Solar Power

Sun Africa is mobilising over $2 bn for Angola’s solar industry

The Angolan Government and Sun Africa signed an MoU for a $1.5bn mini-grid energy project on September 20th, in the presence of President João Lourenço.

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Earlier this year, the consortium of Sun Africa, MCA Solar Angola and Hitachi ABB Power Grids broke ground on 370 MW of solar PV projects in Angola. These are split across seven different facilities now under-construction, including the 188.88 MWdc Biopioa solar plant and the 96.70 MWdc Benguela solar plant.

These are developed under a $650m integrated solar project that sees Sun Africa acting as developer while the MCA Group is the EPC contractor and Hitachi ABB Power Grids the original equipment manufacturer.

The scheme benefits from a €560m export credit from Sweden and is also financed by K-Sure of South Korea and the Development Bank of Southern Africa (DBSA). The facilities will be mostly supplied by Swedish contractors, from substations to steel frameworks, with Hitachi ABB Power Grids in Sweden delivering 50% of the Swedish scope of work. The rest will come from NEXTracker’s facility in Fremont (California) and Sun Africa’s facility in Miami (Florida).

In March this year, Angolan Minister of Energy and Water João Baptista Borges laid the foundation stone for the Benguela and Biopio solar PV plants.

But Sun Africa took its commitment to Angola a step further this week with the signing of a memorandum of understanding for the development of Africa’s largest mini-grid and rural electrification project at a cost of $1.5bn.

The MoU was signed between Angolan Minister of Energy and Water João Baptista Borges during a roundtable organized by the US Chamber of Commerce, in the presence of Angolan President João Lourenço.

The project targets increased electrification rates in the provinces of Namibe, Cuando Cubango, Huila and Cunene via the development of mini-grid solar systems and the construction of new substations. The U.S. Exim Bank is expected to provide the bulk of financing.

According to the International Energy Agency, less than half of Angola’s population had access to electricity in 2019. While the country has so far mostly relied on hydropower and thermal sources of energy, it also has a high solar resource potential, and its average annual global radiation is estimated at between 1370 and 2100 kWh/m2/year. With this resource, Angolan authorities believe they could install a solar power generation capacity of 55,000 MW.

Details on the Benguela and Biopio solar PV facilities are available in the “Projects” section within your Hawilti+ research terminal.

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Nigeria has closed Africa’s biggest Eurobond’s issuance this year, and might raise more

Earlier this week, Nigeria successfully issued three tranches of Eurobonds on the international capital markets, its first such operation since November 2018. While the country had planned to raise between $3bn and $6.2bn, the order book peaked at a whopping $12.2bn, enabling the government to settle for a healthy $4bn from foreign investors. The issuance successfully attracted bids from Europe, the Americas and Asia and was also open to domestic investors. Nigeria now has an extra $4bn split into three tranches: a 7-year tenor Eurobond at 6.125% for $1.25bn, another 12-year tenor Eurobond at 7.375% for $1.5bn and finally a 30-year tenor Eurobond at 8.25% for $1.25bn. While the rates secured by Nigeria are not as attractive as some of its neighbours (Côte d’Ivoire and Benin recently closed Eurobonds issuances at only 4.3% and 4.875%), the operation certainly confirm investors’ appetite for Nigerian debt. Nigeria is rated B2 (negative) by Moody’s, B- (Stable) by S&P and B (Stable) by Fitch. The country is in the middle of a historic foreign exchange and currency crisis, so the influx of additional dollars is expected to help its central bank provide much-needed foreign exchange to the economy. While the proceeds from the Eurobonds are to be used to partly finance the 2021 deficit, an inflow of foreign exchange is also good to increase external reserves and help support the Naira’s exchange rate. The country’s external liquid reserves have been back above the $35bn threshold since mid-September, a level not achieved since last February. While Nigeria has struggled to increase oil production, strong commodity prices still helped the country’s oil exports revenue hit a 3-year high in Q2 2021. Nigeria’s oil & gas exports currently represent 89% of the country’s total export revenues including 80% of crude oil and 8.5% for LNG. The country now has the option of selling more debt: its issuance confirmed the willingness of investors to provide capital and possibly reach the maximum target of $6.2bn Nigeria had set. In an emailed response to Bloomberg this week, Debt Management Office Director General Patience Oniha said Nigeria might seek to raise the full $6.2bn from Eurobonds if the tenors and pricing are good.

Eni puts Cabaça North on stream on Block 15/06 offshore Angola

Following Cuica in July this year, Eni has now achieved first oil from Cabaça North on Block 15/06 offshore Angola. Both fields are tied back to the Olombendo FPSO commissioned back in 2017 to initially develop the Cabaça Southeast and Cabaça Central UM8 fields on the license’s East hub. While Cabaça North was always going to be part of the East hub’s second phase of development, several additional fields were discovered by Eni over the past three years and are now being successfully tied-back under the company’s “infrastructure-led” exploration strategy (ILX). Source: MinFin Angola Ndungu will be the next discovery to achieve first oil within the coming months but tied back to the N’Goma FPSO on the block’s West hub. Meanwhile, Cabaça North will help in maintain output from Block 15/06 where production averaged only 100,000 bopd in H1 2021 compared to a combined capacity of 180,000 bopd across both FPSO vessels. Block 15/06 remains a very lucrative asset for Eni and Sonangol with strong upside potential. As of December 2020, 142.2m barrels had been produced from the West Hub (N’Goma FPSO) with remaining reserves estimated at 174m barrels, while 85.7m barrels had been produced from the East Hub (Armada Olombendo FPSO) where remaining reserves were estimated at 159.8m barrels. As part of its ongoing Partial Divestment Process, Sonangol is currently negotiating the sale of up to 10% of its interest in Block 15/06. Angola is currently sub-Saharan Africa’s most dynamic deep-water subsea market with majors such as TotalEnergies, Eni and BP involved in several subsea tiebacks and infill projects to maintain and increase output from existing production hubs. The country continues to be faced with declining output despite recent increase in production in July and August. Angola has produced an average of 1.143m barrels of oil per day (bopd) between January and August this year according to the ANPG. Its OPEC quota for September is set at 1.348m bopd. Full details on Block 15/06 are available in the “Projects” section within your Hawilti+ research terminal. More information on the Angolan oil & gas market is also available in Hawilti’s latest H1 2021 report on Angola.