OIL / MINING SECTOR NEWS

OIL / MINING SECTOR NEWS
Government Announces Licensing for Kwanza Basin Blocks
At an oil conference in London this week, the head of licensing at Angola’s Ministry of Petroleum Alfredo Rafael announced that the Angolan Council of Ministers is considering a recommendation to hold an oil exploration licensing round for the Kwanza Basin before the end of 2005 or in early 2006. According to Mr. Rafael, 23 onshore development blocks will be up for bid. The Kwanza Basin is located 60 kilometers south of Luanda.

APPA Oil Production Reaches 8 Million Barrels per Day

The Association of African Oil Producing Countries (APPA) Executive Secretary Dave Lafiaji was in Luanda this week meeting with Angolan Petroleum Minister Desiderio Costa who is the current president of APPA. The two men discussed preparations for the March 2006 Cabinet-level meeting of the organization which will take place in Luanda. Among the agenda items are membership expansion and improving the workings of the “APPA Fund,” a financing facility for oil development projects in the member countries.
APPA member states have a combined oil production rate of 8 million barrels per day, with Nigeria producing 2.3 million barrels per day and Angola producing 1.1 million barrels. Total reserves for the member countries is 92 billion barrels, and the organization is likely to increase its reserves with the probable admission of new members, such as Sudan, Mauritania, Sao Tome, Mozambique and Namibia at the March meeting.

New Diamond Cutting Facility to Generate $240 Million in Revenue

A new diamond cutting facility being constructed in southern Luanda is expected to process $240 million worth of diamonds annually. The new enterprise, which will be inaugurated in November, is a joint venture between Sodiam LLD Diamonds and an Angolan trust. Sodiam is the sole authorized seller of Angolan diamonds and is 99 percent owned by Endiama, the state diamond mining company. Angolan diamond cutters are being trained in Namibia and the facility will ultimately employ some 600 Angolans. Sodiam intends to give hiring preference to former combatants and the war-disabled.

The operation represents a new stage of development in the Angolan diamond industry, and is expected to increase diamond revenues to the country. Although Angola is the sixth largest diamond producer in the world, the country currently only exports rough diamonds, thus losing the value added revenue generated by exporting polished gemstones. As an example, a Sodiam official estimates that if Angola exports rough diamonds worth $9 million, these same diamonds, once cut and polished, are sold for $56 million.

Angola’s kimberlite diamond reserves are estimated at 50 million carats, while its alluvial diamond reserves are estimated to be 40 million carats. Follow-on geological studies indicate that these reserves, however, could be substantially higher, possibly reaching 220 million carats of kimberlite diamonds and 150 million carats of alluvial diamonds. In 2004, Angola’s diamond production was about 6 million carats, but Endiama expects diamond production to increase to 12 million carats by the end of 2006.

Spotlight on the Financial Sector

Angola’s financial sector is growing and modernizing. Three new banking institutions opened their doors in Angola recently. They are Banco Keve, NovoBanco and BIC. While Luanda has traditionally been the financial sector hub for the country, many banks are expanding to the provinces as well, with most major cities having a number of commercial banking options.

In addition, as part of the Angolan government’s effort to modernize the financial sector, in 2002 the Empresa Interbancaria de Servicos (EMIS), an inter-bank service provider corporation, was established. EMIS is developing a universal automated teller system (ATM) and an automated payment service system at the point of sale. It also is facilitating electronic bank transfers. EMIS also launched the Multicaixa that allows customers from banks to withdraw cash and pre-pay their cellular telephones. More then 2,000 cards have been issued by financial institutions. Withdrawals can be made in local currency only. Multicaixa is also available for purchase at some grocery stores, retail outlets and restaurants. EMIS’s plans for the future include features such as utility bill payments, and agreements with VISA and Maestro to allow users of those cards to withdraw money in Angola. EMIS shareholders are the Angolan National Bank (BNA) with a 51percent interest, and other commercial banks holding the remaining 49 percent interest. EMIS is modernizing Angola’s financial services sector.

Inflation Rates:

    Source. BNA

Nominal Interest Rates for loans to non-financial enterprises in domestic currency:

Nominal Interest Rates for loans to private individuals in domestic currency:

Nominal Interest Rates for loans to non-financial enterprises in foreign currency:

Nominal Interest Rates for loans to private individuals in foreign currency:

INFRASTRUCTURE DEVELOPMENTS

Angolan Government Approves National Road Reconstruction Plan

The Angolan government approved the Executive Program for the Rehabilitation of the National Road System this week. The $190 million program will cover the rehabilitation of 1,200 km of road within a 12 month period. The Instituto de Estradas de Angola (INEA) is in charge of the program and is now completing work on structuring the complete program. Financing for the program will come from the national treasury and external sources.

Russian Firm to Build Second Unit for Capanda Hydroelectric Power Plant

Russia’s state construction firm Technopromexport signed a $112 million contract with the Angolan Ministry of Energy and Water to build the second unit for the Capanda hydroelectric power plant in Malange. The unit will consist of two 130 MW generating units and will double the plant’s total capacity to 520 MW upon its completion in 2007. The project is being funded by a Russian banking consortium, which is providing a 10 year loan to the Angolan government for the project. In addition the government has received a $130 million line of credit from Brazil for the Capanda facility.

The construction of the Capanda hydroelectric dam began 20 years ago and, once completed, will have cost about $2 billion. The Capanda facility produces much of the energy consumed in Malange and Luanda provinces.

At the signing ceremony Minister of Energy and Water Botelho de Vasconcelos reviewed other energy projects underway, noting that the government has already approved the construction of a third Cambambe/Luanda energy transportation line, a second Capanda/Lucala/Cambambe line and another Capanda/Luanda line. He added that in the previous month, the government had signed agreements with China’s EximBank to finance construction of electricity transmission lines. The government is now looking at interconnecting the three energy generation systems (northern, central and southern regions) to create one integrated national power generation network.

IN OTHER NEWS

Angolan Economy Grows 12.2 Percent in 2004

Angola’s economy grew 12.2 percent last year, according to Planning Minister Ana Dias Lourenco. Oil sector growth was 14 percent, while the non-oil sector grew by 9.1 percent. Oil accounted for 55 percent of Angola’s GNP in 2004, as compared to 54 percent in 2003. The Minister also reported that the agriculture, livestock and fishing sectors also posted positive growth trends with growth of 9 percent in 2004 as compared to 8.5 percent in 2003.