Sao Tome and Principe (2012)

Degree of reliance on imported energy:

Oil consumption and imports in 2009 were around 1,000 barrels a day. There is no oil refinery. As a result, all petroleum products including jet fuel, gasoline and kerosene have to be imported. The fuel comes mostly from an Angolan supplier that has an effective monopoly. Spending on fuel imports amounted to US$ 16 million in 2009, or 15.4% of the total imports to the country. There are no indigenous sources of oil, coal, natural gas or hydropower. The mid-2000s saw a boom in offshore exploration in the joint development zone between Nigeria and the country. These efforts have met with little success.

Main sources of Energy:

Total installed electricity capacity (2008): 14 MW 
Petroleum Products: 57.1% 
Hydroelectric: 42.9% 
 
Total primary energy supply (2008): 71.4 ktoe 
Oil and Oil Products: 62% 
Biomass: 37% 
Hydroelectric: 1% 
 
Biomass (firewood and charcoal) is used heavily for cooking purposes. Electricity generation in 2008 was 33.7 GWh, with a consumption per-capita in the same year of 210 kWh.

Country:

Sao Tome and Principe

Extent of the network:

Electricity supply in STP is unreliable and coverage extends to only about half the population, so many households rely on candlelight and kerosene lighting, and biomass for cooking. 
 
The main distribution system covers the north-west part of São Tomé Island (where the capital city is). Hence, about 80,000 people (out of a total population of about 150,000) are supplied with electricity from EMAE, the national utility, on São Tomé e Príncipe. There is also a privately owned micro-hydro system on the Augustino Neto plantation. EMAE also operates an isolated diesel system on Principe. [4] 
 
Although 60% of households have access to electricity, only 48% use electricity for lighting, while 49% uses kerosene lamps. Close to 85% of households use firewood or coal for cooking.

Capacity concerns:

São Tomé e Príncipe’s energy sector faces substantial challenges. Firstly, a shortfall in capacity and insufficient resources to pay for fuel translate into frequent blackouts, which disrupt the economy. Secondly, as is the case in many other island economies, energy production is very costly.  Thirdly, technical and commercial inefficiencies exacerbate financial losses. Finally, the tariff structure is not cost reflective. 
 
Generation costs are high, as most of EMAE’s generation is from diesel-fired plants and the cost of imported fuel is high. Power transmission is subject to illegal tapping. So far, government efforts to increase generating capacity have proved unsuccessful, and a generator remains a necessity for businesses, diplomatic missions and tourism sites. 
 
Demand has risen to 15MW and will continue to rise with economic growth. The frequency of electricity cuts, ranging from a couple of hours in the city centre to a couple of weeks in more remote rural areas, rose sharply in 2009 after a major fire destroyed two generators at EMAE. A short term solution uses the capacity from the power station at Bobo-Forro. Chinese Taipei has provided funds to build two new generators in Santo Amaro. The generators have been provided by Hyundai Heavy Industries, and installation began in April 2010. The total capacity of the systems is 8.7 MW. Portuguese group Soares da Costa is building a new generator to produce 6 MW at Bobo-Forro.

Potential for Renewable Energy:

Solar energy 
With an average daily insolation of 5.2 kWh/m2, the country is well-placed to utilise solar energy. However, little progress has been made, short of pilot projects in public buildings, such as schools. 
 
Wind energy 
Meteorological measurements in the mid-1990s indicated that the country does not have significant wind potential, but that topographical conditions mean the potential for the technology cannot be ruled out. A 2 MW demonstration project was launched in 2007 in the district of Caue, 90 kilometers from Sao Tome city, with technical support from German firms. 
 
Biomass energy 
An estimated 30 GWh/year are available from biomass utilisation. Sustainable use of forestry resources is a paramount concern, given the degree of reliance on traditional biomass fuels for basic energy needs. 
 
Geothermal energy 
No study has currently been conducted as to the geothermal potential of the country. However, the islands' geographical location, on the Cameroon volcanic mountain line, indicates the possibility of a geothermal resource. 
 
