Diageo to Centrica Target Angola Oil Wealth in Trade Push
(Updates with Diageo Africa operations in eighth paragraph.)
By Colin McClelland
Oct. 11 (Bloomberg) –- Centrica Plc (CNA) and world’s biggest distiller Diageo Plc are among British companies that may start operations in Angola as it seeks to rebuild and ease its dependence on oil, according to a U.K. trade mission.
The U.K.’s biggest-ever business delegation to Angola visited the southwest African country, the U.K.’s third-largest export market in sub-Saharan Africa, from Oct. 7 to 10. The two countries signed an agreement in June to improve trade as Angola, which produces the most crude in Africa after Nigeria, seeks to diversify away from oil.
“If you said two years ago to British businesses ‘come to Angola,’ we might have had five” companies, mission leader Jonathan Marlandsaid in an Oct. 8 interview in Luanda, the capital. “Now we had a waiting list and really good support.”
Angola, which produced 1.74 million barrels of oil a day in September and relies on crude for 97 percent of its exports, is rebuilding after a 27-year civil war that ended in 2002. About 15 British educational institutions are due to visit next month while a group of U.K. agricultural companies are scheduled to arrive early next year, Jonathan Alms, an adviser to U.K. Trade & Investment, said in an interview.
Diageo (DGE), which has plans to set up a distribution company in Angola, served its Johnnie Walker whiskey to about 200 government and business leaders at the U.K. Ambassador’s residence on Oct. 8. British Airways Plc (IAG) advertised its twice-weekly Luanda-London flights at the event while Jaguar and Landrover, luxury cars made in Britain by India’s Tata Motors Ltd. (TTMT), were on display.
Wealth derived from Angola’s oil industry has helped propel sales of Diageo’s premium brands such as Johnnie Walker Blue Label and Ciroc vodka, James Crampton, a company spokesman based in London, said in an e-mailed response to questions.
“Angola is one of the largest and most attractive total beverage alcohol markets in Africa,” Crampton said. “We are expanding coverage in partnership with our local distributors and exploring options for the local production of mainstream brands.”
Diageo employs about 5,300 people in Africa and brews Guinness in more than 20 countries on the continent, according to the London-based company’s website.
British Gas-owner Centrica may consider the construction of natural gas lines to different regions of the country from offshore production as Angola plans to increase its electricity generation fivefold by 2025.
Oil and gas producer BP Plc (BP/), the largest British investor in Angola to date, plans to spend $15 billion in the country over the next decade on projects such as the PSVM oil field and the country’s first liquid natural gas plant, Robert Wine, a London-based spokesman for the company, said by e-mail.
“Non-oil investment by U.K companies in Angola is very small, but interest is growing,” John Woodruffe, head of Trade & Investment at the British embassy in Luanda, said in an interview. The exact amount of British investment excluding petroleum is difficult to determine because not all companies register their operations with the embassy, he said.
Helicopter manufacturer AgustaWestland Inc., owned by Rome-based Finmeccanica Spa (FNC), Travelex Worldwide Money Ltd. and chemicals trader Gapuma U.K. Ltd. were part of the 18-company trade mission.
Investors in Angola must contend with regulations that state their local operations should be worth at least $1 million, according to the foreign investment agency Angolan National Private Investment. Angola also has a visa process that can take months to navigate while the country ranks 157th out of 176 countries on Transparency International’s 2012 Corruption Perceptions Index.
“It’s a slow burn,” Marland said. Companies must be “prepared to put in the time, build relationships, don’t think you’re going to do something overnight, invest in the transfer of skills and make a commitment.”