Niger tensions threaten Chinese projects, as dam building stops

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The recent upheaval resulting from the military junta-led coup in Niger appears to have raised uncertainties about the progress of China’s investment initiatives and undertakings within the nation.

In the wake of news indicating the suspension of dam construction, concerns are now mounting over the potential setback facing a PetroChina-backed export pipeline originally slated for completion by the end of this year.

Following the coup, the European Union and the US, which collectively accounted for 40% of Niger’s budget through development aid, suspended their financial support.

Furthermore, the Economic Community of West African States (ECOWAS) escalated its response by imposing additional sanctions on the junta on August 8.

These measures compounded the earlier actions, which focused on border closures and severing financial and commercial ties.

Being the second-largest investor in the nation following France, China’s growing apprehension about the political turmoil is also evident, as demonstrated by Beijing’s advisory on August 7, urging its citizens to depart from Niger.

On the same day, the Chinese contractor Gezhouba Group, responsible for the $800 million Kandadji hydroelectric project in Niger, announced to suspend the construction, citing the freezing of a significant portion of its funds due to the prevailing sanctions following the coup.

The group’s statement included their intention to cease operations and lay off their workforce temporarily while expressing the possibility of resuming work once their financial situation stabilizes. Once finished, the dam is projected to enhance the country’s power grid by 50%.

Niger’s population has long grappled with a considerable electricity deficit, with merely 4.3 million individuals having access to power, as a substantial 90% of the populace relies on wood for energy.

The recent sanctions imposed by the regional Economic Community of West African States (ECOWAS) have dealt a severe blow to Niger’s economy, prompting the discontinuation of ties with donor and multinational organizations.

Moreover, the dam was anticipated to offer control over the Niger River, enabling downstream irrigation during the extended dry periods.

Initially set to be completed by March 2026, the dam’s production capacity of over 130MW was anticipated to cater to domestic and neighboring countries’ energy demands. Nevertheless, the upheaval has cast a shadow over the timely completion of this vital project.

Geopolitical analysts have indicated that the consequences of the sanctions on Niger might have the potential to disrupt the pipeline project’s progress and could also impact investments made by China.

Regarded as a monumental endeavor by the government of Niger, the $4 billion pipeline project, aimed at linking the Agadem oil field in Niger to the Cotonou port in Benin, has held the spotlight as the most significant investment initiative since the country’s declaration of independence from France in 1960.

PetroChina’s engagement in Niger traces its roots back to 2011, marked by establishment of a joint venture with the government to harness oil resources from the Agadem site.

Fast forward to 2019, the inception of the current project marked a pivotal moment, envisioning the creation of Africa’s lengthiest cross-border crude oil pipeline.

With construction progress surpassing the 75% mark, the project is poised to commence commercial oil transportation by the latter part of 2023.

Notably, Niger’s government had originally projected that the oil pipeline, once operational, could significantly bolster the nation’s economic landscape, potentially contributing up to a quarter of its gross domestic product and half of its tax revenue, a remarkable increase from the previous respective figures of 4% and 19%.

However, the current geopolitical landscape presents a stark departure from these anticipations. The recent surge in tensions in the region, catalyzed by ECOWAS’ looming military intervention, has cast a shadow over the region’s stability.

As a result, the viability of the pipeline project and the broader scope of Chinese investments in the region have become subjects of mounting uncertainty, warranting a reassessment of expectations and strategies in light of the evolving geopolitical dynamics.

Yet, early indications suggest China is poised to maintain its steadfast commitment to these projects. Zhang Yongpeng, an expert affiliated with Beijing’s Taihe analytical center, has put forth a compelling viewpoint.

According to him, the sole scenario capable of prompting a Chinese departure from these endeavors would mirror the conditions of a civil war akin to what transpired in Sudan.

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