Angola (2012)

Degree of reliance on imported energy: 

<p>
Angola&rsquo;s limited domestic product requirements are met with local energy resources. The remaining demand is met by imports. All the coal is imported.<br />
<br />
A small electric interconnection exists with Namibia.<br />
&nbsp;</p>

Main sources of Energy: 

<p>
Installed electricity capacity (2009): 1,003 MW</p>
<ul>
<li>
Hydro: 76%</li>
<li>
Thermal: 8%</li>
<li>
Gas: 16%</li>
</ul>
<p>
<br />
This capacity is not sufficient to meet the current demand in Angola. Although it might appear there is excess capacity this is due to a lack of interconnectivity and insufficient transmission capacity.<br />
<br />
Total primary energy supply (2009): 11,896 ktoe</p>
<ul>
<li>
Oil: 32.9%</li>
<li>
Gas: 4.7%</li>
<li>
Hydro: 2.3%</li>
<li>
Comb. Renewable and waste: 60.1%</li>
</ul>
<p>
<br />
<br />
<b>Oil and gas</b><br />
Angola has large domestic reserves of crude oil, which are mainly exported to China and the US and hardly used for the country&rsquo;s own energy production.<br />
<br />
According to data from British Petroleum&rsquo;s 2009 Energy Statistical Review, Angola was the third largest oil producer in Africa after Nigeria and Algeria in 2008.&nbsp; Angola had proven oil reserves of 9.0 billion barrels (bbl) as of January 2008. Production was 1.875 mln barrels per day (bpd). This was up from 745,000 bpd in 1999. Domestic consumption is 64,000 bpd.<br />
<br />
Angola has a small natural gas production industry, which is used for the industry sector. Angola has 9.5 trillion cubic feet (Tcf) of natural gas reserves as of January 1, 2008. With the considerable increases in proved natural gas reserves and government policies to end natural gas flaring, plans are under-way to convert much of the natural gas into Liquefied Natural Gas (LNG) for export with some to be used for domestic electricity production.<br />
<br />
<b>Biomass</b><br />
The main source of energy for residential use is traditional biomass.<br />
&nbsp;</p>

Country: 

Angola

Extent of the network: 

<p>
As of 2008 a little more than 30% of Angola&rsquo;s population benefited from access to power, lower than the 46% average for the nation&rsquo;s resource-rich African peers. No disaggregated data is available on the levels of rural versus urban access in Angola. However, it is known that Luanda consumes around two-thirds of the nation&rsquo;s electricity, suggesting relatively high access in the urban and peri-urban areas of the capital. Further, at least 85% of Luanda&rsquo;s municipalities indicate that they use electricity for lighting, corroborating that the availability of electricity in urban areas is high.<br />
<br />
Poor access and erratic power supply can be attributed to the fragmented nature of Angola&rsquo;s power system as well as deficiencies in existing transmission and distribution infrastructure. Angola has three major electric systems that are not interconnected, each operating independently. The north, south, and central systems each have their own networks linking generation sources to load centres.<br />
<br />
The northern system, serving Luanda, accounts for over 80% of the country&rsquo;s generation assets, while the central and southern systems have less than 10% each. While blackouts are commonplace in Luanda, they are even more so in the central and southern systems. Ironically, the north actually has a surplus of energy; its blackouts are less due to lack of energy than to operational challenges associated with managing the system during peak-load periods. [3] The absence of a national transmission backbone prevents surplus power in the north being wheeled to the center and south of the country. This problem of regional imbalances in power supply and demand will only become more accentuated as new generation capacity comes on stream, underscoring the importance of improving the transmission network.<br />
&nbsp;</p>

Capacity concerns: 

<p>
The absence of a national transmission backbone prevents surplus power in the north being delivered to the center and south of the country. This problem of regional imbalances in power supply and demand will only become more accentuated as new generation capacity comes on stream, underscoring the importance of improving the transmission network.<br />
<br />
Angola has enormous hydropower potential, and it currently provides three-quarters of the country&rsquo;s electricity. However, the civil war destroyed existing facilities and the government has not succeeded in keeping supply in line with expanding demand. Electricity production is insufficient and blackouts have affected the major cities [2]. Despite the expansion of power-generation capacity, deficient transmission and distribution infrastructure prevents electricity from flowing to customers, and the reliability of supply remains very poor.<br />
<br />
Investment in the sector is focusing on revitalising networks of energy transport and distribution as well as on expanding production capacities. The government has set a target of increasing production to 7,000 MW, enabling a per capita consumption of 4,000 kilowatt hours (kWh) by 2016 &ndash; an eightfold increase in current consumption.<br />
&nbsp;</p>

Potential for Renewable Energy: 

