The risks and rewards of resource-for-infrastructure deals: Lessons from the Congo's Sicomines agreement

Resource-for-infrastructure (RFI) deals generate upfront infrastructure investments that are to be repaid via future resource extraction revenues. However, much can change in the meantime. This paper explores the Democratic Republic of Congo's Sicomines agreement, a critical RFI case that has proven to be highly contentious, and highlights the role played by risk from its inception a decade ago until now. Drawing on the Sicomines agreement, this paper employs financial modeling techniques to highlight the pitfalls of attempting to identify winners in RFI deals before they reach their conclusion. As this paper demonstrates, the expected benefits of RFI deals can change swiftly and unpredictably. In fact, the model presented in this paper estimates that Sicomines' NPV has dropped from USD 10 billion to minus USD 150 million since its inception.