1. Luanda Electricity a key strategic factor for growth and development
Angolan Power Sector and its challenges

2. Current State of Affairs
Estimated total population:24 millions
Total installed generation capacity MW,
Less than 35% of the population has access to “formal” electricity supply (many more have access through illegal connections).
Approximately 70% of the total supply is consumed in Luanda, where almost 30% of population live;
Generation deficit and transmission constraints need to be reduced ;
Major investments are required to expand access of electricity to a larger proportion of the population as well as to provide for the growing industrial needs;
Reliability and quality of power supply
Grid not interconnected
Three main systems and isolated power networks
The supply does not cover the demand (Deficit). High levels of suppressed demand
Losses
Technical and non technical losses are high due to the poor condition of infrastructure, inefficient billing, metering and settlement systems, illegal connections
Revenue Collection
Collection has improved substantial over the last three years. The Collection rate which was of 36,3% in 2003, went up to 41,1% in 2004, 63% in 2005, 77,6% in 2006;
Utility financial situation
Despite the direct subsidy that the utility gets from the Government, it still have significant losses. The subsidies are not enough to cover operating costs, the utility is over staffed, its commercial services are not reliable, scarcity of qualified human resources and financial resources;
Investments depends on Public Service Investment Program;
Financial problems have limited the ability to rehabilitate and expand infrastructure.
Non cost reflective tariffs
Tariffs not cost reflective;
The Shortfall is met through Government subsidies, but not sufficient to cover all cost involved
Last tariff increase occurred in August 2006 through an executive decree 118/06 MINFIN, which raised tariffs at
Residential customers at US$ 0.042/KWh
Low voltage industrial and commercial customers at US$ 0.055/KWh
Social tariffs at US$0.015/WKh for 50 KWh and is applicable for those customers not exciding 200 KW per month
MV and HV tariffs were not increased
Average tariffs for distributors
At 60 KV, US$ 0,032/KWh
At 15 KV, US$ 0,025/KWh

3. Electricity Industry Dynamics and Investment Opportunities 2025 Goals
The government established the guidelines reinforcing the importance of the electricity and allowing for external investments to achieve major development goals in the sector.
2025 Goals
Ensure and Increase Electricity Supply
Increase the electricity rate from 35% to 60%
Quadruplicate the generation capacity from current ~2.000 MW to ~9.500 MW in 2025
Extend more than km of lines and substations in the transmission grid, and establish international interconnections
Rehabilitate distribution networks, adding more than 1,5 million consumers
Industry Competitivenes s
Improve the efficiency of public companies
Implement a new market model that allows for cost reductions
Develop a new regulatory model encouraging efficiency
System Sustainability
Reduce tariff subsidization
Develop an optimal generation mix, making better use of Angola’s natural resources
Develop the capabilities of the local workforce

4. Projects in the field of Generation:
Cambambe Hydropower station total output of 960 MW (project concluded in 2017)
Lauca Hydropower– 2067 MW, (commissioned in 2017)
Caculo Cabaça Hydropower MW construction starting in 2017
Construction of a new Thermal 20 MW power station in Namibe
Construction of the Jamba Ya Oma and Jamba Ya Mina Hydro power stations;
Rehabilitation and Enlargement of Luachimo Hydro power station;
Construction of new the Hydro power stations of Luapasso, Chiumbe-Dala (commissioned in 2017) and Chicapa II

5. Projects in the field of Transmission:
Construction of the transmission lines associated to the new power plants,
Projects in the field of Distribution:
Expansion of Luanda distribution network ;
Expansion of distribution networks of the capital cities and towns of the eastern provinces which are not connected to the main power grid ;
Expansion of Cabinda distribution network
Implemention of a new tariff model in order to ensure the self-financing of the power sector expansion

6. Projects in the area of Renewable Energy
Development of Small hydropower program, including the realization of feasibility studies and project executives studies of 50 hydroelectric power stations;
Development of solar photovoltaic systems programme which include the installation of 63 PV systems in 52 localities;
Development of mini-hydropower stations program, seeking private sector participation.
Implementation of wind parks, with the participation of the private sector
Development of wind and solar mapping for power generation
In isolated networks where hydropower, solar and wind, are adopted, it is expected to maintain the use of thermal generation source and / or energy storage systems (reservoirs and water pumping systems, battery for solar / wind systems) to guaranty the continuity of supply.
In rural areas , renewable energy (especially the mini-hydro, wind and solar) may be the most interesting alternative not only from the perspective of sustainability, but also from an economic perspective and also the short time needed to ensure the supply to the population.

