Africa Energy Futures: Côte d’Ivoire

Over the last five years, how has the energy mix changed, and what have been the key drivers?

Cote d’Ivoire’s energy mix is mostly derived from thermal power. There are four major thermal power plants in the country: Azito, Ciprel, Aggrekko and Vridi. The main source is natural gas. However, gas production in Côte d'Ivoire does not meet domestic power demand for the thermal power plants. The rest of the gas is imported mainly from Nigeria.

The Government of Côte d’Ivoire is determined to change this situation by turning the country into a regional LNG import hub in West Africa, meeting both regional and domestic demand. To that end, the government is involved in the construction of a terminal with a floating storage and re-gasification unit (FSRU) in Vridi, south of Abidjan, with a capacity of 3 million tons per year, and a pipeline connecting the FSRU to existing and planned power plants in Abidjan. This will also feed into the regional markets connected to the Ivorian network.

Many other projects are underway to diversify the energy mix. These include: Atinkou (Ciprel V) 390 MW gas power project, Azito thermal power plant (250 MW expansion), Songon (372 MW) and the hydroelectric dams, Singrobo (44 MW), Louga (283 MW), Boutoubré (156 MW), Tiboto (220 MW) and Tayaboui (100 MW). But for the moment, heavy fuel oil and distillate diesel oil are the main back-up fuels.

Untapped hydropower potential is estimated at 7,000 MW, of which 1,847 MW is potentially economically exploitable. As part of the country’s 2020 plan, seven new hydro projects with a total capacity of 1,150 MW have been announced.

The government is also interested in the development of mini-grids, for which photovoltaics is very well suited. For example, street lighting with solar panels has already been implemented. However, there are still no solar power plants in the country.

Côte d'Ivoire plans to produce 20% of sustainable energy in its energy mix by 2030. It also wants to reduce the share of fossil fuels to 66% and increase the share of renewable energy (mainly hydro) in electricity production to 34%.

What is the outlook for the energy and natural resources sector in the next five years? In particular:

Key policy decisions

On June 13, 2022, the Ivorian government adopted a local content law for oil and gas sectors. This law requires holders of petroleum license to give priority to jobs to qualified personnel of Ivorian nationality, to provide training programs that enable these personnel to acquire the level of qualification required to access all levels of responsibility in the sector.

The same obligation is expected of the oil sector, oil and gas companies operating in Cote d’Ivoire, in all sectors of the value chain, from exploration to exploitation.

Investors must also give preference to Ivorian companies for subcontracting, service provision and goods supply activities. In addition, the bill directs them to exploit the financial and insurance services available in the country.

No additional reforms in the energy sector are anticipated at the moment.

However, the following projects are expected by 2030:

• The share of hydroelectric power sources will be developed to a capacity of more than 1,560 MW.
• The government plans to create biomass power plants to reach a capacity of 500 MW.
• Installed solar capacity should increase to 400 MW.
• The wind energy pilot project for a total capacity of at least 100 MW is foreseen in the mountainous west, the plains of the east and the coastline in the south of the country.
• The Ivorian government is considering the construction, concession, leasing or acquisition of a thermal power plant with a capacity of 200 MW and its connection to the national electricity grid.
• Five solar projects with a total capacity of 253.5 MW are expected to be commissioned by the end of 2023. These include the Boundiali 37.5 MW plant, the Bingué-bougou 25 MW plant, the Touba-Loboa 75 MW plant, the Korogho 66 MW plant, the Ferkéssédougou 25 MW plant, and the Odienné 25 MW plant.
• The Côte d’Ivoire government has announced that a lithium-ion battery energy storage system will be installed at the first-ever mega solar project in the country. The batteries will be used in integrating the variable output of the PV modules for export to the local electricity grid. The plant has an installed capacity of 35 MWp. Six Saft Intensium Max units totaling 10 MW/13.8 MWh would be installed along with power conversion systems and medium voltage power infrastructure.

Main policy challenges

Côte d'Ivoire has launched a set of legislative and regulatory texts aiming at governing the energy sector in recent years. However, these texts need to be updated to better align with the development of the sector.

Moreover, since 1990, the state has granted the exclusive right to transport and distribute electricity to the Compagnie Ivoirienne d'Electricité (CIE), the national power utility. This monopoly does not encourage the emergence of new players in the electricity sector. Fair competition could further help to diversify the energy mix.

From a regulatory perspective, one of the major changes in the energy sector is the recent enactment of the local content law for the oil and gas sectors. This law provides a further strengthening of local content provisions, which include reforms on the preferential selection of local companies for supply and services contracts and employment of nationals, as well as the use of local financial and insurance services. Moreover, the new law implements a classification of petroleum-related activities into three distinct categories, namely:

• Category A activities – reserved for Ivorian companies.
• Category B activities – reserved for Ivorian companies and for Ivorian companies in partnership agreements with foreign companies.
• Category C activities – for all companies.

The implementing decree of this new law has yet to be enacted.

The anticipated role that renewables and/or new technologies will play

Today, private operators in Côte d’Ivoire are currently responsible for 70% of energy production and 100% of its distribution. The grid is expected to cover 99% of the population by 2035, and 42% of the energy produced will come from renewable sources (with a breakdown of 26% large hydro and 16% into “other”—solar biomass, small hydro, and wind).

In line with the Paris Agreement ratified by the government, renewable energy is set to play an important role in electricity generation and the sector is expected to increase the share of renewables to 16% of its electricity mix by 2030.

The National Action Plan for Renewable Energy outlines plans for installed capacity (MW) and generation (GWh). The projections look very ambitious, partly because they give high capacity factors to hydro (60% for small, 46% for large) and biomass (84%), but they show the 42% target being achieved in generation (MWh).

According to the latest supply-demand balance analysis, the installed capacity of the generating fleet of 2,229 MW in 2022 is expected to increase to around 4,000 MW in 2025 and 6,000 MW by 2030.

What are the key investment opportunities in the energy and natural resources sectors over the next five to ten years?

The Côte d’Ivoire energy minister recently announced the discovery of an estimated 2 billion barrels of oil and around 2.4 trillion cubic feet (51 million cubic meters) of gas only 50 km south of Abidjan. Côte d’Ivoire to date has 51 identified oilfields with four in production, 26 in exploration and the remaining 21 still up for grabs. This provides additional opportunities for exploration, drilling, and storage for companies. Moreover, as the country’s thermal power plants run on natural gas and LNG terminal is being finalized, providing equipment to these sectors offers additional opportunities for investors.

Overall, as the country looks to expand its use of renewable energies and local power plants in rural areas, investors should expect opportunities in Côte d’Ivoire’s energy sector, including in generation/production, transmission, and distribution.

With particular focus on sustainability, and on reducing carbon emissions, how will the energy and natural resources landscape change over the next five to ten years?

The Ivoirian government expects to develop photovoltaic energy by building solar power plants in the north of the country and increase hydroelectric production capacity by strengthening the production units.

These measures will reduce CO2 emissions and increase the diversity of the energy mix by focusing on green energy. Based on the optimistic developments in the energy and natural resources landscape over the last five years, the points set out above are realistic and achievable.

DLA Piper Africa is a Swiss verein whose members are comprised of independent law firms in Africa working with DLA Piper.