In article 48 of DRC Constitution of 18 February 2006 as amended to date, the right of access to electricity is enshrined and guaranteed to the entire Congolese population. However, in actual fact, the situation is quite different because of the huge deficit in the supply of electricity to the population i.e. there is a weak coverage rate. Only a small number of the population have access to electricity and even then only infrequently.
Amongst causes behind this situation mainly lies the existence of a legal framework which is unattractive and inadequate to current environment. The legal framework that currently governs the electricity sector in the DRC is essentially composed of antiquated, disparate, out-dated and unsuitable legal instruments as compared to the evolution of the sector. Most of these instruments date back to the colonial era and include: (i) the General Conditions on Electrical Energy Decree 02 June 1928, (ii) Electrical Energy Transport through Private Concessions Decree 16 April 1931, (iii) Concession and Administration of Waters and Streams Decree 06 May 1952, (iv) Electrical Energy Import and Export Provisions Decree 31 July 1953, (v) Electrical Energy Distribution Ordinance-Act No 61-61 26 February 1953, (vi) Electrical Energy Standardisation Decree 16 June 1960, (vii) State-Owned Electricity Company (SNEL) Constitution Ordinance No 78-196 05 May 1978, (viii) National Energy Commission Ordinance No 0073/CAB.ENER/94, (ix) Ministerial Decree No 0072/CAB.ENER/94 Authorising the Construction of Power Dams 16 November 1994, (x) Ministerial Decree No 0073/CAB.ENER/94 Setting Forth Conditions for the Approval of Electricians and Electrification Services Companies 16 November 1994, (xi) Ministerial Decree No 0074/CAB.ENER/94 Setting Forth Conditions for Securing the Authorisation for the Construction of Power Dams 16 November 1994, (xii) Joint Ministerial Decree No 011/CAB/MIN/EP/FIN/ENER/98 on the State-Owned Power Utility (SNEL) and State-Owned Water Utility (REGIDESO) 23 May 1998, (xiii) Ministerial Decree No 24CAB/MIN/ENER/02 Setting Forth Conditions for Approval of Suppliers of Services and/or Equipment to SNEL.
In this perspective, the DRC has initiated a bill which was passed into Act by Parliament since May 2013 and is currently under review by the Senate for its adoption. It will then be promulgated by the Head of State and be issued in DRC Official Gazette, in compliance with the provisions of articles 100, paragraph 2, and articles 130-137 of DRC constitution.
This bill ushers in numerous innovations that will result in changing various aspects of DRC electrical energy law and which are highlighted in this article. The bill will amongst other things (a) liberalise the electrical energy sector and open the electricity market to any operator, (b) put in place a new institutional framework, (c) establish a regulation mechanism for settlement of disputes amongst operators, on the one hand, and between operators and customers, on the other hand, (e) create servitudes inherent to power public utility activities, and (f) establish tax, customs, and financial regimes under common law or contracts.
Liberalisation and opening of the electricity market
SNEL enjoyed a de facto monopoly in the production, transport, and distribution of power across DRC territory due to the absence of any alternative electricity producing source. This monopolistic situation has been in place since SNEL’s creation by 16 May 1970 Ordinance-Act No 70-033 as a state-owned industrial and commercial company governed by SNEL’s bylaws. These bylaws were organised by 5 May 1978 Act No 78-002 and 6 January 1978 Act on the General Legislation Applicable to Companies. SNEL has since been converted into a commercial limited liability company by 7 July 2008 Act No 08/007, with the DRC state as its single shareholder.
The bill breaks this monopoly by fully liberalising the electricity sector in the DRC. It therefore opens this market to any operator interested in the activities of production, transport, distribution, import, export, and commercialisation of electricity in the DRC. The bill stipulates that only concessions and licences will be granted on the basis of a transparent call for bids process.
That said, conducting these activities will be done under any one of the legal regimes set forth in the bill, namely: (i) the concession regime, (ii) the licencing regime, (iii) the authorisation regime, (iv) the declaration regime, or (v) the free regime. These activities will further lead to payment of a fee the rate and collection modalities of which will be set by a joint ministerial decree by the Minister having remit over electricity and the Finance Minister. These various legal regimes differ from those governing power infrastructures. Such is the case because these infrastructures, as assets necessary for the operation of power public utility, form part of the national land. They therefore can be transferred only under the same conditions as would be required for transferring any other portion of the national land.
In anticipation of the great number of electricity companies expected to operate in DRC, the bill has organised an oversight mechanism that will not only promote and guarantee fair competition amongst companies, but also compliance with the rights of power users and consumers.
In this regard, the bill strikes a balance between free-market economy and planned economy by determining the right mix. On the one hand, the bill takes into account the need to liberalise a de facto monopolistic electricity sector in the DRC and opens its market while putting in place incentivising measures that would attract private and public investments. On the other hand, the bill also recognises the necessity to protect the Congolese population whose financial means are meagre. It does that by setting the rates of electricity bills and by obliging the State to off-set the financial losses resulting from a state control over public utility services that might be supplied by private operators.
