Issue 142 • 4 July, 2008

Angola’s ENE looks to reform and development

While no decisions are expected until after September’s elections, major reforms are in the pipeline for the state power utility to enable it to deliver the power produced from planned new generation projects, writes François Misser, recently in Luanda.

Empresa Nacional de Electricidade (ENE) plans to separate its generation, transmission and distribution operations to prepare for eventual unbundling and to improve its performance.

The director for corporate planning and co-ordinator of ENE’s Internal Restructuring Process Implementation Unit, Euclides Morais de Brito, told African Energy the reforms aimed to create a more commercial and transparent environment.

One key priority is to reduce technical and non-technical losses, currently running at 30%. The company is investing in information technology to increase the quality and reliability of the service and to improve revenue collection. ENE also hopes to tackle the bottleneck created by the lack of transmission capacity, as most transmission infrastructure is concentrated in the northern part of the country.

These measures should help to create the conditions for an increase in generation capacity to meet demand rising at 13%/yr, in the context of an estimated regional generation capacity deficit of around 8,000MW in southern Africa as a whole. In addition to meeting domestic demand, Norsk Hydro expressed interest in 2006 in building a 600,000 t/yr aluminium smelter in Angola which would require some 1,635MW of power.

Generation projects

Angola’s installed capacity amounts to 810.7MW from hydropower and 1,157MW of thermal. Morais de Brito estimates the actual available capacity at just 872MW. The main sources are the Capanda hydropower dam (520MW) and the Cambambe dam (180MW) on the Kwanza River. The smaller Lomaum dam (35MW) on the Catumbela River and the Mabubas dam (17.8MW) on the Donde River need complete rehabilitation. The Matala dam (40.8MW) is not operating at full capacity owing to a decrease in the Cunene River’s flow.

The cabinet recently approved a decision to expand the Cambambe dam by 80MW, and much larger investments could eventually follow. Angola’s hydro-electric potential is estimated at some 18,000MW, notably from the Kwanza (6,500MW), Queve (3,020MW), Cunene (2,045MW) and Catumbela (1,679MW) basins. In the Kwanza basin, three major sites have been identified at Lauca (2,120MW), Caculo Cabaça (1,560MW) and Nhangue (450MW) (AE 140/7). Other projects envisaged are the construction of the 360MW Baynes hydropower station on the Namibian border and of the 60MW Gove power station.

The director of planning at the Ministry of Energy, Paulo Matos, told a seminar in Luanda in May organised by the Ministry of Planning and the World Bank that the development of the Kwanza River projects alone over the 2009-2016 period could cost up to $7.3bn.

The political decision to embark on development on this scale has yet to be made, however. Technical studies have been made by the Gabinete de Aproveitamento do Médio Kwanza (GAMEK) created by the Ministry of Energy with the technical support of the Brazilian Furnas Centrais Eléctricas, but they need to be updated, Morais de Brito said, adding that the work faced funding constraints.

One option could be to expand the use of public-private partnerships. In the case of Capanda, Gamek is working with Brazil’s Odebrecht and Russia’s Technopromexport and sells the generated power to ENE. Russian diamond company Alrosa is starting work this year on the 8MW Luachimo dam in Lunda Norte province to increase capacity to 24MW, and is building another 16MW dam at Chicapa in Lunda Sul province to supply the Catoca diamond mine.

The government also recently approved the E85m Hidroluapasso project, a joint venture between ENE and Portugal’s Escom Mining Energy, part of the Espirito Santo Group (AE 125/7). This project involves the construction of the 12.8MW Samuela hydropower dam and a distribution grid for local consumers which will be connected to the ENE grid through the Lucapa electricity substation and a new substation at Luo. The project aims to supply energy to the region’s mines; the Portuguese group is a partner in the Camatchia-Camagico diamond mine with Endiama, Alrosa, Hipergesta and Angodiam.

Angola also has considerable potential to harness its natural gas for power generation. Morais de Brito said the authorities would have to consider the relative costs and benefits of gas versus hydropower. Gas-fired plants could be built near the production centres at Soyo, near the LNG export terminals or close to major demand centres such as Luanda or the port of Lobito. Morais de Brito said this was a political decision, adding that the government would also eventually have to make a decision about tariffs, as the prices now being charged to consumers do not cover ENE’s operating costs.

Grid plans

Another big challenge is to improve the reliability and the efficiency of the three separate northern, central and southern grid systems by interconnecting them. This would create economies of scale and increase the general reserves of the system. The council of ministers has approved the interconnection between Gabela and Quileva near Lobito which will bring together the Northern and Central grids. In the long term, the intention is to interconnect the future Inga III dam in the Democratic Republic of Congo with either the Capanda or the Cambambe dam and then Namibe, joining the northern and central grids to the southern grid, according to Morais de Brito, who is a member of the board of the regional Western Corridor (Westcor) project.

In any case no decisions are expected until after September’s parliamentary elections.

President José Eduardo dos Santos, an oil engineer by training, is determined to provide the country with the necessary power infrastructure to develop industrial projects, diversify the economy and improve the population’s access to electricity. Only 11% of the population has formal access to electricity, 16% if informal connections are also counted. But the government also has to balance infrastructure investment with social spending to counter claims from the opposition that it is not doing enough to restore sectors like education and healthcare.

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