Angola's debt to China is estimated at USD 20.1 billion, and is the country's largest creditor, said Finance Minister Vera Daves on Friday.
Of this amount, USD10 billion was used to capitalize the Angolan oil company Sonangol and the remaining USD 10.1 billion to finance various investment projects.
Speaking at a press conference, Vera Daves said that the issue of China's financing to Angola has generated a lot of controversy when analyzing the quality of the works carried out by Chinese contractors.
However, the minister explained that the quality of the works does not depend on the creditor - Chinese banks - but on the Angolan State that must inspect them, and on the contractors.
Vera Daves said that upon payment, the paying bank is based only on the invoices presented on the execution of the works. The bill is paid in China and the money does not circulate in the Angolan economy.
"There is always a very strong debate about deliverables, the quality of the works. This does not depend on the financier but on the relationship between the Angolan State and the contractors", she said, explaining that the financing entity, which is a bank, focuses on the invoices and not on the walls.
As for the debt service with China for 2020, standing at USD 2. 678 million, the minister said that the amortizations represent 78.8%, that is 2,103, while interest represents 21.2% (567 million).
She explained that the debt with that Asian giant is commercial and is paid in deadlines of up to eight years, unlike that with the IMF, which allows negotiation of interest rates and repayment terms.
On the discharge of the public debt, estimated at about 90% of GDP and 60% of the General State Budget 2020 (AKz 13.5 billion), ie, USD 5 billion, according to analysts from the Fitch Rating Agency, the director of Public Debt, Valter Pacheco, Angola needs at least 29 years.
However, the official explained that this is just a hypothetical example should the country no longer incur any debt. But this is not the case because the country needs to finance itself to meet needs.
"We will continue to go into debt, but in a more productive and responsible way. Angola will have to continue to finance itself, but with lower interest rates and longer terms ", said the official.
Qatar's state-owned oil and gas company Qatar Petroleum has entered into a farm-in agreement for an acquisition of a stake in an offshore block in Angola.
Qatar has reached the deal with Angola's Sonangol, and France's Total to acquire a 30% participating interest in Block 48, located in the ultra-deep waters offshore Angola.
"The block, with a drill-ready opportunity, covers an area of approximately 3,600 square kilometers, and is expected to be drilled as part of a 2020/2021 drilling program," Qatar Petroleum said.
Saad Sherida Al-Kaabi, the Minister of State for Energy Affairs, the President and CEO of Qatar Petroleum, said:" Continuing on our journey to build a world-class exploration portfolio, by securing interests in promising exploration blocks in diverse geographies, we are pleased to be part of this exciting ultra-deepwater opportunity in Angola, a leading oil and gas producing country.”
Al-Kaabi said: "This is our first opportunity in Angola with both Sonangol, and our long-term partner, Total, an experienced operator with significant in-country presence. We would like to thank the Angolan authorities and our partners in this block for their support. We look forward to a longstanding and fruitful partnership.”
The farm-in agreement is subject to customary approvals by the Angolan Government. Upon receipt of such approvals, the parties respective interests in Block 48 will be as follows: Total (40% - Operator), Sonangol (30%), and Qatar Petroleum (30%).
Block 48 is located in the ultra-deep waters offshore Lower Congo Basin, approximately 400 km northwest of Luanda and 200 km West of Soyo onshore facilities. The average water depth in the block is around 2,500 meters.
Following a recent oil drilling halt offshore Angola caused by the COVID-19 pandemic, Total on Tuesday said it had restarted offshore drilling works in the country, with more drilling rigs expected to resume work soon.
Credit: Offshore Engineer
Nigerian Government has impounded a Boeing 777 jumbo plane belonging to the Angolan government at the Lagos airport for flying illegally into Nigeria.
The government grounded the passengers-laden plane and subsequently impounded it, shortly after touching down in the country on Wednesday afternoon.
The jumbo jet belongs to Angola Airlines, a state-owned airline and flag carrier of the Angolan government.
It was learnt that the plane flew into the country without the requisite and mandatory approvals from the Nigerian authorities. Aviation sources said the jet which was flown into the country purportedly to evacuate stranded Angolan citizens in Nigeria was found to be carrying fee-paying passenger.
However, the number of passengers on board the over 300-seater plane could not be ascertained as of the time of filing this report on Thursday night.
The Nigerian Civil Aviation Authority has commenced further investigation into the matter, it was learnt.
Prosecutors in Angola have ordered the closure of places of worship belonging to one of Brazil's biggest churches, accusing it of corruption.
At least seven buildings belonging to the Universal Church of the Kingdom of God (UCKG) have been seized in the capital, Luanda.
Prosecutors said the evangelical church had been involved in tax fraud and other fiscal crimes.
UCKG officials have previously strongly denied any wrongdoing.
Last year about 300 Angolan UCKG bishops broke away from the Brazilian leadership, accusing it of mismanagement and not being African enough. UCKG officials described the accusations as "defamatory".
