Angola's public services sector is grappling with the concept of business logic, with many state-owned enterprises struggling to balance their social mission with financial sustainability. Manuel Ennes Ferreira, a professor at the University of Lisbon, has highlighted the issue, citing the example of a textile company in Benguela that relies on expensive thermal energy despite being connected to the national grid. This approach results in an additional $2 million in annual costs.
The Empresa Nacional de Distribuição de Electricidade-Empresa Pública (ENDE-EP), responsible for electricity distribution, has a mandate to satisfy energy demands while generating revenue. However, the company's approach often prioritizes administrative tasks over commercial considerations. In the case of the Benguela textile company, ENDE-EP could have invested in expanding its grid to supply the industry, which would have increased revenue and provided a reliable energy source.
Financial institutions in Angola have expressed willingness to finance projects that promote business growth and revenue generation. Two banking institutions consulted by the professor indicated that they would consider financing a project to expand the electricity grid to the Benguela textile company, provided that the state-owned enterprise demonstrates the project's economic and financial viability.
The issue at hand is not about treating essential services like electricity and water as private businesses, but rather about adopting a balanced approach that considers both social and commercial aspects. As public enterprises, ENDE-EP and water utilities have a responsibility to provide universal access to these services while ensuring financial sustainability.
Angola's regulatory framework already acknowledges the importance of balancing social and commercial considerations. The country's regulatory bodies have established tariffs, revenue targets, and business planning methodologies for public enterprises in the electricity and water sectors.
The failure to adopt a business-oriented approach has far-reaching consequences, including lost revenue, reduced industrial production, and decreased competitiveness. In the case of the Benguela textile company, the inability to access reliable and affordable energy has forced it to rely on expensive generators, increasing costs and reducing profitability.
Ultimately, the challenge facing Angola's public services sector is to strike a balance between social responsibility and commercial viability. By adopting a more business-oriented approach, public enterprises can ensure the long-term sustainability of essential services while promoting economic growth and development.
Key points
- Angola's public services sector must adopt a balanced approach that considers both social and commercial aspects to ensure financial sustainability and efficient service delivery.
