Africa initiative, Masilela said.
The World Bank was in “active negotiations” with the US government to support the Inga project, which could offer 4 800 megawatts of power by the start of the next decade, bank president Jim Yong Kim said last week. The complex, on the biggest river by volume after the Amazon, could eventually produce 50 000MW, he said.
While more than two decades of failed starts on Inga was an “overwhelming” legacy to overcome, Masilela said the project might happen now.
“The US has invested dedicated resources towards this,” Masilela said. “The political capital is now behind the project.” – Bloomberg