Continued investment in Angola’s transmission and distribution network is critical for shoring up the growth of the Angola’s power sector over the coming decade, Fitch Solutions asserts.

According to the research firm, these investments in the power sector will improve quality of electricity supply. But not only that, it will also reduce distribution losses and increase electrification rates.

Also, Fitch Solutions places keen emphasis on the country’s development of interconnections with neighbouring countries. This ensures that excess generation of electricity is not wasted and there is security of power supply in the country.

Earlier this year, the World Bank approved a loan facility worth USD250million to the Angolan government. This was to improve the quality of the grid network. The facility also focuses on connecting a further 196,500 homes to the grid.

The Angolan government has also received a loan amount of US$530 million from the African Development Bank (AfDB). This is to help the country focus on improving the country’s power sector network. This facility will also connect a total of 400,000 homes to the grid.

“The AfDB’s loan will form part of the first phase of the Energy Sector Efficiency and Expansion Programme, which will also link the northern and southern grids of Angola.”

Furthermore, Fitch Solutions forecast that these increased investments will result in Angola’s annual average transmission and distribution losses decreasing from 13.7 percent of total output in 2021 to 8.8 percent by 2030. Albeit, there are highlights of risks to the outlook. This is as a result of widespread perceived corruption and a lack of a robust legal system, Fitch Solution avers.

This notwithstanding, the research firm notes that critical reforms undertaken by President João Lourenço also face potential opposition from members of his own party that has previously benefitted under former president Dos Santos.

Interconnections key to benefitting from excess electricity

Fitch Solutions further asserts that the government’s plans to connect Angola both to the Central African Power Pool and the Southern African Power Pool (SAPP), are going to enable the monetization of excess electricity generation through imports.

Without taking this action, the research firm indicates that “this electricity would otherwise either have been lost or power capacity would have had to be curtailed. For the reason that, “ we do not expect that electricity consumption will keep up with total generation over our 10-year forecast period after the completion of the 2,170MW Caculo Cabaҫa dam (which we expect to come online in 2026).”

In December 2018, it was announced that, as part of the SAPP plan, Angola will be interconnected to the wider Southern African Development Community grid by 2021.

In March last year, both the Namibian and Angolan governments signed bilateral agreements for the development of the joint 600MW Baynes hydropower project. While this deal was met with great enthusiasm, it has been faced with a lot of delays. And Fitch Solutions notes that it does not currently factor the project into its forecasts due to the delays.

However, the research firm indicates positivity on the planned interconnector between the two countries. Accordingly, it forms part of the Baynes project that will enable Angola to connect to the SAPP.