7. Major Challenges – partial liberalisation phase
Electricity Sector Reform Master Plan
ENE.EP. has started its internal reorganization and restructuring process in February 2007;
Restructuring will focus on:
Ring fencing, Human resources development, Reorganization of commercial and marketing function, Adoption of a new corporate structure in line with new strategic vision;
The separation of accounts will allow the effective identification of the cost drivers and facilitate the possible move to unbundling if viable and feasible;
A Business Unit on Internal restructuring has been recently established in February 2007;
The utility is seeking funds to implement its restructuring programme (financial and technical support);
A strategic and business plan were developed;
A Contract Performance was developed and is under negotiation with the Government;
The Rehabilitation and Expansion Master Plan were revisited;
The Load Forecast Study was also revisited;
Develop an Information Technology Master Plan;
Develop a new remuneration package based on key performance indicators;
Develop a specific power training needs programme to meet the new challenges

8. Aproveitamentos no Médio Kwanza
Kwanza River Hydroelectric capacity
1.000 m
CAPANDA (520 MW)
LAÚCA (2.067 MW)
800 m
CACULO-CABAÇA (2.100 MW)
600 m
ZENZO 1 (450 MW)
400 m
TÚMULO DO
CAÇADOR (450 MW)
ZENZO 2 (120 MW)
200 m
LUÍME (330 MW)
Potência Total estimada MW
0 m
CAMBAMBE 1 e 2 (960 MW)

9. Major Challenges Expand the electrical power infrastructure;
Improve the quality and reliability of power supply;
Increase the access to electricity supply in the country;
Increase the supply side to meet the demand; and better efficiency.
Interconnect the three main power systems in the country (Northern, Central and Southern);
Interconnect the country to its neighbours (RDC , Namibia and Zambia) ;
Improve the performance indicators within the utilities operations;
Expand installation of Pre-paid meters in order to increase utilities cash flow and gradually eliminate state subsidies.
Capacity building and training of local staff in the field of engineering and management.
Electricity Sector Reform Master Plan
ENE.EP. has started its internal reorganization and restructuring process in February 2007;
Restructuring will focus on:
Ring fencing, Human resources development, Reorganization of commercial and marketing function, Adoption of a new corporate structure in line with new strategic vision;
The separation of accounts will allow the effective identification of the cost drivers and facilitate the possible move to unbundling if viable and feasible;
A Business Unit on Internal restructuring has been recently established in February 2007;
The utility is seeking funds to implement its restructuring programme (financial and technical support);
A strategic and business plan were developed;
A Contract Performance was developed and is under negotiation with the Government;
The Rehabilitation and Expansion Master Plan were revisited;
The Load Forecast Study was also revisited;
Develop an Information Technology Master Plan;
Develop a new remuneration package based on key performance indicators;
Develop a specific power training needs programme to meet the new challenges

