DRC JUNE MONTHLY ECONOMIC REVIEW

UNCLAS KINSHASA 001103

SIPDIS

SIPDIS

DEPT FOR DRL/IL-LHOST AND AF/RSA-MHARPOLE

E.O. 12958: N/A
TAGS: ECON EFIN ENRG ELAB EAIR EMIN ETRD PGOV CG
SUBJECT: DRC JUNE MONTHLY ECONOMIC REVIEW



1. (U) Summary

- MONUC rehabilitated an airport in Bunia, Orientale province.
-BHP Billiton contracted with the DRC's electricity parastatal for
the purchase of 1200 MW of electricity.
- A strike of ONATRA (DRC's port authority) employees paralyzed the
international, maritime port of Matadi.
- Kinshasa's public hospital physicians suspended their strike, but
nurses continue to strike.
- Catholic school teachers nationwide threaten an "annee blanche"
for the 2006-07 academic year, and private and public school
teachers in Western Kasai province also threaten to strike.
- DRC's investment promotion agency, ANAPI, approved 36 investment
projects in the first quarter of 2006.
- Perenco, a French petroleum company, built a solar energy power
plant in Muanda, Bas Congo.
- The DRC's copper, cobalt and zinc production and export totals are
well below annual projections.
- MIBA has reported production and export statistics for only two of
six months in 2005.
- According to Post's market basket survey, June consumer prices
increased by only 0.1 percent.

Aviation
--------------


2. (U) MONUC rehabilitated the commercial airport in Bunia, North
Kivu. The airport now has a 1.2 mile runway and a mobile control
tower. Since 2005, MONUC has supported Congolese airport projects,
such as installing satellite navigation equipment, to help the DRC
comply with international aviation standards.

Energy
--------------


3. (U) BHP Billiton signed a MOU with SNEL (DRC's electricity
parastatal) to purchase 1200 MW of electricity once SNEL completes
work on the Inga 3 hydroelectric plant in Bas-Congo. SNEL currently
estimates completion in 2012.


4. (U) Perenco, a French petroleum company, has built a small solar
energy power plant capable of producing 14 MW per day in Muanda,
Bas-Congo. The company will use 13 MW to power its offshore
petroleum operations in Muanda, and the remaining 1 MW will provide
electricity to the local community.

Investments
--------------


5. (U) In the first quarter of 2006, the DRC's investment promotion
agency (ANAPI) approved 36 projects, with an approximate combined
value of USD 267 million, creating an estimated 3,100 jobs. The
ministries of Finance and Planning must next approve the projects.


Labor
--------------


6. (U) Employees of ONATRA (DRC's port authority) went on strike for
18 days, due in part to a dispute between the workers' two major
unions. The strike paralyzed work at the western Congo's main
maritime port, resulting in a shortage of some imported commodities
and an estimated USD 100 million of revenue lost to the GDRC,
importers and others reliant on the port. The strike ended
following a change in ONATRA's management team, pursuant to a
presidential decree.


7. (U) Employees of the customs and tax collection authorities
(OFIDA and DGI) went on strike on June 29 to demand salary increases
and bonuses, after negotiations with the Ministry of Finance, which
oversees the two agencies, failed. Both suspended their strikes
July 4, after the Finance Ministry agreed to negotiate further.


8. (U) June 20, Congolese physicians suspended their several-week
strike in Kinshasa's public hospitals. During the last week,
physicians completely stopped work in all public hospitals,
withholding even emergency services. The GDRC agreed to increase
the physicians' salaries, although negotiations over the details
continue. Meanwhile, nurses in Kinshasa's public hospitals continue
their strike to claim payment of a risk premium.


9. (U) At its June 24 general assembly, the Catholic school
teachers' union (SYNECAT) decided to declare an "annee blanche" (no
classes) for the next academic year if the GDRC does not comply with
its salary increase demands. The union is also calling for the GDRC
to spend 30 percent of the national budget on the education sector,
instead of the current one percent.


10. (U) In Kananga, Western Kasai, public and private school
teachers are threatening to strike until they receive salaries equal
to those of their counterparts in Kinshasa and Lubumbashi.
Similarly, Ministry of Civil Service employees are threatening to
strike to demand payment of the same bonuses received by their
counterparts in the Finance and Budget Ministries.


11. (U) The Ministry of Civil Service began fingerprinting civil
servants as the next step in the census process. Government
employees will eventually receive identification cards.

Mining
--------------


12. (U) In Kolwezi, Katanga, state mining company Gecamines and
Belgian-owned Kinross-Forrest held a ceremony to mark the launch of
operations of their joint venture company, Kamoto Copper Company
(KCC). Kinross-Forrest signed the deal in July 2005, and it will
conduct open pit and underground copper and cobalt mining.


13. (U) Gecamines reported May production of 1,270 tons of copper,
40 tons of cobalt and 923 tons of zinc, against respective
projections of 2,844, 238 and 500; it reported May exports of 2,526
tons of copper, 57 of cobalt, but did not report zinc production,
against projections of 2687 tons of copper, 305 of cobalt. Both
production and export figures are well below Gecamines' own
projections to date.


14. (U) The Ministry of Mines says that the DRC has officially
exported about 11.1 million carats of diamonds so far in 2006, with
an evaluated value of USD 277 million: comptoirs (rough diamond
traders) exported 10.1 million carats, and MIBA, the DRC's diamond
mining parastatal, 1.1 million. In 2006, MIBA has only reported
March and May statistics.

Inflation
--------------


15. (U) Post's market-basket survey recorded June inflation of 0.1
percent.

Exchange Rates
--------------


16. (U) Week ending 6/09 6/16 6/23 6/30

Central Bank Rates: 450 449 440 447
Parallel Rates
Kinshasa 450 450 450 450
Lubumbashi 430 430 440 450
Mbuji-Mayi 445 450 450 450
Kisangani 440 440 440 440
Goma 440 450 450 450
Bukavu 450 460 460 460

MEECE