Republic of the Congo’s 2014 EITI Report helps account for oil-backed infrastructure loans.
In an oil rich economy, oil proceeds become more precious to a country even as production dwindles and global prices slump, 90% of Congo-Brazzaville’s exports and 60% of its GDP comes from its oil. Its EITI Report now accounts for a sizable share of oil revenue that does not pass through the Treasury.
Deductions at source
Congo-Brazzaville collected over 47m barrels of profit oil worth around USD 4.5bn in 2014. Over a third of that (17m barrels worth USD 1.6bn) was used to pay back oil-backed infrastructure loans, according to the latest EITI Report. Another 6.2m barrels worth roughly USD 590m appear to have been allocated to the domestic refinery CORAF free of charge.
The country has signed three such oil-backed infrastructure projects, two with Italy’s ENI and one with China Exim Bank. Under a 2001 agreement, ENI Congo developed a 50MW power plant in Djéno, Pointe Noire, supplied by associated natural gas from the M’Boundi oilfield. In a second deal signed in 2007, ENI used the same structure to finance a 300MW Congo Power Plant in Pointe Noire. The third arrangement covers several infrastructure projects under a framework agreement with China Exim Bank, although details of projects or agreement date are unknown.
In cash or kind
Under ENI’s two agreements, the operator is allowed to deduct a fixed share of the state’s profit oil in kind and sell it on international markets. The proceeds are transferred to special-purpose escrow accounts to repay the original investment in the two power plants.
In contrast, the share of state’s profit oil deducted to cover projects under the China Exim Bank deal is sold by the state-owned oil company SNPC, with proceeds transferred to a dedicated escrow account.
Congo-Brazzaville’s latest EITI Report tracks repayment of several oil-backed infrastructure projects developed over the past decade. As the country prepares for its first Validation under the EITI Standard, reporting of such bespoke arrangements in as much detail as other EITI reporting will be key.
Access the Republic of the Congo’s 2014 EITI Report.