Howard Buffet investing millions in hydro projects in war-torn Congo

The son of billionaire Warren Buffet is investing millions to repair war-ravaged Congo through his idea of hydro projects.
Crews are busy working in the town Matebe in the conflict-ridden eastern province of North Kivu. They lay giant steel cylinders through which water from the Rutshuru River will plunge 85 meters to drive three massive hydroelectric turbines.

The Howard G. Buffet Foundation, the 60-year-old American’s charity, is bankrolling construction to the tune of US$19.7 million. It hopes the plant will help overcome chronic power shortages holding back development in the giant central African nation when it comes online in December.

The 13.8 megawatt facility is just the first stage in an ambitious regional investment program drawn up by Congo’s national parks authority (ICCN) and the Virunga Foundation, a British charity working in the giant Virunga national park in North Kivu.

For the project’s second stage, Buffett has already pledged a further US$39 million towards the cost of two more hydroelectric plants. The Belgian government has provided US$4 million more, but additional funds are still required.

The Virunga Foundation hopes to attract a total of US$166 million to build seven hydro plants as well as hotels, vocational schools and other infrastructure in and around the national park over the next six years.

“Hydro plants are really the game changer,” Buffett said in a telephone interview from Atlanta, Georgia. “It provides jobs, it provides new resources, new investment. It helps keep people from cutting the trees down for charcoal in the forests. So it’s like a win, win, win.”

Over the past two decades, Buffett’s foundation has pumped more than US$200 million into Africa’s volatile Great Lakes region, which was plunged into turmoil by Rwanda’s 1994 genocide.

Resource-rich eastern Congo was ravaged by two regional wars between 1996 and 2003 that killed millions, most from hunger and disease.

Despite vast deposits of minerals ranging from copper to diamonds and tantalum – a key component in mobile phones – Congo languishes next to the bottom of the U.N. development index. Two-thirds of its nearly 70 million people live in poverty, while its rugged east is plagued by dozens of armed groups, their ranks filled by young men with no prospect of jobs.

A 20,000-man U.N. peacekeeping mission costing US$1.4 billion a year – the world’s largest – plus billions more spent on humanitarian aid have done little to improve conditions. Ongoing violence in and around Virunga – including a recent spate of kidnappings – present a deterrent to investors.

“All the U.N. does is they bring a bunch of guys in, in uniform, and they park them (in) different strategic places, and when the going gets tough, they run,” Buffett quipped.

The Nebraska native, who has spent millions on African projects from saving the South African rhino to hunting Lord’s Resistance Army leader Joseph Kony, said he recognized that the investment was a gamble.

“The government could take it away tomorrow. You could have a rebel group go in and blow it up tomorrow,” he said. “That’s part of why we’re doing it: because no-one else is interested in doing it.”

The Howard G. Buffett Foundation is a private, family charity that does not accept donations, with assets totaling more than US$300 million, according to its last annual report. Much of its funding is believed to have come from his father’s fortune, though Howard himself serves as a director of The Coca-Cola Company and on several other corporate boards.

Buffett’s investments have drawn mixed reviews from analysts who praise his commitment to the region and contributions to conservation and agricultural development but have criticized a heavy use of celebrity advocacy in expensive campaigns that they say do not engage with the complexity of the issues on the ground.

GOING PRIVATE

Experts cite power shortages as one of the foremost barriers to development in Congo. Only about 10 % of the population has access to electricity.

Emmanuel de Merode, CEO of the Virunga Foundation and director of the 7,800-square kilometer park, estimated that each additional megawatt would create around 1,000 local jobs.

The estimate was based on a 0.2 MW pilot project that has attracted investment from Burundian firm Savonor in a 40-tonne per day soap factory that will use locally produced palm oil.

Google (GOOG.O) Chairman Eric Schmidt’s charitable foundation made an initial investment to facilitate the project.

De Merode, a Belgian who starred in last year’s Oscar-nominated, Buffett-produced documentary about the threat of oil exploration in Virunga, said that the initiative responded to an urgent need for large-scale employment opportunities that only the private sector could create.

But some local residents see the initiative as yet another foreign imposition whose priorities do not match their own.

Chrispin Mvano, an independent researcher and journalist in North Kivu, criticized park authorities for failing to collaborate with local communities, who wonder whether they will benefit from the new electricity.

“We’d say that Emmanuel de Merode has become the president of … the National Republic of Virunga,” said Mvano.

He called for greater support to agriculture, the dominant economic activity in the area, and existing small-scale hydroelectric projects.

Virunga National Park, a UNESCO World Heritage site and home to home to roughly half the world’s remaining 900 mountain gorillas, is a cause celebre among conservationists.

But the protected status of the park, created in 1925 by the Belgian colonial government, is resented by many of the more than four million people who live near it but are prevented from cultivating its rich soil.

In a letter to de Merode last month, activists from the southern edge of the park complained that park rangers routinely violate the boundaries and have seized their land.

“Before being a world patrimony, (Virunga) is a local patrimony,” Mvano said.

De Merode acknowledged “enormous tensions” with local populations in enforcing park limits but said that industrialization was the only long-term solution for the region.

Even those who agree, say the project remains a long shot to bring development to one of the world’s most unsettled regions. Innocent Gasigwa, a spokesman for civil society in the territory of Rutshuru, said he supported the hydroelectric projects but warned: “If just one war breaks out again, it’s over.”