10. Steps forward
Bearing in mind:
the existing natural resources
the potential for the growth and development of the Angolan market
the existing energy resources
the rapid growth in electricity demand
The application of the revised legal framework of the power sector, namely the General electricity Law ,
Conditions are hence created for private sector participation in power infrastructure through public private partnerships.
Angola has created an enabling environment to attract private sector investment for co-financing the rehabilitation and expansion of the infrastructure by establishing transparent legal, institutional and regulatory frameworks:
The Private Investment Law 11/03, May 13, allows for private sector involvement in the power sector;
( - ANIP)
The Electricity Act 14/A 96, May 13, promotes competition in generation and allows for participation of private sector in generation and distribution;
The Economic Sectors Under the State Control Act 4/02, April 16, allows the participation of private sector in the electricity generation and distribution industry through various forms of concessions (BOO, BOOT, ROT, Service and Management Contracts).
BOO, BOOT – build (own) operate transfer, ROT – rehabilitate operate transfer, Service and Management Contracts
Huge investments are required for rehabilitation and expansion of generation, transmission and distribution infrastructure - Almost $US2.5 billion needed up to 2016 (for the next three years $US559million)
Main constraints
Scarcity of public funds to rehabilitate and expand infrastructure due to other priorities (social and post war recovering programmes);
Hydropower facilities that need rehabilitation – Mabubas (17 MW), Lomaum (35 MW);
Use of non cost reflective tariffs.

11. Steps forward Taking into account the above mentioned measures,
Actions are being undertaken with regard to the electricity pricing reforms including introduction of cost reflective tariffs;
Consolidation of the role of the Regulator (IRSEA) with the adoption of new regulations as well as the capacity building of its staff.
Identification of business opportunities for IPPs, BOO, BOOT, ROT concession and management contract schemes, ;
Creation of conditions to promote PPAs (private investment participation) in the sector.
Private operators are expected to play an important role in helping restore the power system during the rehabilitation phase, as well as during the phase of its expansion.
Angola has created an enabling environment to attract private sector investment for co-financing the rehabilitation and expansion of the infrastructure by establishing transparent legal, institutional and regulatory frameworks:
The Private Investment Law 11/03, May 13, allows for private sector involvement in the power sector;
( - ANIP)
The Electricity Act 14/A 96, May 13, promotes competition in generation and allows for participation of private sector in generation and distribution;
The Economic Sectors Under the State Control Act 4/02, April 16, allows the participation of private sector in the electricity generation and distribution industry through various forms of concessions (BOO, BOOT, ROT, Service and Management Contracts).
BOO, BOOT – build (own) operate transfer, ROT – rehabilitate operate transfer, Service and Management Contracts
Huge investments are required for rehabilitation and expansion of generation, transmission and distribution infrastructure - Almost $US2.5 billion needed up to 2016 (for the next three years $US559million)
Main constraints
Scarcity of public funds to rehabilitate and expand infrastructure due to other priorities (social and post war recovering programmes);
Hydropower facilities that need rehabilitation – Mabubas (17 MW), Lomaum (35 MW);
Use of non cost reflective tariffs.

12. Actions in course
Stabilization and adjustment of the market relationship between the public utilities according to “Single Buyer” model;
Adjustment of electricity tariffs to be more cost-reflective ;application of the true-cost of all generation and supply activities and simultaneously reduce the subsidization to electricity retail tariffs;
Application of “merit order” to generation plants, ranking them with respect to marginal cost (from cheapest to most expensive) when considering dispatch instructions;
Install electricity meters in all consumption points, preferably pre-paid meters, reducing consumers without a meter;
Electricity Sector Reform Master Plan
ENE.EP. has started its internal reorganization and restructuring process in February 2007;
Restructuring will focus on:
Ring fencing, Human resources development, Reorganization of commercial and marketing function, Adoption of a new corporate structure in line with new strategic vision;
The separation of accounts will allow the effective identification of the cost drivers and facilitate the possible move to unbundling if viable and feasible;
A Business Unit on Internal restructuring has been recently established in February 2007;
The utility is seeking funds to implement its restructuring programme (financial and technical support);
A strategic and business plan were developed;
A Contract Performance was developed and is under negotiation with the Government;
The Rehabilitation and Expansion Master Plan were revisited;
The Load Forecast Study was also revisited;
Develop an Information Technology Master Plan;
Develop a new remuneration package based on key performance indicators;
Develop a specific power training needs programme to meet the new challenges

13. Main Requirements for the Power Sector Development
Infrastrutures
Political Stability
Investments
Energy Market