Angola to Sell More Than 30 State Companies to Bolster EconomyColin McClelland
Angola, Africa’s largest crude oil producer behind Nigeria, plans to sell about 33 state-owned companies over the next five years to increase efficiency and cut costs, Economy Minister Abrahao Gourgel said.
The formerly Marxist southwest African country has about 90 government-run businesses, from newspapers to diamond producers. National petroleum company Sonangol EP, which isn’t for sale, is the largest state enterprise, with profit of $1.24 billion last year. It dominated the economy, which the International Monetary Fund says depends on oil for 40 percent of its output, during a 27-year civil war that ended in 2002. Angola needs to diversify its economy, Gourgel said in an interview last week.
“The war, a limited internal market and the lack of capacity of those who bought state companies in the past meant only a few successes in areas like beer and light industry,” Gourgel said in Luanda, the capital. “The new strategy is to sell non-essential companies, reduce their costs and the amount of government subsidies.”
Companies on the block are mostly small- and medium-sized, he said, including Bricomil SARL, which is a construction company owned by the state through Sonangol, two government banks and the national insurer, Ensa Seguros de Angola SA. Gourgel didn’t say how much the sales are expected to raise.
The disposal of any state financial companies would be run by the central bank and the Finance Ministry, said Gourgel, a former Governor of Banco Nacional de Angola. The Transport Ministry is overseeing the amalgamation of the country’s railway lines under one company within five years, he said.
The government will probably maintain its stakes in mining companies because they need the state’s financial backing to start large-scale projects, he said.
The state’s largest mining company is the national diamond producer, Endiama EP, which owns about half of most projects. Angola, the fifth-largest diamond producer by value in 2011, sold stones valued at $1.16 billion that year, according to the Kimberley Process, an international group with 54 participants representing 80 countries.
The government is “going slow” on implementing new rules for public-private partnerships after approving a new law last year, he said. Some senior members expressed skepticism on what the government could achieve, citing disappointing results for similar arrangements in Portugal and the U.K, he said.
Potential PPP candidates so far include small dams producing electricity and the ports of Cabinda, a northern province, and Lobito in the south. He declined to say which companies were in the running for the contracts.
Insurance company Ensa has weathered an influx of new private and foreign competitors as its former monopoly eroded in certain areas, such as offshore oil projects, while new insurance markets opened in areas such as housing, Gourgel said.
The $114 billion economy is forecast to expand 7.1 percent this year from 7.4 percent in 2012, according to the government and budget documents.
Edel EP, the state-owned electricity distribution company, showed the strongest transformation compared with other government companies over the past year after improvements in accounting practices, internal organization and service delivery, Gourgel said. Blackouts are common several times a day across Luanda.
“We still need to make some investments and review tariffs,” he said. “But we want this internal change to become a visible improvement.”