<p>
With numerous powerful rivers crossing the country, Angola has tremendous potential for generating electricity. Angola has an estimated hydropower potential of 150,000 GWh/year (not defined as technically or economically feasible), of which about 65,000 GWh/year is considered to be firm potential.<br />
<br />
The Kwanza River possesses a lot of hydro potential. The government has identified nine feasible sites where hydro power stations can be built. The river has a potential to generate more than 6,000 MW. Currently, only two sites have been developed which are Capanda (520 MW) and Cambambe (180 MW).<br />
<br />
In April 2009, Namibia and Angola announced that they were going to construct a joint $7 billion 400 MW hydroelectric facility. While on June 24, 2009, Russia&rsquo;s ambassador to Angola pledged to finance two hydroelectric projects totalling 2,000 MW on the Kwanza River.<br />
&nbsp;</p>

Potential for Energy Efficiency: 

<p>
A complex web of subsidies and operational deficiencies makes Angola&rsquo;s power sector among the least efficient in Africa, haemorrhaging resources equivalent to 1.6% of gross domestic product (GDP).</p>

Ownership: 

<p>
<b>Electricity market</b><br />
The two central actors in the sector are the power utilities Empresa Nacional de Electricidade (ENE) and Empresa de Distribui&ccedil;&atilde;o de Electricidade (EDEL). ENE produces power and distributes around 30% of it in the south and central region. EDEL buys power from ENE and distributes the remaining 70% in the north of the country. Both companies receive direct subsidies from government as well as implicit subsidies through low fuel prices.<br />
&nbsp;<br />
<b>Petroleum and natural gas market</b><br />
Sonangol (Sociedade Nacional de Petr&oacute;leos de Angola) is, by a sizeable margin, the largest conglomerate in Angola and indeed one of the largest corporate entities in sub-Saharan Africa. Sonangol came into being in 1976 as the company that took over Angola&rsquo;s oil assets following their nationalisation at independence and is entirely owned by the Angolan government. The principal activities of the group remain vested in the energy sector where the group is fully vertically integrated in the areas of prospecting, research, development and production in the up-steam activities.<br />
&nbsp;</p>

Structure / extent of competition: 

<p>
The Empresa Nacional de Electricidades is vertically integrated.<br />
<br />
The Soceidede Nacional de Combustiveis is the only concessionaire for exploration and production and works with foreign companies through both joint ventures and production sharing agreements (PSAs).</p>

Existence of an energy framework and programmes to promote sustainable energy: 

<p>
The 1996 general Law of Electricity and the Law on delimited Areas of Economic Activities (Law 5/02) are the fundamental laws which form the Angolan power sector&rsquo;s legal framework. The same Law 5/02 states that the generation, transmission and distribution of electrical power for public consumption are &ldquo;relatively reserved areas&rdquo;, meaning private entities require a state concession to enter the sector.. While Angola&rsquo;s legal framework does not prohibit private sector investment,&nbsp; the low tariffs caused by government subsidies and concessions make it unattractive.<br />
&nbsp;<br />
A National Investment Promotion Agency (NIPA) was created in July 2003. The Act No. 5/02 on privatization was enacted on 16 April 2002, but no major privatization in the energy sector has been scheduled or realized.<br />
<br />
In 2003 the Government enacted a law on environmental protection, and in 2004 a law on the environmental impact assessment of projects was also passed. However, the enforcement texts of these two laws have not yet been published. The first law proposed a National Institute for the Promotion of the Environment, and the Environmental Protection Fund, which are still not yet in place.<br />
&nbsp;</p>

Current energy debates or legislation: 

<p>
The main debates concern the transformation of the energy market sector to ensure the participation of Independent Power Producers (IPP).</p>

Major energy studies: 

<p>
The United States and China have conducted research on the energy and electricity sectors in Angola.<br />
<br />
&ldquo;Private solutions for infrastructure in Angola&rdquo;, World Bank, Public-Private Infrastructure Advisory Facility, Published by World Bank Publications, 2005.&nbsp;<br />
&nbsp;</p>

Role of government: 

<p>
The Minister of Energy and Water has executive responsibility for the electricity industry and preparation of regulations.<br />
<br />
The Directorate is tasked with the proposal and promotion of the implementation of the policy pursued by the energy sector. The Ministry of Finance (which sets the electricity tariffs) and the Ministry of Planning are also involved in the development and implementation of the energy and electricity policy and regulatory framework.<br />
<br />
The responsibility for economic regulation shall be transferred to the Institute for Electricity Regulation when this regulatory body becomes operational.<br />
<br />
Environmental matters are the responsibility of the Ministry of Urban Affairs and the Environment (MUAE). It is responsible for the formulation and implementation of environmental policies and practices.<br />
&nbsp;</p>

Government agencies in sustainable energy: 

