By Franz Wild and Janice Kew

The Public Investment Corp. plans to lead investment in energy projects in Africa by buying into South African shale gas projects and helping to fund what could be the world’s biggest power generation complex in Democratic Republic of Congo.

The continent’s largest money manager, which is based in the South African capital of Pretoria and has 1.6 trillion rand ($152 billion) under management, will buy stakes in energy companies operating in Africa, its chief executive officer, Elias Masilela, 49, said in an April 1 interview in Johannesburg.

“We have taken the decision that we will play the lead in the energy space,” Masilela said. “Energy is one of the biggest barriers for the continent and if we don’t deal with it it is going to deal with us.”

Africa’s two biggest economies, Nigeria and South Africa, are among countries on the continent suffering power shortages that are restraining economic growth. The PIC’s focus on energy comes as South Africa explores developing shale projects in its arid Karoo area and attempts to develop the Inga hydropower complex on the Congo River are revived.

The PIC, which mostly manages South African state workers’ pensions, is the biggest shareholder in Johannesburg-based Sasol Ltd. (SOL), the world’s largest fuel-from-coal producer, as well as SacOil Holding Ltd. (SCL) and Camac Energy Inc. (CME), oil explorers listed on South Africa’s stock exchange.

South Africa’s state-owned power utility Eskom Holdings SOC Ltd. last month implemented the first rolling blackouts for the first time in six years, shutting shops and factories, after heavy rains disrupted coal supplies.

Shale Transformation

The potential for shale to transform South African energy supply means the PIC will probably invest in its production if “it makes commercial and sustainability sense,” Masilela said. The PIC defends Eskom’s use of coal, criticized for the pollution it causes, because it was investing in ways of cutting emissions as well, he said.

“Are we going to do the same with shale?” Masilela said. “Most likely, because we’d like to think that shale is going to be a replacement for what Eskom is relying on as a source of power going forward.”

South Africa currently burns coal for almost all of its electricity.

Opponents of hydraulic fracturing, which blasts water, chemicals and sand into rock to release gas, say it risks contaminating ground water.

Power Restraints

South Africa’s President Jacob Zuma has supported shale-gas drilling in the semi-arid Karoo region, an area the size of Montana that’s the center of South Africa’s sheep-farming industry. Explorers including Royal Dutch Shell Plc (RDSA) hope to tap as much as 390 trillion cubic feet of gas resources, the eighth-biggest in the world, according to the U.S. Energy Information Administration.

Nearly half the economies in sub-Saharan Africa are still held back by frequent power-cuts even though the continent is well-endowed with fossil fuels and renewable energy resources, according to the World Bank.

The African Development Bank is trying to put together a group of investors, including the Overseas Private Investment Corp., the U.S. development finance institution, and the U.S. Agency for International Development to fund Democratic Republic of Congo’s $12 billion Inga 3 hydropower project on the Congo River, Masilela said.

“We’d be interested, but at the right level,” he said. “There’s no way a single investor could handle Inga. It’s too big, too many risks and it would rely to a large extent on political diplomacy.”