By Robin Emmott

LUXEMBOURG (Reuters) – The European Union will prepare economic sanctions on the Democratic Republic of Congo unless its ruling coalition, which has delayed next month’s elections, holds a fresh vote early next year, diplomats say.

President Joseph Kabila was due to leave at the end of his mandate in December but authorities have postponed it until April 2018, citing logistical problems.

The vote delay sparked two days of protests in the capital Kinshasa last month that killed dozens of people.

“Elections must take place as early as possible, and no later than in 2017,” said an EU diplomat involved in the talks. “Given the situation, we are prepared to consider sanctions and work is already under way,” the diplomat said.

European Union foreign minister meeting in Luxembourg on Monday are expected to agree a statement in which they will make clear that travel bans and asset freezes are a genuine threat.

“The EU will use all the means at its disposal, including individual restrictive measures,” said a draft statement seen by Reuters that would target “those responsible for serious human rights violations, those who promote violence.”

Foreign ministers are expected to task EU foreign policy chief Federica Mogherini to draw up sanctions, which could be on senior police and other members of the security forces, potentially broadened to government officials at a later stage if there is no progress on an electoral agenda.

The European Union, a major donor of foreign aid as well as a big foreign investor and trade partner, is also seeking an independent inquiry into the violence last month and wants talks on a new timetable for presidential and parliamentary elections.

Former colonial power Belgium is pushing EU governments to reduce the duration of diplomatic visas issued to officials, having cut its own visas to six months, one diplomat said.

Kabila, who came to power in 2001 when his father was assassinated, says he will respect the country’s constitution but has yet to rule out attempting to change laws to enable him to run for a fresh term.

The presidents of neighbouring Rwanda and Congo Republic changed their constitutions last year to allow themselves to stand for a third term. Kabila’s opponents say they fear he will do the same.

Hundreds of people have also died since last year in Burundi, where the EU has also imposed sanctions, after its president Pierre Nkurunziza pursued and won a third term in office that his opponents say is unconstitutional.

The head of the U.N. mission in Congo warned last week that the political impasse poses an “extreme risk” to stability. Millions died in regional conflicts between 1996 and 2003 and Congo has never had a peaceful transition of power.

(Reporting by Robin Emmott; Editing by Tom Heneghan)

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GENEVA (Reuters) – The top U.N. human rights forum agreed on Friday to set up a commission of inquiry to identify perpetrators of alleged international crimes in Burundi, including killings and torture, and ensure that they are brought to justice.

The 47-member state forum adopted a resolution submitted by the European Union by a vote of 19 states in favour and 7 against with 21 abstentions.

Burundi’s delegation took the floor after the vote to reject the resolution as containing “a lot of lies” about the situation in the central African country which it said had stabilised.

(Reporting by Stephanie Nebehay, editing by Tom Miles)

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JOHANNESBURG (Reuters) – Moody’s may cut the ratings of five South African state-owned firms, including utility Eskom, it said on Wednesday, citing funding risks after some local institutional investors said they had stopped lending to some parastatals.

Asset manager Futuregrowth, which manages client assets of about $12 billion, and rival Abax Investments said this month they had reduced or stopped lending to several state-run firms due to political uncertainty and governance issues.

Moody’s said in a statement it was putting Eskom’s Ba1 rating on review for downgrade on the grounds that its funding needs were exacerbated by the rising cost of buying power from independent producers, as well as its spending to revamp and build new power stations.

Eskom is building new plants and transmission lines to augment a power grid that nearly collapsed in 2008 and forced the company to implement controlled blackouts, or load shedding, early last year that dented economic growth.

Chief Financial Officer Anoj Singh called the review “unfortunate” and said Eskom would meet Moody’s to resolve its concerns.

“The review by Moody’s is unfortunate given the progress made towards improving the company’s financial profile, successful implementation of the operations turnaround plan and Eskom’s healthy liquidity position,” Singh said in a statement.

Moody’s is also reviewing the ratings of four other state-controlled entities: the Development Bank of Southern Africa, the Industrial Development Corporation, the South African National Roads Agency (SANRAL) and Land Bank.

“Today’s review for downgrade … primarily reflects the increased risk of funding and liquidity challenges, following some signals of increased risk aversion by funding counterparties owing to market concerns regarding the governance of South African state-owned enterprises,” Moody’s said.

Many of South Africa’s 300-odd state-owned companies, including South African Airways, are a drain on the government’s purse and rating agencies have singled out some as threat to the country’s investment grade rating.

South Africa’s President Jacob Zuma last month defended plans to give his office supervision over state-controlled companies after allies of under-fire Finance Minister Pravin Gordhan said it was a tool to limit his control.

Analysts have said Zuma’s team and the Treasury under Gordhan have disagreed about government spending, including on loss-making state firms, such as South African Airways.

Gordhan has pledged to rein in government spending to limit rising inflation, narrow a gaping budget deficit and appease ratings agencies considering cutting South Africa to “junk” status in reviews expected by December.

(Reporting by Tiisetso Motsoeneng; Editing by David Clarke and Catherine Evans)

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