25 September 2013 – Angola’s plans to invest $23 billion by 2017 on its electricity network to help create new sectors in the oil-producing economy can only work if its energy companies become more efficient and skilled, senior officials said on Wednesday.
Angola, Africa’s No. 2 oil producer, wants to cut its reliance on crude output but the country’s old, war-ravaged and under-capacity energy network hampers investment in new sectors.
Oil output represents over 95 percent of Angola’s export income and around 45 percent of its gross domestic product.
As the country posts fast economic growth – estimated at 7.1 percent for 2013 – home and business energy consumption often brings the grid to its knees, resulting in long blackouts.
President Jose Eduardo dos Santos’s government has pledged to solve the problem by building several dams to quintuple installed production capacity and by investing in electrical grids.
“Our energy policy has to be a lever for the economy, creating conditions for new companies in various sectors, jobs and wealth for the country and individuals,” Joaquim Ventura, Secretary of State for Energy, told a conference in Luanda.
He warned, however, that besides investing in the network, Angola also faces other structural challenges.
These include energy price subsidies that cost the state around $720 million last year and which it plans to phase out.
State energy companies must also become more efficient, including by cutting losses from non-payment and illegal access to the network, both of which are being tackled by introducing a pre-paid metering program, Venura added.
“The tariffs have to rise, the subsidies are not sustainable. Production and consumption rises and so does the weight of the subsidies, a vicious circle, ” Jose de Oliveira, an energy expert at Luanda’s Catholic University, told Reuters.
Only an estimated 30 percent of Angolans have access to electricity. Still, Ventura said, the system is already insufficient because of infrastructure damaged by a 27-year civil war that ended in 2002, as well as rising consumption.
“With the entry in the next few years of heavy industry into the economy, we expect even bigger pressure on supply,” he said.
Ventura also said that Angola plans to train technical workers to have the skills manage the electricity system effectively, but analysts say it is a tough task.
“The main challenge is in human resources, there is more to manage and not enough trained people to do it,” said a senior source in the sector, who asked not to be named. “You can offer scholarships but weak quality of secondary schooling means students reach the programs very badly prepared”.
*Editing by Mark Heinrich, Reuters