In Angola 2007/2008 - (Page 31) VESTMENT POTENTIAL Opportunities in Targeted Sectors Angola is a country with ample business potential, from its rich soil and burgeoning infrastructure and telecommunication industries, to its continuous growth in the energy and water industries. Below is a list of the latest developments and an overview of investment opportunities in targeted business sectors. Electricity The market shows a willingness and ability to pay relatively high prices for power, despite the low income level in Angola. While a fully competitive power market is not currently feasible, there are significant opportunities for the private sector in such areas as extending rural electrification, developing grids isolated from the main network, generating power for sale to the government utility, and providing a host of services to the government under service contracts. Gas While gas could potentially be used to generate power, the domestic market for gas remains small, and production can be profitable only when liquefied natural gas (LNG) can be exported. Thus, domestic exploitation of gas, though beneficial for Angola, remains dependent on the development of the offshore gas industry and the proximity of any LNG facilities to major markets. Water Like electricity, there is a strong willingness and ability to pay for water services. The government has identified an ambitious investment program valued at USD 3 billion for the water sector over the next fourteen years. Teams are currently exploring the Mozambique model, in which a government-owned holding company retains assets and the private sector manages and operates the system under a concession or lease contract. In assessing options for private participation, the study notes that while a concession arrangement for the utility as a whole may not be feasible at this time, the government should transfer as much responsibility to private companies as they can possibly bear. An alternative for consideration is to un-bundle the sector so that the government retains the network for raw water capture, treatment, and transmission, while outsourcing all commercial functions – including billing, collection, and meter reading – to private companies. In the short- and medium-term, the study recommends that tariffs be rationalized and operational performance improved to better prepare the utility for involving the private sector. Transport Angola’s investment needs for its three rail systems amount to approximately USD 4.5 billion. With rail traffic operating at a fraction of prewar levels and network costs very high, private participation in rail lines may not be feasible. The country is currently collaborating with the Chinese government to reconstruct one of the three damaged lines. Angola’s cargo ports, on the other hand, are well positioned to attract private investors and operators, as some private investors are already active in the Luanda Port. Private operators are also active in Angola’s airports, where the government has outsourced catering, baggage handling, and security services. For more information contact info@investinangola.org 31
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