An analysis by a think tank on Angola warns that Sonangol is in decline and should undergo a thorough reform, including the privatization of 45% of its capital and a ban on party militants from management positions.
The proposals are outlined in a document from the Centre for Economic and Social Development Studies of Angola (CEDESA), authored by Rui Verde, which states that Sonangol is undergoing “a process of decline that cannot be explained solely by unfavorable circumstances, such as the pandemic or volatility in international oil prices.”
The scholar emphasizes that what is occurring is “structural erosion,” resulting from institutional weakness and the company’s inability to increase oil production.
The study notes that investments made outside the oil sector — in health, transport, telecommunications, or real estate — “have proven unsustainable,” accumulating hundreds of millions of dollars in losses and becoming a permanent burden on the state-owned oil company’s accounts.
This is compounded by governance issues, marked by corruption, nepotism, and fuel diversion schemes, which “eroded the company’s credibility and exposed its institutional vulnerability,” the report adds.
According to the analysis, “Sonangol’s decline is not cyclical but structural,” resulting from weak parallel businesses, poor management, and the inability to increase production.
Several signs of decline are highlighted, including the continuous fall in profits, “opacity in relations with the Angolan state,” lack of accounting transparency, absence of public auditing, and the fact that “production is stagnant.”
Domestic oil production has consistently decreased, from over 1.8 million barrels per day in 2008 to less than 1.1 million in 2024, without Sonangol managing to reverse the trend through new technologies or enhanced recovery projects, the report notes.
Another critical factor is the reduction in investment in exploration and development, as Sonangol has prioritized debt repayment to the state, opaque financial operations, and maintenance of non-strategic assets over productive reinvestment.
Although partial privatization plans have been announced — including a potential initial public offering of up to 30% — doubts remain about the quality of financial information and internal governance, discouraging potential investors, Rui Verde argues.
CEDESA therefore proposes a thorough reform of the state-owned oil company, including the privatization of 45% of its capital on the international market, ensuring that “one-third of this stake is reserved for employees,” in order to “democratize the shareholder structure,” strengthen alignment between workers and management, and attract international capital and know-how.
The author also advocates the approval of a law banning political party militants from holding positions at Sonangol, shielding the company from partisan interference and ensuring appointments based on technical and meritocratic criteria.
“Management independence is essential to attract international investors and restore public confidence, preventing Sonangol from being used as an instrument of political clientelism,” he emphasizes.
Another proposal is the selective privatization of Sonangol areas that have chronic losses, including Sonangol Distribuição.
According to the report, the downstream segment (refining, transport, and distribution) is traditionally heavy, low-margin, and capital-intensive. Transferring it to private operators would allow the state and Sonangol to focus on strategic and more profitable segments, such as exploration and production, while competition in the domestic market could improve prices and service quality, the researcher argues.
On the social front, it is suggested that part of the revenues generated be directly channeled to the producing provinces, funding infrastructure, education, and health. This territorial redistribution, it is argued, would reduce regional inequalities and strengthen the legitimacy of natural resource exploitation.
Finally, the report advocates a significant increase in investment in research and development (R&D), particularly in areas such as energy efficiency, renewable energies, and decarbonization technologies.
CEDESA is an independent research group, composed mainly of academics and international specialists, analyzing public policy and economic governance in Angola.
Source: Lusa