Hydropower 
Studies conducted by EMAE conclude that the country has potential for additional hydro power generation, but that more analysis needs to be done. Preliminary feasibility studies for 14 sites suggest investment costs ranging from US$3,000 to US$10,000 per installed kW. As of 2009, approximately 4 MW of hydropower capacity were under construction in the country, with a further 26 MW in the planning stage.

Potential for Energy Efficiency:

There is a lack of government or utility-driven programs for energy efficiency and demand side management. Energy consumption per capita stood at 0.278 toe in 2007. Technical efficiency in the power generation system is low, with high distribution losses. In conjunction with high commercial losses through inadequate billing procedures, the potential for efficiency in the electricity sector is high. Inefficient biomass fuels, or in some cases coal, are commonly used in households for fulfilling domestic energy needs. Some limited activities are taking place to improve supply-side efficiency, for example indirectly through a UNEP CFC/ODS reduction program for refrigeration in the islands.

Ownership:

Electricity market 
The state-owned Empresa de Agua e Electricidad (EMAE) has an installed capacity of approximately 14 MW. However, actual generation is approximately 7.5 MW, due to frequent breakdown of generation units. As a consequence, large clients such as international hotels rely on their own generators and are not connected to the electric grid. In 2008, the Government, through the EMAE, established a BOT contract with Hidroelectric STP Ltd., for the development of the hydroelectric sector in the country. EMAE is a partner in the company, which is 45% owned by the Portuguese group, Soares da Costa. 
 
Liquid fuels market 
Sao Tome is optimistic about the development of petroleum resources in its territorial waters, situated in the oil rich Gulf of Guinea, which are being jointly developed in a 60-40 split with Nigeria. The first production licenses were sold in 2004, though a dispute over licensing with Nigeria delayed Sao Tome's receipt of more than US$20 million in signing bonuses for almost a year. The Empresa Nacional De Combustiveis e Oleos (ENCO) is responsible for the international oil market in the country, whilst development rights for the offshore regions of the country are handled by a variety of international companies, including Chevron-Texaco and Esso.

Structure / extent of competition:

Electricity is provided by the EMAE, a 100% state-owned, vertically-integrated company which falls under the jurisdiction of the Ministry of the Environment, Infrastructure and Natural Resources. The Government also owns a majority share in Hidroelectrica STP Ltd. As of 2008, ENCO is owned in the majority (78%) by the Angolan State Oil Firm SONAGOL. Sonagol has held 40% of the shares in the company since the 1980s, and acquired a further 35% of the Government’s shares, and 3% from other shareholders, in 2008. ENCO is responsible for the wholesale of oil and petroleum products in the country.

Existence of an energy framework and programmes to promote sustainable energy:

The 2007 Program of Action of the government made it a priority for the energy sector to improve energy supply capacity, diversify sources of electricity and improve medium voltage lines. The installation of additional capacity to improve energy supply in order to revive economic activity increased power capacity by 2,000 kW and allowed for the maintenance of generators. Although some efforts were made, the energy supply to the population, as well as the generator maintenance activities continue to need improvement. 
 
The Oil Revenue law governs the allocation of funds from oil-related activities. 
 
The 2008 progress report on the Poverty Reduction Strategy Paper (PRSP) for the country indicates that no progress has been made on updating the country’s overall energy policy framework.

Current energy debates or legislation:

The World Bank’s assessment in September 2009 confirmed the government’s views that the power sector is in need of major reform. Key issues to be addressed include:
<ul>
<li>
A high connection fee (US$130 per household), even for poor households, which stimulates illegal connections and impedes targeting of subsidies;</li>
<li>
a lack of programs for energy efficiency and demand side management;</li>
<li>
poor maintenance of the existing thermal generators; and</li>
<li>
the lack of resources within EMAE to invest in new generation capacity, maintain existing generators, or expand the distribution system. An estimated US$48 million is required to modernise commercial operations.</li>
</ul>
 
As a result, the Government of STP has requested assistance through the World Bank to conduct a Study on the Revitalization of the Power Sector and Private Sector Participation. The aim of this is study is to identify priorities and encourage private sector participation, in order to improve the sector’s technical and financial sustainability. In 2011, the Public-Private Infrastructure Advisory Facility invested US$330,000 into a study on the revitalisation of private-sector participation in the power sector of STP. It is hoped that the study will provide an analytical and practical framework for reforming the power sector, particularly with regard to improving the performance of EMAE through private-sector involvement.

