Sonangol delays payments as it battles to reform
Lufthansa pilots’ strike disrupts flight schedule
Angola’s state oil company Sonangol has amassed hundreds of millions of dollars in debts and deferred payments to oil majors and contractors while its new chief, Isabel dos Santos, attempts to reform its operations. Contractors say they have waited months even for small payments from Sonangol, which handles the oil and gas reserves of Africa’s secondlargest oil exporter.
The delays began following the appointment of dos Santos, the daughter President Jose Eduardo dos Santos, in June to root out waste and corruption at a company that was struggling even before oil prices plunged.
As she worked to unravel the company’s myriad debts and repayments, outgoing cheques ground to a halt. Contractors and sources close to Sonangol said it is months behind in payments to nearly every entity it works with, from cash calls worth hundreds of millions and smaller payments of hundreds of thousands.
“They haven’t paid us, but we are talking to them,” a source at one contractor told Reuters. “They’re trying to make reforms but there is a cash flow problem.” Sources told Reuters that those owed included Chevron , Total, BP, ENI and ExxonMobil . Sonangol has asked for a moratorium on other debts until the end of the year, they said.
This is the most significant effort yet to reform the central pillar of sub-Saharan Africa’s third-largest economy and one of the continent’s biggest companies. Sonangol employs some of the Angola’s most powerful people and its tentacles spread beyond energy to real estate and railways, and trucking to telecoms.
The appointment of dos Santos was itself controversial. Her father has ruled Angola since 1979 and government critics accuse his family and associates of enriching themselves while doing too little to spread the benefits of Angola’s oil wealth
Lufthansa pilots in Germany began a two-day strike yesterday, grounding some 1,800 flights at one of Europe’s largest airlines in a long-running pay dispute. The Vereinigung Cockpit (VC) pilots’ union initially called a 24-hour walkout for yesterday, but extended the strike for an extra day after two courts rejected attempts by Lufthansa to halt the industrial action.
Lufthansa, led by CEO Carsten Spohr, insists that despite a record profit in 2015, it has no choice but to cut costs to compete with leaner rivals such as Ryanair on short-haul and Emirates on long-haul flights. Shares in the company have lost 12 percent of their value this year, but were up 1.2 percent at 1309 GMT, outperforming German blue chips, which were down 0.5 percent.
Lufthansa cancelled 876 of roughly 3,000 flights scheduled by its group airlines for Wednesday, and scrapped 912 flights for today, affecting over 215,000 passengers in what is the 14th strike in the dispute since early 2014. Lufthansa’s CEO has said he expects the strike to cost between 7 million euros and 9 million euros ($7.4 million to $9.6 million) a day.
The strike started at midnight and to its people. Isabel runs a multinational business empire that has made her Africa’s richest woman. A group of lawyers has filed a lawsuit accusing the president of nepotism and violating Angolan probity by appointing her as head of the state oil firm. The supreme court last month ordered him to respond to the inquiry. Isabel dos Santos has defended the decision, saying she had been picked for her expertise and competence.
At the start of the shake-up, she clipped the wings of the entire Sonangol legal department, barring them from conducting any external negotiations. This may have hindered sorting out payment complications.
She even booted out the hair-dressing and nail-bar salons that had set up shop inside Sonangol’s Luanda headquarters to pamper the oil executives in their lunch and coffee breaks, according to one Luanda-based diplomat.
Former chief executive Francisco de Lemos Jose Maria, along with the rest of the board, was replaced in June when dos Santos took over. Sources close to Sonangol said she had taken away Sonangol’s ability to pay its own bills directly. Revenues from oil sales now flow directly to government coffers, where payments must be approved before they go out.
The delays bubbled to the surface last month, when reports circulated that Chevron was demanding immediate payment of $300 million in unpaid cash calls the money that Sonangol is required to pay for operations on oil and gas fields.
Chevron declined to comment, but the talks prompted Sonangol to issue a rare statement about the troubles. “This perfectly normal situation in the Angolan oil industry is not unique or isolated,” the company said. — Reuters affects flights departing from German airports, including 133 long-haul flights.
Hotels for stranded
Flights by Lufthansa’s other airlines, including Germanwings, Eurowings, Austrian Airlines, SWISS and Brussels Airlines, will not be affected, Lufthansa said. Austrian and SWISS are using larger planes to carry passengers, while Lufthansa has reserved almost 4,000 hotel rooms in Frankfurt and Munich for stranded passengers. Lufthansa has called on the pilots to enter mediation, which has been rejected by their union because it is first seeking a better offer from management as a basis for talks.
The union wants an average annual pay increase of 3.7 percent for 5,400 pilots in Germany over a five-year period from 2012. Lufthansa has offered 2.5 percent spread over the six years to 2019.
In its effort to reduce costs, Lufthansa has agreed deals on pay and retirement schemes with the main unions representing ground staff and cabin crew in Germany. “It is incomprehensible that the union is calling for the biggest pay increase for the most well-paid group of staff,” Lufthansa board member Bettina Volkens said in a statement. — Reuters
FRANKFURT AM: Some passengers walk under a display showing cancelled flights due to a strike of pilots of German airline Lufthansa at the airport in Frankfurt am Main, yesterday. — AFP