Thought leadership from our experts

Focus on the Angolan power sector – Investment in capacity building, efficiency and steps towards liberalisation

Manuel Santos Vítor, PLMJ, Portugal Ana Oliveira Rocha, PLMJ, Portugal

2015 brought a revision of the Angolan power sector law1 (PSL), which followed a 2014 reorganization of the attributions of its major stakeholders2 (all state owned enterprises (SOE)), most of which had ambitiously been forecasted in the 2011 National Energy Policy and Security of Supply Strategy (2011 Strategy) approved through Presidential Decree 256/2011 of 29 September with an overall implementation horizon for 2025.

Angola identified a major need to take steps towards the country's electrification, including the necessary growth of electrical energy generation from the 2011 overall 1GW generation installed capacity to 9GW in 2015, aiming at quadrupling its energy sector's offer up to 2025. In 2011 Angolan's energy matrix was mostly composed of 3% of electricity, 33% of oil and natural gas and dependent on biomass which represented 64%3. The goal of the Governmental Power Sector Transformation Program is that of the electricity subsector representing 10 to 15% of the country's energy matrix in 2025.

The main vectors of the 2011 Strategy were set based on the need to ensure the financial and economic sustainability of the national electricity sector (SEN), a clear separation of the SEN's activities - which additionally to generation, transmission and distribution now also distinguishes power supply from the latter -, increasing the role of the sector's regulatory entity ("Instituto Regulador do Sector Eléctrico" or IRSE) promoting investment under public private partnership (PPP) model, creating necessary know-how on construction and operation through power purchase agreements with attractive remunerations and taking profit of the SOE oil company, Sonangol, natural gas entitlements synergising with generation.

One of the most important issues within the electricity subsector regard the SEN's deficit linked to high system costs and the impossibility to transfer the same to consumers, which in turn lead to an expressive subsidization of the final supply tariffs applied (up to 80%).

The solution to such deficit passes by the mentioned building up of the Country's generation capacity – diversification of energy sources through hydropower, combined cycle power projects and renewable energies being favoured so as to take advantage of the country's natural resources -, cross-sector efficiency increase, gradual legislation review and the creation of additional transmission capacity and interconnectivity4, all of which aiming at contributing to the country's general industrial diversification and social beneficiation5 whilst finally achieving the sector's sustainability.

Partial liberalisation of the electricity subsector is forecasted to occur between 2021 and 2015, namely after operational efficiency measures, metering at all consumption points, monitoring systems and retribution based on incentivisation of losses' reduction (estimated of over 40%6) are implemented.

The IRSE's approved organic structure in 20147, the 2015 amendment of the 1996 PSL8, jointly with the December 2015 enactment9 of new electricity supply tariffs - which had not been revised since 200610 - already partially implement the sector's restructuring and improvement. These allow PPPs in generation, with up to 50-year concessions, to be formalised through tender procedures11 for access to all sector's activities excepting isolated distribution systems (IDS) and supply of electricity.

In the latter cases, the related rights - with a general maximum term of 20 years and a minimum validity of 10 years for IDS and 5 years for electricity supply - shall be licensed by the Ministry of Energy and Waters or other public agency acting under delegated powers.

Only generation activity which is not for public service purposes (qualified as non-bound generation) may also be subject to licensing, with the associated electricity supply being subject to contractual agreement between the parties involved. The transmission system operator and SEN's manager concessionaire, RNT12, acts as single-buyer for all public service13 generated electricity.

All remaining electricity sector activities' tariff regime as well as electricity supply terms and conditions are still subject to further regulation to be prepared by IRSE and followed by Presidential approval. The 2015 amendment to the PSL mainly provides for IRSE's not yet independent role as protector of consumer's rights, promoter of efficiency and development of the SEN, hand in hand with the fostering of the sector's financial sustainability and consumers' rights specifications.

  1. Law no. 14-A-96, of 31 May 1996.
  2. Presidential Decree no. 305/14, of 20 November 2014, providing for the unbundling of the electricity sector's activities, extinguishing the SOEs ENE - Empresa Nacional de Electricidade (ENE) e EDEL - Empresa de Distribuição de Electricidade and creating the SOEs concessionaires (i) Rede Nacional de Transporte de Electricidade, E.P., (RNT) concentrating all transmission activity associated assets previously held by ENE and the GAMEK – Gabinete de Aproveitamento do Médio Kwanza (GAMEK), and liable for the SEN's management, it being the single-buyer and the transmission system operator assuming all related contractual rights and obligations; (ii) Empresa Pública de Produção de Electricidade, E.P. (PRODEL) – holding exploitation rights of all public service generation undertakings and associated assets and contracts previously held by ENE and GAMEK; and (iii) Empresa Nacional de Distribuição de Electricidade, E.P. (ENDE), dedicated to distribution and supply activities having incorporated all distribution assets and assuming all related contractual arrangements previously held by ENE and EDEL.
  3. Further data in Governmental Power Sector Transformation Program Presentation available at:
  4. The country has three major electric systems (north, centre and south) operating independently.
  5. In 2013 only 35% of the population was estimated to have access to electricity.
  6. Vide ft. 3 above.
  7. Approved by Presidential Decree no. 208/14, of 18 of August 2014.
  8. Enacted by Law no. 27/15, of 14 December 2015.
  9. By Executive Decree no. 705/15, of 30 December 2015.
  10. Formerly, Executive Decree no. 118/06, of 14 August 2006.
  11. SOEs being exempted from such requirements.
  12. Vide ft. 2 above.
  13. Public service is deemed to be verified whenever there is a transfer to a public or private entity of the use rights of public assets or natural resources. Please note that the Angolan State is the holder of all mineral rights, including water, found in the ground, underground sea or sea bed within its territory which includes its continental shelf and the exclusive economic zone.