Major energy studies:

São Tomé e Príncipe Advisory Project Report on Energy Infrastructure, Earth Institute, Colombia University. <a href="http://www.earthinstitute.columbia.edu/cgsd/stp/documents/STPEnergyRepor...

Role of government:

The Ministry of Natural Resources, Energy and Environment 
The Ministry is the responsible body for natural resources management, biodiversity, conservation and the environment. The mandates are shared by two different institutions:
<ul>
<li>
The Directorate (Department) of Natural Resources</li>
</ul>
The Directorate is responsible for the management of plans and execution of government policy on natural resources. The Directorate is also responsible for permits related to the use of resources, such as minerals, sand and gravel, industrial licensing, and intellectual property.
<ul>
<li>
The Directorate of Environment</li>
</ul>
This Directorate is focused on environment issues, such as conservation, biodiversity and natural resources preservation. Its main function involves: the execution of the government policy for the environment, information concerning carbon dioxide emissions, adaptation for climate change and the National Biodiversity Strategy Action Plan. 
 
National Petroleum Agency 
The National Petroleum Agency (ANP, <a href="http://www.anp-stp.gov.st">www.anp-stp.gov.st</a>) is an independent public agency in charge of oil resources management; the Agency assists the government with petroleum issues, giving regulatory and policy recommendations to promote investment and sustainable development in the sector.

Government agencies in sustainable energy:

No government agency is currently involved with the promotion of, or research into, the use of sustainable energy in the country.

Energy planning procedures:

Up to 2010, under the United Nations Framework Convention on Climate Change, the following projects on energy have been submitted by STP: 
 
1. introduction of the new technologies for the use of firewood, and to make charcoal; 
2. introduction of renewable energy technologies (solar, wind and biomass); 
3. construction of two hydropower stations at Claudino Faro and Bernardo Faro. 
 
STP’s government is considering private sector participation in the energy sector and are considering the following factors: 
(1) whether it is best to initially keep EMAE in public hands and have private sector participation increase over time or to sell EMAE; 
(2) whether it is best to sell EMAE as an integrated electric and water utility company or as separate business lines; and 
(3) whether or not to unbundle the power sector and sell the generation, transmission, and distribution business lines separately. 
 
The government also wishes to assess the viability of improving EMAE’s efficiency and foster the emergence of private capital for new investments (e.g. generation). 
 
The EUEI-PDF is engaged in a project to improve capacity for energy planning in the country, in an effort to pave the way for an improved, integrated and realistic energy policy. This project includes a particular emphasis on grid and off-grid renewable energy systems, so that grid development can also aid in reducing oil imports.

Energy regulator Date of creation:

A multi-sector regulatory agency, the Autoridade General de Regulação (AGER, <a href="http://www.ager-stp.org/">http://www.ager-stp.org/</a>), is currently developing capabilities in the power business.

Degree of independence:

Whilst AGER is, in ownership, a subsidiary of the Ministry of Telecommunications, the organisation is endowed with legal autonomy, and the capacity to distribute its own resources. The board consists of 3 members, the President and two Administrators. Members of the board are free to act on an individual basis in their roles in the company. Funding for the Authority is set by the government upon a funding request being made.

Regulatory framework for sustainable energy:

No regulatory framework for sustainable energy currently exists in the country. AGER has prepared a Bill of Law, recently submitted to the National Assembly. This Law defines the rights and obligations of concessionaires and licensees in power generation, transmission, and distribution, as well as the marketing of energy. It also enables the marketing of energy at regulated wire tariffs to enable the emergence of the private sector, including IPPs and self-generators. In addition, AGER has drafted a separate Bill of Law dealing with the rights and responsibilities of customers in order to improve enforcement of utility contracts, combat fraud, and collect due bills, all of which are aimed at strengthening commercial discipline. 

