Hard Currency

Angola’s oil refinery can strengthen public finances, says Gemcorp

By David Whitehouse

Posted on January 18, 2021 08:32

General view of the capital of AngolaÕs Cabinda province, the impoverished territory that accounts for half of the oil output from AfricaÕs top petroleum producer © The capital of Angola’s Cabinda province, which accounts for half of the country’s oil output, June 11, 2016  REUTERS/Ed Cropley
The capital of Angola’s Cabinda province, which accounts for half of the country’s oil output, June 11, 2016 REUTERS/Ed Cropley

Angola’s under-construction oil refinery at Cabinda can help strengthen the country’s public finances by reducing pressure on foreign-currency reserves, Gemcorp CEO Atanas Bostandjiev tells The Africa Report.

It’s “not economically viable” for Angola to export crude oil and then import refined products, says Bostandjiev. “It creates a hard currency drain.” The project will also generate taxes for public coffers and contribute to economic diversification, he adds.

The country’s foreign currency reserves, which dwindled below $10bn in 2020 from a peak of $34bn in April 2013, have added to the debt pressures faced by the government.

Analysts have pointed to the parlous state of public finances and argued that debt restructuring may be needed. Finance minister Vera Daves de Sousa said this week that Angola has secured three years of debt payment relief from Chinese creditors, and that it is about to receive more than $700 million from the International Monetary Fund.

READ MORE Angola may be forced into debt restructuring in 2021

Gemcorp, an emerging markets trade and investment group, is building the refinery under a joint venture agreement with state-owned oil company Sonangol. The project, funded by private equity and debt capital, will create about 2,000 direct and indirect jobs in construction, engineering, logistics, security and administration.

The aim is to enable Angola to capture the full value of its natural resources, while reducing the environmental impact of shipping oil to refineries in Europe and beyond.

  • Angola imports about 80% of its refined oil. Having a refinery “is of the utmost importance,” says Bostandjiev. “It can’t solve the issues on its own. But it can make a substantial improvement.”
  • The first phase of the project scheduled to be in operation by June 2022.
  • Bostandjiev is not worried about the prospect of competition from projects such as the Dangote refinery in Nigeria. “The deficit of refined products in the region means there is plenty of scope for more refineries to be built.”
  • Gemcorp is also investing in a modular refinery in Liberia, with commissioning expected in April or May.

Lack of capacity to store refined oil products is one constraint. President João Lourenço in December authorised US$662m of investment to build the onshore Barra do Dande terminal in Bengo province, near the capital Luanda. The facility is expected to start operating in the first half of 2022.


Bostandjiev founded Gemcorp in 2014, convinced that international banks were ignoring emerging market growth prospects in the wake of the 2008 global financial crisis. The firm aims to provide structured financing solutions and has an African presence in Ghana, Zimbabwe and Ethiopia, as well as Angola.

READ MORE Zambia’s default leaves Angola as Africa’s most exposed borrower

Bostandjiev has had a relationship with the Angolan government since his days as a partner at Goldman Sachs. “We go into countries as a long-term partner,” he says.

  • The country can’t achieve industrialisation without security of energy supply, to which the refinery will contribute, says Parvoleta Shtereva, Gemcorp’s head of investments.
  • Energy is needed to develop new industries. Oil security “translates into diversification,” she says.

The Cabinda project, which includes the building of a school, is using the US modular refining technology, which means that petrochemicals capacity can be added at a later stage. “There is merit and potential for it,” says Bostandjiev, pointing to demand for petrochemicals in Angola and the region.

He sees Angola’s young population as holding promise for the country’s future. The country’s arable land as given the means to make it a large-scale food supplier and processor, he adds. Gemcorp is working to identify a “scaleable” investor for a new agricultural project in Angola.

READ MORE Angola’s anti-corruption crusade tide turns against João Lourenço

There’s no way for Angola to “leapfrog” to a diversified economy, says Bostandjiev. Having a refinery, he argues, is beneficial to an economy such as Angola regardless of whether it has oil reserves. “This economy needs expertise and technology to kick-start auxiliary businesses to oil.”

Bottom line

Angola ultimately needs a more diversified economy to be able to withstand the risk of prolonged low oil prices.

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