On the setting of rates, the bill specifies that it shall be done in compliance with the principles prices to reflect costs, fairness, equity and non-transferability of charges (with charges not being auditable). The bill also stipulates that the rules and modalities for setting electricity consumer rates, fees for connecting to the electricity transport and distribution grid, as well as fees for electricity production, will be set by a joint ministerial decree taken by the Minister of National Economy and the Minister with remit over electricity, in consultation with the Power Regulatory Agency.
Establishment of a new institutional framework
As result of changes that have occurred in the sector, the bill catered for a legal framework that is more expanded than currently is the case in a bid to ensure a more efficient and effective management of the provisions of the bill by the State. The new institutional framework hence comprises: (i) the Ministry with remit over electricity, (ii) the Regulatory Agency, and (iii) a State-owned body tasked with the electrification of rural and periurban areas.
In addition to the task entrusted to the Regulatory Body to promote competition and the involvement of the private sector in the production, transport, distribution, import, export and commercialisation of electricity, the Body is also tasked with a very special prerogative. It is vested with the power to undertake the settlement of dispute between various operators, on the hand, and between operators and consumers, on other hand, before disputes are taken to court.
As a state entity placed under the supervision of the Ministry with remit over electricity, the Regulatory Body will be financially supported by the state budget, by a share of resources from the state-owned body tasked with the electrification of rural and periurban areas, and from administrative fees, arbitration fees, financial penalties, and from remunerations accrued from the Body’s expertise.
The state-owned body tasked with the electrification of rural and periurban areas is entrusted with more specific prerogatives by the bill, including preparing calls for bids and contracts awarding, in compliance with the legislation in force for services, supplies, and works required to that effect.
Placed under the supervision of the Ministry, the state-owned body tasked with rural and periurban electrification will be funded through resources from the revenues generated as part of the National Electrification Fund, by an annual budget share allocated by the State, a share from repatriated “carbon credit”, funding from aid donors, and resources from considerations from the State as result of financings granted to the DRC by international donors, as well as from the proceeds of loans granted to operators against the resources of the Electrification Fund etc.
A part from this framework, the Bill also instituted a National Electrification Fund which will help sponsor investments in the electricity sector in rural and periurban areas. This will be done through subsidies mechanisms. The Fund will be managed by the state-owned body tasked with electrification of rural and periurban areas. The Fund will be supplied from (i) fees paid for exercising activities in public utility electricity, (ii) the share of taxes on the consumption of electricity, and (iii) deductions made on revenues from exportation of electricity.
Besides, regarding the management of the electricity sector, the Bill provides for decentralisation and sharing of competences amongst the central state, the provinces, and decentralised territorial entities. For instance, decentralised entities will amongst other things have jurisdiction over issues production and distribution of the kind of electricity which is appropriate to provincial and local interest. The power range for this type of electricity will be less than 60 KW. However, these decentralised entities will have to comply with the national electricity policy and concessions made by these entities should not adversely impact on the environment, other provinces or any neighbouring country.
Establishment of a special mechanism for the settlement of disputes in the electricity sector
As mentioned above, the Bill vests the Regulatory Body with the special competence to hear various disputes opposing operators in the sector, on the one hand, and between operators and consumers, on the other hand.
The Regulatory Body will have to render its decision within one month of being approached by a natural or juristic person, or by any consumers association or organisation, or by the Electrification Body. However, this Regulatory Body may delay its ruling if it feels that is useful and necessary that an investigation be conducted. In this case, the deadline will be extended to two months. The Body’s ruling will be made public and notified to the parties. In the event the ruling is rejected, the case may be brought before the Administrative Court of Appeals the approach which, upon being approached, has a suspensive effect on the enforcement of the ruling; except if the ruling was accompanied with enforcement order as per article 21 of the DRC Civil Procedures Code.
It is worth mentioning that the Regulatory Body shall not at all substitute itself to Courts, which will still be open to any party keen on taking the legal route to resolve any dispute. Submitting disputes to the Regulatory Body first, for instance for labour issues, is aimed only at alleviating courts which are already overwhelmed, handling issues that don’t require any court handling.
Criminalisation of certain acts in the electricity sector
The Bill also contains a series of criminal provisions, thus, criminalising some inciviques behaviours which have been undermining the electricity sector for years now.
Some of these behaviours are (i) electricity fraud or connecting illicitly to the grid, (ii) construction of buildings on or under electrical cables or encroaching upon public domain reserved for electrical installations and even authorising such constructions, (iii) causing major disturbances to the grid due to the non-approval of previous electrical installations.
In view of the above, it stands out that the DRC government is resolved to efficiently meet the growing demand for electricity from all categories of consumers through quality suppliers and compliance with safety standards. The Government is mainly keen on resolving the issue of weak rate of access to electricity by making the sector better performing. This is the centrepiece of any economic, technological and social development.
But at the end of the day, it is only compliance with and efficient implementation of the provisions of the Bill by the State, operators, and consumers that will remain a defining element for achieving the set objectives.