There is considerable investor interest in reforms being enacted across the energy industry in Angola, but more work is needed before serious projects emerge and there remains caution about the extent to which cronyism has been eliminated, writes Dan Marks
There has been material progress reforming Angola’s opaque and nepotistic energy sector over the past year. Considerable work has gone into crafting new power sector regulations, and there have been notable changes to upstream licensing and the role of state oil and gas giant Sonangol, as well as important reforms to the downstream hydrocarbons sector. Investors and analysts canvassed by African Energy were impressed by the extent of the changes, although plenty of problems remain to be resolved.
Since former president José Eduardo dos Santos left power in 2017, his successor João Lourenço has been pushing to make the country more business friendly. Lourenço has struggled to deal with the fallout of the 2014 oil price crash and its ramifications for the oil-dependent economy and particularly Sonangol, which has seen production decline and is unable to adequately invest in modernising its aging infrastructure. Lourenço has been aggressively targeting the policies required to secure funding from the International Monetary Fund (IMF) and World Bank Group (WBG) (AE 383/1).
The resulting reforms appear to be a serious attempt to deal with the many problems faced by the energy industry and are likely to make an impact. Concerns remain, however, that the reforms reflect economic necessity rather than genuine political transformation and that changes to the previous system could be resisted.
The full article was published in African Energy, Issue 397, 25 July 2019
Angola will be one of the countries discussed at the sixth annual Africa Investment Exchange: Power & Renewables meeting, which is being held in London on 13-14 November.