Renegotiation of the Chinese contract in the Democratic Republic of Congo: a balanced partnership with many advantages
The Democratic Republic of Congo (DRC) recently achieved a masterstroke in the renegotiation of the famous “Chinese contract” concluded with the Chinese Business Group. At the end of the amendment signed on January 18, 2024, the two parties succeeded in harmonizing their interests in a spirit of win-win partnership.
This renegotiation allowed the DRC to obtain five considerable gains:
1. Increase in investment costs for the Infrastructure component: Thanks to this renegotiation, the DRC will benefit from a significant increase in investments planned for infrastructure development. An amount of USD 624 million will be released in 2024, which represents 76% of the total value of infrastructure financed over a period of 15 years.
2. Rebalancing of shares in the management of the Busanga Dam: While the Chinese party previously held 70% of the shares in the Synohydro-Busanga Dam co-ownership, the amendment made it possible to increase the co-ownership shares of the Congolese state at 40%. This new distribution allows the DRC to have a blocking minority in decision-making and a more important role in the management of the dam.
3. Readjustment of interests in Sicomines: The initial contract provided for a distribution of profits of 68% for the Chinese and 32% for Gécamines, without providing for royalties for the DRC. Through the renegotiation, it was agreed that 35% of the profits will now be taken to finance the roads, and the rest will be shared equally between the two parties. In addition, Sicomines will pay the Congolese government 1.2% of turnover, or 24 million USD per year.
4. Rebalancing of marketing: Before the renegotiation, the Chinese side had the exclusivity of the sale of mining production, setting prices at its convenience. The new distribution allows the DRC to sell 32% of mining production to the highest bidder and at a fair price, while maintaining a share of 68% for the Chinese side.
5. Rebalancing of management positions in Sicomines: The initial contract granted the Chinese a concentration of powers at the management level, leaving the DRC with subordinate positions. With the renegotiation, the principle of co-management was introduced, allowing the DRC to have important leadership positions and a stronger voice in decision-making.
This renegotiation of the Chinese contract in the DRC therefore allowed the Congolese party to regain control of its interests, obtain greater investments in infrastructure and benefit from a more equitable sharing of benefits. It is an example of a successful partnership where each party finds its advantage, thus contributing to the economic and social development of the country.