The UCKG claims to have about eight million members in Brazil and branches in several African countries. It promotes "prosperity theology", whereby believers are told their faith and donations to the Church will lead to material wealth.
The row started last year when Angolan bishops broke away from the Brazilian Church, accusing it of "fiscal evasion" and of practices contrary to the "African and Angolan reality".
In December, Angolan authorities opened an investigation and on Friday prosecutor-general Alvaro Da Silva Joao announced the seizure of seven UCKG temples.
"These apprehensions result from the fact that in the records there are enough indications of the practice of crimes of criminal association, tax fraud, illicit export of capital, abuse of trust and other... illegal acts," he said in a statement.
Angola's Supreme Court has handed a five-year jail sentence to Jose Filomeno dos Santos, the son of the oil-rich country's former president, for fraud when he headed the national sovereign wealth fund.
Dos Santos, 42, was summoned before the court in December over allegations he tried to embezzle up to $1.5 bn from the sovereign wealth fund, which he oversaw from 2013 to 2018.
Nicknamed "Zenu", dos Santos, son of ex-President Jose Eduardo dos Santos, was charged with stealing $500m from the fund and transferring it to a Swiss bank account.
"For the crime of fraud ... and for the crime of peddling influence ... the legal cumulus condemns him to a single sentence of five years in prison," judge Joao da Cruz Pitra said on Friday.
Three co-defendants, including the former governor of the National Bank of Angola (BNA), Valter Filipe da Silva, were sentenced to between four and six years in prison for fraud, embezzlement and influence peddling.
All four were acquitted of money laundering charges. They have previously denied any wrongdoing.
Zenu is the first member of the former presidential family to be prosecuted as part of an anti-corruption campaign led by President Joao Lourenco, who came to power in 2017.
In February, Angolan investigators froze the assets of Zenu's billionaire half-sister, Isabel dos Santos.
She is being probed for a long list of crimes in Angola, including mismanagement, embezzlement and money laundering during her stewardship of the state-run oil giant Sonangol.
Lourenco has mainly targeted the family members of his predecessor, who appointed relatives and friends to key positions during his 38-year rule - leaving a legacy of poverty and nepotism.
Isabel has vehemently denied the accusations against her and denounced Luanda's actions as a politically-motivated "witch-hunt".
Only a small elite have benefitted from Angola's vast oil and mineral reserves.
The southwest African country has been slow in recovering from a 1975-2002 civil war. Large pockets of the population live in poverty with limited access to basic services.
Angolan prosecutors on Tuesday sought a seven-year jail sentence for the son of former president Jose Eduardo dos Santos for allegedly embezzling $500 million from state coffers.
Jose Filomeno dos Santos, 42, was summoned before Angola's Supreme Court in December over allegations he tried to steal as much as $1.5 billion (1.3 euros) from the sovereign wealth fund, which he oversaw from 2013 to 2018.
Nicknamed "Zenu", he was charged with pilfering $500 million (445 million euros) from the fund -- alongside the former governor of the national bank of Angola (BNA), Valter Filipe da Silva, and two others.
The funds were alleged transferred to the funds to a Swiss bank during the dos Santos presidency.
All four have denied the accusations.
Deputy attorney-general Pascoal Joaquim asked judges to sentence Zenu and one collaborator to seven years in prison and hand the other two a 10-year sentence.
"Since the beginning, the defendants have always had the intention to bypass the Angolan state," Joaquim told the court in the capital Luanda.
Zenu is the first member of the former presidential family to be prosecuted as part an anti-corruption campaign lead by President Joao Lourenco, who came to power in 2017.
His predecessor led Angola for 38 years, leaving a legacy of poverty and nepotism in a country still recovering from a 1975-2002 civil war.
Zenu was appointed head of the $5 billion fund in 2013, 34 years into his father's reign.
His half-sister Isabel dos Santos was ousted from her position as chair of the state oil giant Sonangol in November 2017.
Cited by Forbes magazine as the richest woman in Africa, she is accused of diverting billions of dollars from state companies during the dos Santos presidency -- allegations she has vehemently denied.
In December a court in Luanda issued a "preventative" order to freeze her business assets as part of the investigation.
Earlier on Tuesday, Lourenco reiterated his intention to combat graft.
"Over the past two years we have done a lot and the evidence is there," the president told members of his ruling People's Movement for the Liberation of Angola (MPLA) party.
"The authors are paying for the crimes they committed, which is different to what has been done... since independence."
Angola plans to kick off niobium exploitation at Bonga mountain, located at central Huila province's municipality of Quilengues, in the second half of this year, official said on Tuesday.
After two years of prospecting, the rare superconducting material, used in the space industry, niobium will be exploited for the first time in the country, said Adriano Pedro, Quilengues' administrator.
For the exploitation, Pedro said a mining company is investing 100 million U.S. dollars for the project, adding that the prospecting process of the mineral made it possible to collect samples and ensure the quality of the ore.
