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Sonangol Stops Asset Sales Discussions

CEO Sonangol

Angolan state-owned oil firm Sonangol will reportedly halt all talks related to the potential sale of assets. The decision has been made by the company’s new CEO, Isabel dos Santos.

Reuters cited today a Sonangol statement detailing how “all processes of evaluation, negotiation and sale of any assets” were immediately suspended following a board meeting in June.

A separate statement mentioned that the powers of the company’s legal department were largely stripped to only include handling disciplinary affairs.

The daughter of long-time President Jose Eduardo dos Santos was appointed last month to head Sonangol with the goal of improving efficiency at the company, which is vital to the economy of Africa’s currently largest oil producer.

One key step she recently announced was to shift Sonangol's non-core assets, such as its banking, real estate and airline interests, into separate holding companies. Her appointment raised eyebrows due to her supposed conflict of interest from her dealings with Portugal's Galp Energia and Angolan mobile phone provider Unitel.

Boston Consulting Group and PriceWaterhouseCoopers have been hired as external advisers to the push for reforms, which has received approval from the foreign oil firms operating in Angola. This could help Sonangol convince creditors that it has a viable plan to repay US$13 billion in loans to European banks.

Related: Oil Drillers On Thin Ice As Banks Tighten Credit

AllAfrica yesterday explained how one financial institution, London-based Standard Chartered Bank, last month gave Sonangol a 45-day deadline to explain its failure to comply with the debt-to-capital ratio reporting obligation stipulated in a loan agreement with the bank syndicate behind the US$13-billion loan.

According to Business Insider, the Angolan government last week cut off talks with the International Monetary Fund about a loan, which was necessitated by the drop in oil prices. Over the past year alone, Angola's currency has lost about 35 percent of its value against the U.S. dollar, foreign-exchange reserves have dropped to about US$22 billion, and inflation last May reached an eleven-year high, hitting 29.2 percent.

By Erwin Cifuentes for Oilprice.com

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