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CSR in the Oil Sector in Angola:
World Bank Technical Assistance Study
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5. CSR issue #3: Affordable energy solutions for the poor
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During the mission we discussed extensively the issue of affordable energy provision to the underserved in Angola. Our original assumption was that this was likely to attract the interest of - most if not all - the oil companies (core competencies), the GoA (infrastructure rehabilitation and development) and the NGOs (social and environmental concerns). In addition, we felt that we had an opportunity to set realistic deliverables within the pilot duration. Deliverables could include the passing of ad-hoc legislation by GoA to establish energy infrastructures in underserved areas, the inclusion of affordable energy to the new gas liquefying plant project, the creation of an energy private/public fund to promote renewable and/or cleaner energy sourcing, etc.
The following technologies were discussed during the mission as potentially promising for deployment in Angola:
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Solar energy. It can be used to supply electricity to small communities and families in areas with no grid access (both urban and rural). Implications for health clinics (refrigeration of medicines and vaccines), schools (lengthening the school day), water supply (pump operation), and telecommunication (satellite radio/TV, wireless phone operations, Internet kiosks).
There is no clear strategy by the GoA at the moment to deploy this technology, although it could make a significant contribution to rural development. Among the oil companies, only BP and Shell have solar energy products (photovoltaics), and only BP is interested in introducing them into Angola. Currently, BP is exploring how significant the demand may be, and is deciding whether to deploy photovoltaic installation beyond its strategic voluntary charitable activities in Angola. They have equipped 2 schools (one in Luanda, one in Viana, just outside Luanda), and plan to equip clinics to allow refrigeration of medicines (no specific plan in place yet).
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LPG. Liquefied Petroleum Gas (a.k.a. propane, butane, or a mix of the two) is a lesser-value derivative produced with LNG (Liquefied Natural Gas). Gas is normally transported via a pipeline from the oil fields to a liquefying plant, which produces separate streams of LNG and LPG (and avoids the need for flaring gas offshore). LNG is then exported via special tankers, and LPG is usually bottled and distributed for local consumption. The LNG plant project, a multi-billion project involving several companies (ChevronTexaco, BP, ExxonMobil, Norsk Hydro, TotalFinaElf and Sonangol) and would represent the oil industry’s first major onshore investment since the end of the war.
The plant would produce a considerable amount of LPG that could cover some of Angola's demand for power generation and cooking. In particular, LPG could assist the poor in graduating from inefficient and environmentally-harmful fuels such as wood, charcoal and kerosene. However, this could only be realized through a commitment by the LNG project to the commercial distribution of LPG in the local community and the rest of Angola (perhaps in partnership with local SMEs). This would represent a strategic change in the oil industry’s approach to CSR in Angola, which has not traditionally involved the supply of energy services to local communities, and has tended to focus on philanthropic rather than commercial solutions.
Currently Sonangol produces a limited amount of LPG in Block 0, and distributes it in bottles of various sizes on the domestic market for cooking. The 15kg bottle retails for about USD 2.40. Prices are subsidized. The GoA has plans to reduce subsidies for various petroleum related fuels, but the subsidies will remain for LPG.5
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Hydroelectric. Angola’s geophysical characteristics yield good potential for hydroelectric power generation, so much so that Angola could theoretically produce enough electricity with this technology to become a net exporter. There is, however, no interest with the oil companies. Furthermore, the LNG plant would provide excess LPG to be used for electric power generation. New small or medium plants could be build around the country, and old diesel-powered plants could be upgraded.
Although all the technologies discussed above are critical to provide affordable energy and contribute to the social and economic development of Angola, we have come to the conclusion that it is unrealistic to include energy provision as part of the CSR Angola pilot. At this point in time, there is little or no interest within the oil companies, limited or absent coordination within the GoA, and inadequate understanding within the civil society - due in part to the many emergencies that the country is facing - for the positive impact that affordable energy could have. Our conclusion is that an affordable energy provision is not a viable option. However, we would be interested in GoA and company reaction to this conclusion.
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Footnote:
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Under this plan, subsidies will also remain effective for kerosene, which is mainly used for illumination lamps.
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