Angola Power Report Q1 2013

BMI View: As expected by BMI, Angola’s general elections in late August reinforced President DosSantos’ role in power, giving him a new five-year term in addition to the more than three decades of rulethat he has already enjoyed. The opposition party won just 36 seats in Angola’s 220-seat parliament, andwhile UNITA is quoted as describing the elections as ‘unfair’ there has been no civil unrest reported. Forstakeholders in Angola’s energy market, the outcome of the elections will ensure market continuity andAngola continues to be one of the most attractive markets in the region for investment. Improvements toits inadequate electricity transmission and distribution infrastructure were promised by the government,as part of its Rural Electrification Programme, and post-election government officials also admitted theneed to raise electricity production in the Cabinda exclave in order to meet the energy demands of theFútila Industrial Park. But as is often the case in sub-Saharan markets, Angola’s politicians presentambitious electricity generation targets with few details as to how they actually plan to meet them.

In our revised quarterly power report, BMI forecasts that Angola's overall power generation will increaseby an annual average of 15.4% between 2012 and 2017 to reach 11.92 terawatt hours (TWh). A 16.2%annual average increase in hydropower will spur this growth and hydroelectric power will dominate theelectricity mix during the forecast period. We envisage Angola's net power consumption increasing from5.29TWh in 2012 to 10.40TWh by 2017. A steady increase in GDP will support growth; followingestimated GDP growth of 9.89% in 2012, BMI forecasts average annual growth of 7.5% between 2011and 2021.

We expect improvements to Angola's national electricity grid to result in a gradual decline in thepercentage of transmission and distribution (T&D) losses, falling from around 10.0% in 2012. Thepresence of oil and gas majors in the country will incentivise the government to improve its electricityinfrastructure to meet the industry’s requirements, and demand is particularly high in the Cabindaprovince, but access to electricity remains limited with considerable room for improvement.

Key developments in Angola’s power sector this quarter include:

The fourth turbine at Capanda hydroelectric power station in Malanje province began operationsin September 2012, adding 130MW to the plant’s electricity generating capacity.

Angola’s National Electricity Company (ENE) has taken over the management of energydistribution in the cities of Ndaltando and Dondo.

In September 2012, the chair of the ENE announced that Luanda province would have increasedelectricity provision by November 2012 when four thermal power stations begin operations, atMorro Bento (25MW), Benfica (15MW), Viana (40MW) and Luanda Railways (110MW).