Angola is accelerating plans for the initial public offering (IPO) of as much as 30% of its shares in Sonangol, its state oil company, in a bold move to attract foreign investment and revitalise its economy.
This comes as Nigeria’s state-owned oil giant, the Nigerian National Petroleum Company (NNPC), faces delays in its IPO efforts, highlighting the contrasting approaches of two of Africa’s largest oil producers.
Angola, which relies heavily on oil exports for government revenue, is pushing forward with the partial privatisation of Sonangol as part of broader economic reforms.
“We are taking the steps that are needed, at least internally, for this process to begin,” Sebastiao Martins, the chief executive officer of Sonangol said at a press conference in Luanda. “What we don’t want is for external pressures to push us into making mistakes.”
Initially planned for 2022, Sonangol’s IPO would mark a major step in the oil-producing nation’s efforts to increase transparency and attract foreign investment as the government seeks to reduce the role of the state in the economy. The company is Angola’s largest and a major contributor to gross domestic product.
Diamantino Azevedo, Angola’s oil minister said the goal remains to dispose of 30 percent of Sonangol’s shares locally and abroad.
The sale would be carried out in stages, he said at the same event, without giving details about the timing.
Fuel Subsidies
One reason the IP0 has stalled is a delay in ending fuel subsidies, Martins said. Angola spent $639 million on the subsidies in the second quarter of 2024, according to the Finance Ministry.
“The big reality is that the issue of subsidies will continue to weigh on the privatization process of Sonangol,” Martins said. The IPO’s timing will depend on the government, he said.
Last Tuesday, Sonangol said operating revenue fell to $10.5 billion in 2024, from $11.4 billion a year earlier, on lower crude prices. Average oil prices in 2024 dropped to $80 per barrel, from $82 per barrel in 2023, the company said.
Sonangol plans to retain its stakes in Portuguese lender Banco Comercial Portugues SA and oil company Galp Energia SGPS SA, Martins said.
The Angolan company is the second-biggest investor in BCP with a 19.5 percent stake and owns an indirect stake in Galp through the Amorim Energia venture, which controls 36 percent of the Portuguese oil firm.
“BCP and Galp have distributed dividends and for us they continue to be assets to keep,” Martins said. “We see no reason to leave.”
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Nigeria drags
While Angola moves ahead with its plans, Nigeria’s NNPC is struggling to keep pace. The Nigerian government announced plans to partially privatize NNPC in 2021 as part of the Petroleum Industry Act (PIA), which aimed to overhaul the country’s oil and gas sector.
However, the process has been plagued by delays, bureaucratic hurdles, and a lack of transparency.
Analysts attribute the slow progress to Nigeria’s complex political environment and resistance from within the NNPC itself.
“The NNPC has long been a symbol of Nigeria’s oil wealth, but also its inefficiencies and corruption,” said Chidi Nwafor, an energy analyst based in Lagos. “Privatizing such a large and entrenched institution is no easy task, especially when there are powerful interests that benefit from the status quo.”
Despite the optimism surrounding Angola’s IPO, challenges remain. The global shift towards renewable energy and the volatility of oil prices could impact investor interest in Sonangol.
Additionally, the company will need to demonstrate improved governance and operational efficiency to attract buyers.
For Nigeria, the stakes are even higher. The country’s economy is heavily dependent on oil exports, and the failure to reform NNPC could have long-term consequences.