Given the project has already been authorized by Presidential Decree and the prospecting process is over, the exploitation is able to start in the second half of the year, the official said.
Angola is halfway through the construction of a $77 million diamond hub that it hopes will create revenue sources beyond the sale of rough diamonds.
The hub is located in Angola’s diamond province of Lunda Sul. It will contain a main diamond-cutting facility, a diamond evaluation and training center, and smaller manufacturing plants, Sodiam, Angola’s state-owned diamond company, said last week. Sodiam also plans to set up a bourse in the hub, it announced earlier this month.
“The hub aims to bring together companies related to the mining sector, focusing not only on the diamond value chain, but also in providing adequate and necessary infrastructures for the promotion and development of related activities,” the company noted.
Sodiam will divide the hub into three main parts. A commercial area, which will be open to the public, will include banks, insurance companies, tax offices, stores, restaurants, a food court, a convention center and a training center. Meanwhile, an industrial zone will contain 26 lots of varying sizes, which will house factories and logistics platforms for the diamond industry. The third section will comprise the main cutting factory.
Sodiam expects the hub to be completed by the end of the year.
Angola has cut the number of oil cargoes that it will ship to Chinese state firms to pay down debt to Beijing as it seeks to renegotiate repayment terms to deal with the crippling impact of the coronavirus, three sources familiar with the matter said.
Angola said this week it had asked for G20 debt relief and was in advanced talks with some countries importing its oil on adjusting financing facilities, but expects no further debt overhaul to be needed beyond this.
The sharp global economic slowdown due to the novel coronavirus pandemic pushed Brent oil prices to their lowest levels since the late 1990s and U.S. oil futures to negative territory for the first time in history.
The price drop has put heavily-indebted Angola into a fragile state as it derives a third of state revenues from oil.
By far, its biggest creditor is China. Analysts say Angola has over $20 billion in bilateral debt with the lion's share owed to China. Much of the cash was borrowed to build roads, hospitals, houses and railways across the southern African country.
On top of its Chinese debt, Luanda secured a $3.7 billion loan from the International Monetary Fund last year and state oil firm Sonangol has borrowed $2.5 billion from banks between end-2018 and mid-2019, the IMF said.
A global oil output cut deal led by the Organization of the Petroleum Exporting Countries (OPEC) has added to Luanda's woes.
As an OPEC member, Angola was pressured to cut oil exports starting from May. The result has left the country with fewer and lower-value cargoes to split between paying off its Chinese debt and filling its depleted coffers.
The sources said that China's state-owned Sinochem would receive five cargoes in July, down from the usual seven or eight, while the trading arm of Chinese giant Sinopec called Unipec would receive none.
Unipec typically receives two to three cargoes earmarked as debt repayment.
Sonangol, Angola's finance ministry, Sinopec and Sinochem did not immediately respond to requests for comment.
China's foreign ministry said on Wednesday that the relevant departments were in contact with Angola over its request for debt relief.
"These oil-backed loans create stronger interdependence (between lender and borrower) than traditional financing. This tactic of diverting cargoes is not new as seen elsewhere," David Mihalyi, a senior economic analyst with the Natural Resource Governance Institute, said.
Chad threatened to cut repayment cargoes to commodities trader and miner Glencore during a major loan restructuring in 2017. Similarly, Congo Republic has cut many repayment oil cargoes to Glencore and commodities trader Trafigura as discussions drag.
Angola is not the only African country heavily indebted to China. The IMF and ratings agency Moody's have raised concerns about debt levels in sub-Saharan Africa particularly with China.
Kenya has overtaken Angola as the third-largest economy in Sub-Sahara Africa, International Monetary Funds’ (IMF) fresh estimates released Friday has shown.
The East Africa’s largest economy, that has been the fourth largest economy in the Sub-Sahara Africa, has surpassed Angola to become third-largest economy in dollar terms.
Kenya now is behind Nigeria (1) and South Africa.
Bloomberg reports that Angola has contracted every year since 2016 as oil output declined, and the kwanza was devalued in 2019 while Kenya’s shilling held steady.
The coronavirus pandemic and restrictions to limit its spread will probably see Angola’s gross domestic product contract 1.4 percent in 2020, while Kenya’s is projected to grow by one percent, according to the IMF report.
According to IMF, Angola, an oil dependent country, recently had its national assembly approve a package of revenue and expenditure measures to fight the COVID-19 outbreak in the country and minimize its negative economic impact.
Additional health care spending, estimated at $40 million (Sh4billion) was announced. Tax exemptions on humanitarian aid and donations and some delays on filing taxes for selected imports were granted.
While Kenya has earmarked Sh40 billion (0.4 percent of GDP) in funds for additional health expenditure and funds for expediting payments of existing obligations to maintain cash flow for businesses during the crisis, among other tax relief incentives.
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