Sonangol has sold 49 assets within its group but will only proceed with privatization after resolving the issue of fuel subsidies, according to the state oil company’s financial director.
Initially scheduled for this year, the privatization, involving the dispersal of 30% of Sonangol’s capital on the stock exchange, has been postponed until 2026.
“There is a very important issue related to subsidies for fuels that needs to be addressed,” Baltazar Miguel told Lusa.
The discrepancy between the import price of fuels and the sale cost has resulted in significant losses for the company.
“It is more challenging to attract investors to a company with these unresolved issues,” he explained during the “Conversas Economia Sem Makas” event in Luanda.
Miguel added that Sonangol has been working with the government to tackle this problem, reaching an agreement to pay off approximately $4.5 billion in debt.
Meanwhile, Sonangol has privatized 49 companies across various sectors, including banking, real estate, logistics, telecommunications, and other non-core areas.
However, the stake in Portuguese bank Millennium BCP will be retained due to its increased valuation and emerging dividends.
Regarding last year’s performance, Miguel noted that the results met expectations, especially in terms of profits, despite a 20% drop in oil prices early in the year.
“Over 60% of our profits come from crude oil sales, which allowed us to make necessary internal adjustments to achieve positive results,” he said. Sonangol concluded 2023 with a net profit of around $1.356 billion.
The company reported that the reduction in oil prices, combined with geopolitical factors and market behavior changes, led to a decrease in consolidated turnover.
However, it maintained a “solid performance” with a turnover of $11.483 billion and an EBITDA of $3.666 billion.
Sonangol anticipates positive results in 2024, provided the price of a barrel remains around $65. If prices drop, substantial adjustments in project investments and organizational costs will be required.
Miguel expressed concern about the international unpredictability in the coming year, including potential impacts from the end of the Ukraine war or changes in U.S. oil production policies.
Domestically, Sonangol is focusing on diversification, particularly in gas projects and oil. The company plans to increase investment in the oil sector from $45 billion in the past five years to over $71 billion in the next five years.
As the largest investor in Angola’s oil sector, Sonangol is working on marginal fields and incremental production to maintain production at one million barrels per day.
