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The current Board of Directors of Sonangol was mandated by Presidential decree to proceed with the restructuring of the company...​


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The current Board of Directors of Sonangol was mandated by Presidential decree to proceed with the restructuring of the company with the aim of restoring the financial sanity and organizational efficiency necessary to create value for its shareholder and thus the national economy.

It is assumed that the current conjuncture of sharp and prolonged oil price crises poses enormous challenges to oil companies worldwide.

Also at Sonangol, the reduction in oil sales revenue led to a decrease in its results and profitability, reducing the dividends paid to the shareholder, the State.

However, in the specific case of Sonangol, this sharp reduction in revenues was not accompanied by the necessary revision of the Group's investment strategy. This scenario has led to an impass with international creditors, making it difficult to obtain new financing fundamental to the sustainability of operations, maintenance of production levels, payments to suppliers and fulfillment of its financial commitments.

In order to counteract this negative scenario, the new Board of Sonangol undertook a thorough evaluation of the Group to ensure a complete understanding of the current situation and to make its decisions based on the company's reality.

This assessment, which covered the financial and fiscal situation, the organization, processes, information systems and people, points to a situation far more serious than the scenario outlined initially, mandating urgent management decisions.

The evaluation conducted to date has identified a number of inconsistencies between the accounting information and the actual information of the company, as well as a lack of control over several financial holdings, making it evident that the Group needs to be financially restructured in order to meet its debt commitments.

In terms of processes, a misalignment with good practices, non-compliance with procedures and internal rules and the lack of control mechanisms were identified.

Information systems were also the target of diagnosis, and the lack of reliability of the information and deep weaknesses in the accounting system (SAP) with high risk for business and decision making were demonstrated.

At the level of Human Resources level, there is an over-dimensioning of the structure, with approximately 22,000 employees linked to the Sonangol Group, with approximately 8,000 active employees, over 1,100 non-active employees (and representing an annual cost of more than 40 million dollars) , more than 8 thousand workers belonging to temporary employment agencies, and 1,934 internal and external scholarship holders.

With regard to the organizational structure it was concluded that the current model is not aligned with the best national and international practices. In particular, some managers manage small teams without having the cross-sectional view of the business, and there are a large number of hierarchical layers, making the decision-making process difficult. It was also verified the duplication of functions between the companies of the Group and an excessive number of companies within the universe Sonangol.


From a financial point of view, Sonangol's gross revenues have been falling since 2013.

Sonangol's gross revenue in 2013 was 40,070 million USD, in 2014 it was 24,657 billion USD, in 2015 it was 16,212 billion USD, and this year 2016, gross revenue of 15,325 billion USD is estimated.
At the same time, the company's operating costs did not decrease as much as the decline in revenues, estimated at 11,957 billion USD in 2016, down from 14,443 billion USD in 2015.


Comparatively Sonangol's profit has been declining between 2013 and 2015. In 2013 the profit was $ 3,089 million, in 2014 was $ 1,415 million, and In 2015 the profit was USD 389 million (three hundred eighty-nine million). In 2016, it is predicted that there will be no dividends for the state shareholder.


In 2015, 4,683 billion USD were invested in new projects, including projects outside the oil and gas sector. Investments in 2016 focused primarily on oil exploration and development projects, however, with a reduction of investment to about 3,303 billion USD.

Sonangol has been honoring the payment of the monthly installments referring to its financial debt to the banks. However, failure by Sonangol to comply with the financial covenants (other contractual conditions) with banks in 2015 resulted in a number of constraints, notably by limiting access to financing that was scheduled for 2016.

The company's financial debt for 2016 is estimated at 9,851 billion USD.
Currently, there is a need to contract new financing, as there are financial commitments in 2016, still to be financed, so that Sonangol can comply with payments by the end of the year. This requirement totals 1,569 billion USD. 

With the advent of peace and stability in the country at the end of the war in 2002, Sonangol embarked on a policy of greater investment, diversifying into projects outside the oil and gas sector. Thus it increased its portfolio of holdings in various businesses, creating new companies, and beginning its internationalization.

Today, the current challenges are not only a result of the fall in the price of crude oil, but, fundamentally, the application of a questionable investment policy over the last fifteen years, without generating the expected value for the shareholder.

This investment portfolio is currently characterized by problematic projects such as the Lobito Refinery and the Barra do Dande Ocean Terminal, and large non-profitable investments outside of Sonangol's core business, namely investments in areas such as health, hotels, real estate and renewable energies.

It was also found that the national production of refined products is limited, accounting for about 20% of total consumption. Import costs increased during 2016, with costs incurred in USD and sales in Kwanzas. The importation of refined products represents a need for foreign currency of approximately 170 million USD per month. Access to foreign currency at this juncture has been very challenging for Sonangol, which has had difficulty making payments to its overseas suppliers. This situation is exacerbated by the fact that there are accumulated debts for the whole of 2015 and the first semester of 2016.

Once the diagnosis was made and analyzed, it became clear that the current challenges stem not only from the fall in oil prices, but fundamentally from questionable management policy and practices that have placed Sonangol in a precarious financial and operational situation.

Faced with this, even more difficult context, the new Board of Directors has had as a priority focus of its management the inversion of less positive results, access to new sources of financing and the long-term sustainability of the company.

All efforts are now concentrated in the restructuring of the company, in order to proceed then to the transformation of the company, in line with the new Model of the Angolan Oil Sector.


We are working hard to ensure that financial commitments are met. These will determine Sonangol's ability to obtain new funding to invest in new oilfield projects to avoid declining production levels.

In addition, in order to maintain Sonangol's financial liquidity and the stability of the Angolan economy, we are working with the BNA and the Executive to continue to ensure regular access to foreign currency and thus payment of imported refined products.

We are also, in a judicious and thoughtful manner, re-evaluating all investments and projects. In particular, investments in the Lobito Refinery and fuel storage station in Barra do Dande are suspended (not canceled) to reassess the strategic vision and economic viability.

Finally, the new Board of Directors has launched an internal restructuring program based on Transparency, Rigor, Excellence and Profitability, which it’s confident that it will unleash the full potential of the Sonangol Group. This program is based on the following macro initiatives:

At the level of cost reduction, an ambitious program - the Sonalight program - is focused on reducing costs through renegotiation and / or cancellation of contracts, rationalization of expenses, correct sizing of operations and revision of the compensation policies. The program has identified and implemented several cost containment measures with an impact greater than 240 million USD of recurring annual savings.

Sonangol is also focused on redesigning organizational structures with an alignment of subsidy policies with industry practices, revitalizing an anticipated reform program, resolving the situation of non-active employees, revising the number of contract employees, and designing a new model for the scholarship program.

The success of this restructuring depends on the commitment of all employees. In order to instill a culture of greater Rigor, Excellence, Transparency and Commitment, the aforementioned basic values, a program of culture change is under way. The new Board of Directors has set an example in open and transparent communication with employees and the media, involving middle management in decision-making processes, raising the level of exigency and technical rigor, and promoting talent and excellency.

Mindful of Sonangol's relevance in the country's economic landscape, Sonangol's Board of Directors and its employees are deeply committed to the process of transformation that is under way, in order to return to the company its role as the main creator of national wealth, making it an international reference of excellency and profitability.

Board of Directors of Sonangol, December 1, 2016.​

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