RETRADE-SA MPA: Southern Transmission Network Expansion Project in Angola

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The proposed Project aims to extend lower-cost generation to the southern provinces of Angola through the construction of transmission lines to integrate the southern regions into the national transmission network. It will finance Angola’s investment obligations towards the Angola-Namibia (ANNA) interconnection project which will create the transmission capacity needed in Angola to interconnect with the Southern African Power Pool (SAPP). Benefits of the proposed project include: (i) displacing expensive diesel generation; (ii) increasing the availability and quality of service to communities in the south; (iii) opening up access to the regional electricity market, creating conditions for Angola to become an operating member of SAPP; (iv) increasing the alternatives for energy exports within SAPP; and (v) enabling the development of renewable energy projects in the south of Angola. Proposed activities are presented below. Component 1: Cunene transmission network (US$254 million, of which IBRD US$252 million). This component will finance the expansion of the transmission network to the south of Angola to facilitate the electrification of the Cunene Province and enable the interconnection of Angola to SAPP through Namibia. The line to Ondjiva will allow the 10.5 MW diesel plant to be replaced with renewable energy and will establish a secondary interconnection to SAPP through an existing 132 kV transmission line to Efudja in Namibia. Component 2: Cahama-Namibia Interconnection line (Angola section) (US$126 million equivalent, of which IBRD US$16 million equivalent). This will pilot a public-private partnership (PPP) approach for financing transmission infrastructure, using a PFT model. It will entail the competitive procurement of an experienced developer of transmission lines and related infrastructure with knowledge of the country or region, which will form a special purpose vehicle (SPV) to act as the project implementation company. The SPV would sign appropriate concession, offtake, and other agreements with the RNT and the government. The concession will cover the development, financing, construction, and operation and maintenance (O&M) of the transmission line. Appropriate credit enhancement mechanisms, including payment risk guarantees, will be considered for inclusion in subsequent phases of the MPA. Component 3: Smart grid upgrades and market readiness (US$51 million equivalent, of which IBRD US$50 million). This will finance investments and technical assistance to the government and the RNT to help them prepare for integration into the regional market. The RNT, as the system operator, has no experience of operating in an interconnected system. The proposed activities will build the necessary infrastructure and capacity for synchronization with the interconnected SAPP system. Component 4: Investment pipeline and project implementation support (US$33 million equivalent, of which IBRD US$32 million). This will finance project management costs and project preparation to prepare an investment pipeline for future transmission lines to be developed using the PFT model. Implementation support will include the costs of the Project Implementation Unit (PIU) to be established within the RNT, along with expertise and support throughout the project implementation, such as consultancy services for the preparation of bidding documents, procurement processes, and supervision of works. A provisional sum of US$10 million right-of-way compensation is also included.