Angola: Government’s commitment to diversify economy to offer opportunities for investors in the power sector
Notwithstanding the ongoing crisis in the oil sector globally that has led to significant drops in government revenue, the Angolan Government has said it remains ever more committed to the diversification of the country’s economy away from oil revenue dependence.
The government’s push to increase production nationally and hence reduce imports, especially food imports, consists of a number of initiatives that include major investments in power infrastructure. The development of the power industry, with the aim of providing cheap, reliable and affordable energy for both industry and the population is a key pre-requisite for the development of Angola’s productive sector.
According to H.E Joao Baptista Borges, Angola’s Minister of Energy and Water, the government is prepared to invest around USD 500 million over the next two years in solar energy projects in the country as part of a strategy to increase clean energy generation, and bring electricity to the entire country. This statement was given by Minister Borges in Addis Ababa during the 3rd African Business Forum, promoted by the United Nations Economic Commission for Africa (UNECA), on February 11th, 2020.
Additionally, Angola expects to implement a USD 400 million two-phase project in the clean energy segment, funded by the World Bank and the French Development Agency (AFD). The project aims at improving the distribution of electricity in four key provinces. The Project also expects to reform the structure of public companies in the sector with the aim of increasing access to affordable Energy for Angola’s underserved populations. On May 29, the government started a public consultation to determine the environmental impact of the project.
The Angolan state oil company, Sonangol, and Italian major Eni signed in June 2019 an agreement that created Solenova Ltd. The purpose of this jointly-controlled company is to assess and develop renewable energy opportunities in Angola. ENI and the Angolan Government also agreed to jointly develop the 50MW Caraculo Solar Plant in Angola´s south western province of Namibe.
In the coming months, according to the Minister of Energy and Water, another 300MW of solar energy will be installed in the country, equivalent to a third of the capacity of the Cambambe hydroelectric plant (one of the main power structures in Angola), which, according to Minister João Baptista Borges, shows the government’s commitment to renewable energy, especially whenever generation costs are competitive.
“We see many projects in the pipeline in Angola, in addition to those that are already ongoing. This is a testament that the government is serious about boosting industrialisation with the help of affordable energy. I believe these investments will pay off in the coming years and for generations to come,” said Verner Ayukegba, Senior Vice President of the African Energy Chamber. According to him, Angola even has the potential of becoming a future exporter of energy into the region. The existence of all major International Oil Companies (IOCs) is an added advantage to Angola as these companies seek to increase their non-carbon footprint by investing in clean energy projects. While Eni seems to be leading the way in Angola with its solar initiatives, others are set to follow. French oil company Total for instance has initiated negotiations with the Angolan government, and an agreement is anticipated on other clean energy generation projects soon.
The minister also revealed that the country is already working with Africa50, a pan-african infrastructure investment platform created to promote infrastructure investments accross Africa.
Business Opportunities in the power sector are expected to increase given that 50% of the Angolan population still does not have reliable access to electricity. According to Minister João Baptista Borges, the Angolan Electricity Sector Development Plan and the Energy Security Plan point to the construction of a capacity of about 600 MW of solar energy in the country by 2022, with the installation of about 30,000 individual photovoltaic energy production systems, in line with the country´s National Development Plan 2018-2022. In order to achieve this goal, the minister notably stressed that the government will open up the sector to competition from the private sector, both national and international.