<p>
The Ministry of Energy has setup a new directorate responsible for renewable energy to compliment the national electrification department. The technologies being considered are solar, wind, biomass and mini/micro hydro plants. Government is promoting these with the intention of supplying power to schools and clinics; households will be considered at a later stage once an appropriate delivery modality is established.</p>

Energy planning procedures: 

<p>
In 2011, it is expected that the government will spend close to USD 1.3 billion (3% of the total budget) on energy. Government plans also call for the development of small hydroelectric power plants to strengthen the agro-industrial sector.</p>
<p>
&nbsp;</p>

Energy regulator Date of creation: 

<p>
An electricity regulator, the Institute for Electricity Regulation (IRSE), is to be established in accordance with the Lei General de Electricidade, Lei No. 14 A/96 of 31 May 1996 (General Law of Electricity).&nbsp; Even though the Act establishes IRSE as a separate legal body with a clear mandate; it is still in transformation and lacks the necessary skills to fulfil its full mandate.</p>

Degree of independence: 

<p>
IRSE continues to have limited oversight on the granting of licenses, tariff approvals and approval &amp; monitoring of investments in the electricity industry. However, the Act still mandates IRSE to implement General Electricity Law 9 (Law 14-A96), to develop the Public Electricity System (SEP), and to protect consumers&rsquo; interest in pricing of electricity.</p>

Regulatory framework for sustainable energy: 

<p>
N/A</p>

Regulatory roles: 

<p>
When operational, the &ldquo;Instituto Regulador de Sector Electrico&rdquo; will supervise the national electricity sector, encompassing electricity related law implementation, electricity concession/license, and import/export of electricity. It will not have the authority to set prices/tariffs or to issue concessions/licences.</p>

Role of government department in energy regulation: 

<p>
Various laws and regulations have been promulgated regarding the energy and electricity sectors. The General Electricity Law of 1996 seems to be considered as one of the most important statutes in terms of the electricity sector, especially with regards to private sector involvement. In terms of the Law, the Council of Ministers has the power to grant concessions (power capacity superior to 1MW or when there are more than 50 000 inhabitants) and provincial governments have the power to grant licences. The Law of Delimitation of the Sector of Economic Activities, 2002, is also very important. The Decree 43/01 sets out the procedure in terms of concessions.<br />
<br />
The Land and Urban Planning Law clarifies land ownership and tenure. Environmental protection regulations require an Environmental Impact Study for investment projects in areas such as petroleum, mining, power stations and road construction. Licensing regulations in the energy sector provide strong legal protections for private investment in infrastructure projects such as building dams, power plants or electricity distribution grids.<br />
&nbsp;</p>

Regulatory barriers: 

<p>
International experts recognized that current electricity reformations taking place in Angola would reduce the barriers to investment significantly. The country&rsquo;s latest investment laws should facilitate foreign and domestic investments, give equal access to investment incentives and enable the participation of private investors in public infrastructure projects.&nbsp; But industry experts have suggested that Angola needs to ease state controls on electricity prices and offer incentives to attract private investment.</p>

References: 

BP (2009) BP Statistical Review of World Energy June 2009 Available at <a href="http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/re... [Accessed 4th September 2013]<br />
<br />
Hydroworld.com (2009) Russia pledges to finance 2000 MW Hydropower for Angola available at <a href="http://www.hydroworld.com/articles/2009/06/russia-pledges-to.html">http:... 4th September 2013]<br />
<br />
World Bank (2005) &ldquo;Private solutions for infrastructure in Angola&rdquo;, Public-Private Infrastructure Advisory Facility, Published by World Bank Publications, Available at <a href="http://www.ppiaf.org/ppiaf/sites/ppiaf.org/files/publication/Angola-CFR.... 4th September 2013]<br />
<br />
Magombo, Gloria (2009): Southern African Development Community (SADC) Power Sector Review and Consultation Mission to Angola. Available at <a href="http://pdf.usaid.gov/pdf_docs/PNADU856.pdf">http://pdf.usaid.gov/pdf_doc... 4th September 2013]<br />
<br />
African Economic Outlook (2011): Angola 2011 Available at <a href="http://www.africaneconomicoutlook.org/en/countries/southern-africa/angol... 4th September 2013]<br />
<br />
Pushak Nataliya, Foster, Vivien (2011): Angola&rsquo;s Infraestructure: A Continental Persepctive. Available at <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1934674">http://paper... 4th September 2013]<br />
<br />
Imara (2011): Angola&rsquo;s Country Report. Available at <a href="http://www.imara.co/uploads/stockbroking/africa-securities/Angola_Countr... 4th September 2013]<br />
<br />
IEA (2009) Share of total primary energy supply Available at <a href="http://www.iea.org/stats/pdf_graphs/AOTPESPI.pdf">http://www.iea.org/sta... 4th September 2013]