UPDATE 2-Congo demands $17 bln more in infrastructure investments from China deal

(Adds Sicomines response)


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Feb 17 (Reuters) – Congo’s state auditor has demanded an additional $17 billion of investments from a 2008 infrastructure-for-minerals deal with Chinese investors that is currently being renegotiated, a report seen by Reuters showed.

China’s embassy in Congo said on Friday it was shocked by the state auditor’s report, calling it “full of prejudice” and not corresponding to reality.

President Felix Tshisekedi’s government has been revisiting the deal struck by his predecessor Joseph Kabila under which Sinohydro Corp and China Railway Group Limited agreed to build roads and hospitals in exchange for a 68% stake in Sicomines, a cobalt and copper joint venture with Congo’s state mining company Gecamines.

Under the Sicomines deal, the Chinese investors committed to spending $3 billion on infrastructure projects, but the state auditor – Inspection Generale des Finances (IGF) – demanded that commitment be increased to $20 billion to reflect the value of the mining concessions that Gecamines contributed to the deal.

In a response posted on Twitter, Sicomines said it objected to the contents of the report and challenged the “competence” of the auditor.

“Unjustified criticisms and measures taken against SICOMINES affect the functioning of the company and of the Cooperation Project, jeopardizing the interests of the country and the Congolese people,” Sicomines said.

The Chinese embassy said the deal was “a great example of win-win partnership,” using a catchphrase of Tshisekedi’s when he talks about Congo’s ventures with other countries.

Neither the embassy nor Sicomines specifically addressed the IGF’s criticisms and demands.

So far, Sicomines has only spent $822 million on infrastructure investments, according to the IGF report. The auditor also called for an “immediate” $1 billion investment from Sicomines, and a commitment to 50% of the workforce on infrastructure projects being Congolese.

Among a list of 16 demands, the IGF called for the “renegotiation of the Convention to adjust and balance the duties and benefits of both parties and bring them into line with the value of their respective contributions.”

The auditor also demanded that Gecamines be given a bigger stake in Sicomines. It currently has a 32% holding.

Congo’s finance minister Nicolas Kazadi told Reuters last month that the government expected to reach an agreement on the Sicomines deal this year.

Congo in September suspended a tax break on Sicomines, exonerating the firm from paying import taxes. Two officials told Reuters that suspension was still active. (Reporting by Stanis Bujakera, Fiston Mahamba, and Sonia Rolley Writing by Helen Reid Editing by Mark Potter)

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