Angola leads in attracting Chinese financing for energy infrastructure

The offices of Sonangol EP stand illuminated at night in Luanda

Angola is the African country that has received most Chinese funding for the construction of energy infrastructure since the year 2000, according to a recent study from Boston University, in the United States.

The Boston University Global Development Policy Center study reports that over the past 18 years, China has provided funding of about USD34.8 billion for energy infrastructure in African countries, of which $8.9 billion to Angola, well above Nigeria ($6.6 billion).

Zambia, Uganda and South Africa received Chinese loans of more than $2 billion over the same period, Sudan $1.6 billion and the remaining African countries $11 billion.

In supporting infrastructure reconstruction in Angola, China has focused on financing the construction of dams, namely the Caculo Cabaça dam.

The new dam, whose first stone was laid in August 2017 by former President José Eduardo dos Santos, will be the largest power plant in the country, and the construction project received funding of $4.5 billion granted by the Industrial and Commercial Bank of China.

Angola’s energy and water minister, João Baptista Borges, said construction of the new Caculo Cabaça dam in the Kwanza basin will enable it to reach the goal of 9,000 megawatts of installed capacity across the country by 2025 as well as exporting electricity to neighbouring countries.

The Boston University study showed that the proportion of Chinese funding for energy infrastructure in Africa has been increasing relative to other regions and that last year this continent received the most from these capital flows ($6.8 billion), above Southeast Asia ($5.8 billion).

Data from the study includes figures from the China Development Bank and the Export and Import Bank of China.

“Traditional multilateral development banks have not been proactive in major energy projects, and China is more than willing to fill that void,” said Kevin Gallagher, professor of global development policy at Boston University.

The same expert warned that Africa’s demographic explosion, which is expected to bring the continent’s population to more than 1.3 billion people by 2050, leads to a projection of an increase in demand for energy production and transmission in the coming decades.

The latest report by the Economist Intelligence Unit (EIU) on Angola said that relations with China will be given “high priority” by the Angolan authorities, as reflected in the recent agreement on entry visas between the two countries.

“The opening of a branch of the Bank of China in mid-2017 should make Angola a more attractive destination for small and medium-sized Chinese companies,” the EIU said.

“The government will also continue to seek loans from China to enable it to continue capital spending program to build highways and power plants,” despite greater attention from Chinese entities on the “risk of projects with dubious repayment capacity,” said the EIU. MDT/Macauhub