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The document notes the existence of “structural erosion,” resulting from institutional weakness, the company’s inability to increase oil production, and “unsustainable” investments.
An analysis by an Angola-focused research center warns that Sonangol is in decline and should undergo deep reform, including the privatization of 45% of its capital and a ban on party-affiliated individuals in its management.
The proposals are presented in a document by the Center for the Study of Economic and Social Development of Angola (CEDESA), signed by Rui Verde, who argues that Sonangol is undergoing “a process of decline that cannot be explained solely by unfavorable circumstances, such as the pandemic or the volatility of international oil prices.”
The scholar stresses that what is occurring is “structural erosion,” resulting from institutional fragility and the company’s inability to increase oil production.
The study notes that investments made outside the oil sector — in healthcare, transportation, telecommunications, and real estate — “proved unsustainable,” accumulating hundreds of millions of dollars in losses and becoming a permanent burden on the state oil company’s accounts.
Added to this are governance problems marked by corruption, nepotism, and fuel diversion schemes, which “eroded the company’s credibility and exposed its institutional vulnerability,” he adds.
According to the analysis, “Sonangol’s decline is not cyclical but structural,” resulting from the fragility of its parallel businesses, poor management, and the inability to increase production.
It points to several signs of decline, such as the continuous fall in profits, “opacity in the relationship with the Angolan state,” lack of accounting transparency, and the absence of public auditing, and notes that production is “stagnant.”
Domestic oil production has been consistently decreasing, dropping from more than 1.8 million barrels per day in 2008 to less than 1.1 million in 2024, without Sonangol being able to reverse the trend through new technologies or enhanced recovery projects, the study highlights.
Another critical factor noted is the reduction in investment in exploration and development, since instead of prioritizing productive reinvestment, Sonangol has allocated resources to paying state debt, engaging in non-transparent financial operations, and maintaining non-strategic assets.
Although partial privatization plans have been announced — including a possible initial public offering of up to 30% — doubts persist regarding the quality of financial information and internal governance, discouraging potential investors, Rui Verde argues.
CEDESA therefore proposes a profound reform of the state oil company, including the privatization of 45% of its capital on the international market, ensuring that “one-third of this stake is reserved for workers” in order to “democratize the shareholder structure,” strengthen alignment between workers and management, and attract international capital and know-how.
The author also advocates for the approval of a law that prohibits political party members from holding positions at Sonangol, shielding the company from partisan interference and ensuring appointments based on technical and meritocratic criteria.
“The independence of the administration is an essential condition for attracting international investors and restoring public trust, preventing Sonangol from being used as an instrument of political clientelism,” he emphasizes.
Another proposal is the selective privatization of the Sonangol divisions that consistently incur losses, including Sonangol Distribuição.
According to the report, the downstream segment (refining, transport, and distribution) is traditionally heavy, low-margin, and demanding in terms of investment.
Transferring it to private operators would allow the State and Sonangol to focus on the more strategic and profitable segments, such as exploration and production, while increased competition in the domestic market could improve prices and service quality, the researcher argues.
On the social front, the study suggests that part of the revenue generated should be directed to producing provinces, financing infrastructure, education, and healthcare. This territorial redistribution, it is argued, would reduce regional inequalities and strengthen the legitimacy of natural resource exploitation.
Finally, the document calls for a significant increase in investment in research and development (R&D), particularly in areas such as energy efficiency, renewable energy, and decarbonization technologies.
CEDESA is an independent research group composed primarily of academics and international specialists who analyze public policy and economic governance in Angola.
