Angola: Sonangol’s billion dollar headache

24 July  2016, Luanda – The task facing Angola’s state oil company, Sonangol, as it adjusts to lower revenues during the slump in oil prices, is complicated by a stratospheric debt burden which gives little room for manoeuvre. And yet the new administration is unexpectedly making repayment of one private debt a top priority.

sonangol_logoIn spite of multiple pressing issues (including the root-and-branch restructuring of Sonangol) repayment of this particular debt has been fast-tracked by Sonangol’s new CEO, the President’s daughter Isabel dos Santos. A source close to the Sonangol board has told Maka Angola it’s the reason why Sonangol has been seeking a loan of US $800 million from a bank based in Egypt, offering as surety its shares in the Millenium BCP division of Portugal’s largest private bank, the Commercial Bank of Portugal (BCP).

The urgent repayment? A one billion US dollar debt owed to Trafigura. This is the joint venture between the controversial Swiss multinational Trafigura, trading as the DT Group and Angola’s Cochan company. Trafigura exports Angolan crude, and then imports the refined fuels back into Angola, with a near monopoly on the import of petrol and diesel.

Does the rush to pay off Trafigura have anything to do with the identity of the creditors involved? The joint venture involves three key Angolans dubbed ‘the Presidential Triumvirate’: Vice-President Manuel Vicente, formerly the Chairman and CEO of Sonangol from 1999-2012; General Manuel Hélder Vieira Dias “Kopelipa”, Minister of State and Head of the Military Intelligence Bureau (Casa Militar) in the Office of the Presidency; and General Leopoldino Fragoso do Nascimento “Dino”, adviser to General Kopelipa and the man credited as the founder, Chairman and Director General of Cochan. General “Dino” is the director of Trafigura’s business interests in Angola.

Isabel dos Santos has not just taken charge of the delicate negotiations for the loan and the pay-off to Trafigura, she also prioritized the conclusion of the transaction to acquire the Cobalt International operation in Angola, a deal agreed in August 2015. The company was linked to the Nazaki firm, but severed links after an investigation by America’s Securities and Exchange Commission (SEC) revealed hidden stakes by high-ranking Angolans.

 It’s unlikely to be a coincidence that the ‘high-ranking Angolans’ in Nazaki included the ‘presidential triumvirate’ named above. Sources close to the presidency say General Dino is the figurehead for some of the President’s most important business interests – at least those which aren’t already in his daughter’s name.

Angola spends between US $150 and 170 million a month on importing oil derivatives and without increasing its own refinery capacity it has no medium or long-term prospect of resolving this situation. Considering that Angola is currently the largest oil producing nation in Africa (since renewed violence in Nigeria’s Delta caused a fall in its 2016 production), why hasn’t it invested in building a greater refinery capacity on its own soil?

One possible answer is that some high-ranking Angolans find it more lucrative for their personal business interests to import fuel. Insiders say that if there has been little or no effort directed towards the speedy reduction of fuel imports, it’s because the Presidency has no interest in it.

  • Rafael Marques De Morais, Maka Angola
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