China's Sinohydro has deal for Cameroon dam project

YAOUNDE Aug 31 (Reuters) - Chinese construction company Sinohydro has reached a preliminary agreement to take over the 200 Megawatt Memve'ele hydropower station in southern Cameroon, the project manager there said on Monday.

It is the latest deal in Africa signed by Sinohydro, which earlier this year announced a road project in Gabon and which has been rebuilding infrastructure in Angola since the end of its civil war in 2002.

Sinohydro "is replacing Globeleq/Sud Energie, a British firm that backed out of the project in May," said Gerard-Paul Onji'I Esono, head of communications for the Memve'ele project, due to cost 556 million euros ($795 million).

"The British firm was to execute the project on BOOT condition, which means they were to build, own, operate and transfer to Cameroon after 20 years. The Cameroon authorities considered this time too long," he said.

He said Cameroon and Sinohydro wanted to finalise the new agreement as soon as possible. Construction work is expected to begin in March and the project should go operational by December 2014.

The Memve'ele project involves building a dam on the Ntem river in Cameroon's South region, a road to the project site, a power plant and electricity transmission lines to link it to the national grid. The northern parts of Congo Republic, Gabon and Equatorial Guinea are also due to benefit with electricity.

Cameroon depends on hydropower for 95 percent of its energy supply. Only 5 percent of the country's rural population and 65 percent of urban dwellers have access to electricity.

The country's sole power utility AES-Sonel, a subsidiary of US-based AES Corp (AES.N), has raised energy output to about 936 Megawatts over the last five years but that is still short of demand, which is growing at an annual 8 percent. (Reporting by Tansa Musa; Editing by Mark John and Dan Lalor) ($1 = 0.6998 euro)