The African Development Bank (AfDB) has committed $530 million to finance a 343 km, 400 kV central-south transmission line connecting the north and south transmission grids in Angola for distributing clean energy between the two regions.
The finance package, approved by the Board of Directors of the African Development Bank, consists of $480 million in financing from the Bank. The remaining $50 million would come from the Africa Growing Together Fund – a $2 billion facility sponsored by the People’s Bank of China and administered by the African Development Bank.
The funding covers the first phase of the Energy Sector Efficiency and Expansion Program (ESEEP) in Angola, which will help the government connect the country’s transmission grids and tackle limited operational capacity within the Angolan power distribution utility ENDE.
Around 80% of residential customers in Angola are not metered, resulting in financial losses and reliance on government subsidies. As part of the ESEEP, 860,000 pre-paid meters will be installed, and 400,000 new customers will be connected to the grid and effectively metered.
At the regional level, the ESEEP will enable a connection to the Southern Africa Power Pool (SAPP). The new transmission line will become the backbone for the distribution of power to Angola and Namibia’s southern provinces. It will enable further power trading between countries in the region.
The funding follows two other recent Bank contributions to Angola’s energy sector strategy. In 2015, the Bank approved a $1 billion power sector reform loan for Angola, which created an independent regulator and the sector’s unbundling into distribution, transmission, and distribution companies.
North Angola has a surplus of more than 1 GW of mostly renewable power. In contrast, South Angola relies on expensive diesel generators, supported by government subsidies.
The Transmission capacity will increase by 2,250 MW and eliminate the need for polluting, diesel-powered generators in southern provinces. Once operational in 2023, the project will avert the consumption of 46.8 billion liters of diesel per year in the south, cutting 80 megatons of CO2 emissions.
The government of Angola will save more than $130 million per year in diesel subsidies.
Angola has significantly improved the capacity, operational efficiency, and sustainability of the electricity sector. In 2015-2019, Angola’s total installed capacity in renewable energy rose from 1,017 MW to 2,763 MW, mainly through the improved exploitation of the country’s abundant hydropower.
In 2019, Ethiopia’s quest to roll out a sustainable procurement framework for independent power producers received a boost in the form of a grant of $995,000 made by the Sustainable Energy Fund for Africa (SEFA), managed by the AfDB.
Meanwhile, AfDB’s board of directors had also approved a $20 million concessional investment from the SEFA to establish the COVID-19 off-grid recovery platform.
Rahul is a staff reporter at Mercom India. Before entering the world of renewables, Rahul was head of the Gujarat bureau for The Quint. He has also worked for DNA Ahmedabad and Ahmedabad Mirror. Hailing from a banking and finance background, Rahul has also worked for JP Morgan Chase and State Bank of India. More articles from Rahul Nair.