Regulatory roles:

AGER is currently primarily responsible for the telecommunications sector; however, the organisation is active in licensing and registering electrical service providers, including IPPs and the supervision of regulated entities. More responsibility for the sector will be afforded to the organisation with the acceptance of the Bill of Law.

Role of government department in energy regulation:

The Ministry of Telecommunications is responsible for the activities of AGER, although the extent to which the Ministry affects the energy sector is unclear. The Ministry for Natural Resources and the Environment is responsible for the development of the energy sector, including capacity-building measures.

Regulatory barriers:

Major constraints on the continued development of the sector include the lack of an adequate institutional framework and legal framework for the energy sector. The assumption of responsibilities for energy sector regulation fully by the AGER would also provide a more suitable foundation for the creation of such frameworks.

References:

International Renewable Energy Agency. Renewable Energy Country Profile: Sao Tome and Principe. Avialable at: <a href="http://www.irena.org/REmaps/countryprofiles/africa/SaoTomeandPrincipe.pd... [Accessed 20th September 2013] 
 
Indexmundi. Sao Tome and Principe Oil - Imports. Available at: <a href="http://www.indexmundi.com/sao_tome_and_principe/oil_imports.html">http:/... 20th September 2013] 
 
The Economist. Sao Tome and Principe: The Chocolate Islands. Available at: <a href="http://www.economist.com/blogs/baobab/2011/10/sao-tome-and-principe">htt... 20th September 2013] 
 
Mbendi. Electrical Power in Sao Tome and Principe. Available at: <a href="http://www.mbendi.com/indy/powr/af/sp/p0005.htm">http://www.mbendi.com/i... [Accessed 20th September 2013] 
 
MacauHub. Sao Tome Investing in Wind Power. Available at: <a href="http://www.macauhub.com.mo/en/2007/07/18/3389/">http://www.macauhub.com.... 20th September 2013] 
 
Norwegian Renewable Energy Partners. World Hydro Potential and Development. 2009. Available at: <a href="http://www.intpow.com/index.php?id=487&download=1">http://www.intpow... [Accessed 20th September 2013] 
 
UNEP. Project Proposal: HCFC Phase-out Management Plan. Available at: <a href="http://www.multilateralfund.org/63/English%20Documents%20Lib/1/6350.pdf"... 20th September 2013] 
 
Soares de Costa Grupo SGPS. Relatorio e Contas 2011. Available at: <a href="http://www.soaresdacosta.pt/documents/rc_1q2011_pt.pdf">http://www.soare... [Accessed 20th September 2013] 
 
Ministério Das Obras Públicas E Recursos Naturais. Panorama Energético Nacional. Available at: <a href="http://cotedivoire.acp-cd4cdm.org/media/319842/panorama-energetico-nacio... [Accessed 20th September 2013] 
 
Petroleum World. Lawyer Accuses Sao Tome Govt. of Corruption Over Oil. 25 March 2010. Available at: <a href="http://www.petroleumworld.com/story10032510.htm">http://www.petroleumwor... [Accessed 20th September 2013] 
 
IMF. Sao Tome and Principe: Poverty Reduction Strategy Paper Progress Report. May 2008. Available at: <a href="http://www.imf.org/external/pubs/ft/scr/2008/cr08154.pdf">http://www.imf... [Accessed 20th September 2013] 
 
World Bank, PPIAF. PPIAF Assistance in Sao Tome and Principe. April 2011. Last updated November 2012. Available at: <a href="http://documents.worldbank.org/curated/en/2012/11/17526287/ppiaf-assista... 20th September 2013] 
 
EUEI PDF. Newsletter No. 07, June 2011. Sao Tome and Principe: Energy Strategy. Available at: <a href="http://www.euei-pdf.org/sites/default/files/files/field_pblctn_file/EUEI... [Accessed 20th September 2013]

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