Energy sector in Angola
The approved Private Investment Law (Law No. 20/11 of 20 May 2011), defines the Energy and Water as one of the priority areas for private investment in Angola.
Although substantial investments in the power sector have been injected from governmental level, the productive capacity still lags behind the country’s demand. According to IHS Inc., Angola’s electricity system serves 30% of the population. Other sources, such as KPMG’s 2012 country profile study, estimates this figure at only 20%.
To run their operations, businesses must rely on their own generators. This translates at micro level to high operational costs and at macro level to slow development and diversification of the local industry.
Angola’s current lack of capacity throughout the chain value, high downtime and the irregular supply of energy to domestic and industrial consumers is understandable after nearly three decades of civil war that only ended in 2002.
However, at a 6,8 % GDP real growth rate (2012 est.), the local authorities have further ambitious development plans. In this sense, it is planned to merge the three independent systems that currently provide electricity to different parts of the country. The new comprehensive national grid is planned to ultimately connect with the systems of the neighbouring SAPP members, to create a common electricity market.
The water potential of the country, distributed by 47 hydrographical basins, is enough to produce 18 thousand megawatts. Nevertheless, according to data provided by the Ministry of Energy and Water, Angola currently only exploits 5% of this potential.
In terms of renewable energy, this is still very much in its infancy. However, at the International Energy Efficiency and Sustainable Development Conference held in May this year, Angola was nominated to be the focus country for the 2014. Thus, the government has made a clear statement that will align the Angolan future development strategy in this direction, with more initiatives to be introduced to take advantage of the county’s great potential.
The Ministry of Energy and Water announced plans to build by the end of this decade, three major power stations of five thousand megawatts, natural gas exploitation in three major power stations, with a combined cycle power plant in the North of the country, with approximately 750 of megawatts by the end of 2013.
Under a general plan of integrated exploitation of hydro resources of the Kubango river basin, the Angolan government also plans to construct 30 new electricity generating units during 2015-2030. There are also restructuring plans for ENE, the national electricity company, with the possibility of selling a majority stake to a private investor.
With all these massive ambitious plans, the opportunities in the Energy and Water sector of Angola are plentiful. The following are the main areas in accordance with the governmental strategy:
Generation infrastructure, mainly based on water resources and natural gas;
Renewable energy technologies, with focus on wind, solar and small hydroelectric plants;
Economically and environmentally sustainable management of local resources (solid waste and forest residue);
Infusion of private capital and know-how to build and operate the sector
Implementation of Energy metering and monitoring systems
Getting into the market
Electrical Power Industry is under the tutelage of the Ministry of Energy and Water (MINEA) that proposes, leads, controls and executes the policy of the Executive in the field of energy, water and sanitation. Regulatory power sits with the IRSE (Institute for Electricity Sector Regulation).
MINEA is also responsible for the National Energy Policy, including the promotion of renewable energy sources.
Within the Energy & Water Sector in Angola there are three distinct state-owned companies, each with responsibility for the level of product asset management, energy transport and energy distribution: ENE – the National Electricity Company, EDEL – the electricity distributor and ENCEL-UEE – acting as the constructor and manufacturer for the electrical energy industry.
The Angolan business environment is unquestionably complex and very dynamic, with new rules and regulation coming into force and changing often. Direct investment in the Energy and Water sector are faced with many constraints, including high initial costs and administrative and legal barriers. The local labour force has few qualifications and the expatriate work force is very expensive.
For first time business operators in Angola, careful entry strategy planning is highly advisable. We suggest the following:
Perform due diligence using a reputable local law firm specialised in doing business in Angola
Visit regularly and develop face to face relationships with local contacts
Forming a Joint Venture with a local company can facilitate the process of establishing in Angola
Finding a local partner who is well known and well connected
Be prepared that market entry can take longer and cost more than in other countries
Always seek first approval at ministerial level and build up good links with the appropriate industry’s officials.
Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).
To commission research or for general advice about the market, get in touch with our specialists in country – or contact your local international trade team.
Jose Paulo, British Embassy Luanda. Tel: ++244 222 397 681; Email: [email protected]
Margarethe da Paixao, British Embassy Luanda. Tel: ++244 222 397 681; Email: [email protected]
UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.
International Conference of Energy and Water of Angola 2013
25-27 September 2013