Apr 25 2014
Fleurette Group (Fleurette), one of the largest private investors in the Democratic Republic of Congo (DRC) and Andrade Gutierrez, one of the world's leading construction companies, today announce they have signed an agreement to form a Joint Venture (JV) to develop new infrastructure projects in the DRC.
While considerable progress has been made in the DRC to develop the economy after years of conflict, the country remains in need of significant investment in its infrastructure to further its economic development. The JV will target opportunities in the power, rail and road sectors, all of which will hugely benefit from new investment.
The need for infrastructure investment in the DRC
- Major power shortages force the DRC to import energy from outside the country while total installed capacity has remained level for 20 years, despite significant increases in demand, both industrial and commercial. In the Katanga region, the engine of the DRC's economic growth, power supply is c. 500MW (including imports from Zambia). Demand in the region is currently 650-750MW, and is expected to reach 1,000MW with the doubling in mining output planned in the next five years. With mining activities already constrained by power shortages and the expected increase in the needs of the general population, there is an urgent need for new power supply.
- The DRC's rail network is of primary importance for shipping mineral commodities out of the DRC to ports in east, west and southern Africa. Road infrastructure will soon be insufficient to transport the increased mining output (currently c. 400 trucks per day). An improved rail system will significantly reduce transportation costs for the resources sector and vastly increase general transport efficiency for the entire country, taking trucks off the road system.
- Finally, the DRC's road network has fallen into serious disrepair as a result of its extended period of conflict. Sealed roads comprise a mere 3,000 km of the country's total road network of over 30,000 km. It is estimated that just 42% of the country's roads are in a condition good enough to support freight transport. The World Bank estimates that repairs and maintenance on the DRC's existing road networks will require roughly US$400 million per year.
Fleurette Group and Andrade Gutierrez Infrastructure JV
A combination of Fleurette and Andrade Gutierrez is ideally suited to developing infrastructure in the DRC. Fleurette is one of the largest private investors in the DRC and has been investing in the country for 17 years. It is a proven, committed investor in the country with core expertise in executing projects in mining and related sectors. Fleurette also has proven track records of successful cooperation with key stakeholders and partners in the region.
Andrade Gutierrez is a leading global construction company with over 65 years' experience in developing engineering projects worldwide. Andrade Gutierrez has operating experience in 10 African countries. It provides expertise and support along the development and post construction life cycle, including operation and maintenance. Key projects successfully completed by Andrade Gutierrez include in the past 12 months the delivery of 200MW of thermal power plants, four airports and several roads projects in sub-Saharan Africa.
The JV by Fleurette and Andrade Gutierrez has appointed Renaissance Capital, a leading frontier markets investment bank, as financial advisor. The JV will evaluate different investment opportunities and projects in which the companies can work together to develop and then take the project forward to completion. Andrade Gutierrez will act as the lead developer in any chosen project. The JV is not seeking a partner to bring an existing project to fruition.