Contribute to Human Rights Watch
|HOME | SITEMAP | SEARCH | CONTACT | REPORTS | PRESS ARCHIVES|
|Angola in Human Rights Watch World Report 2001:||FREE Join the HRW Mailing List|
The Oil Diagnostic in Angola: An Update
Human Rights Watch, March 2001
1 In addition to the Oil Diagnostic, the monitoring program sets out a series of ambitious reforms that the government must undertake before becoming eligible for Enhanced Structural Adjustment Facility loans from the international financial institutions, including: creating an integrated financial management system; eliminating domestic fuel subsidies; limiting subsidies to indebted state-owned enterprises; eliminating tax exemptions that are not a part of international agreements; eliminating import licenses and non-tariff barriers; simplifying commercial licensing; progressively adjusting tariffs for public services such as water and electricity to market levels; liquidate the Caixa de Credito Agropecuria (CAP); defining a strategy to deal with the country's external debt; clearing arrears payments to multilateral financial institutions; gradually eliminating external commercial credits to the central bank; creating a register of debt service payments, including oil-backed loans; preparing a restructuring of the financial system, including privatization of state banks; revising of the special foreign exchange regime; presenting a policy document on privatization; implementing a pilot program involving the privatization of five state-owned companies; publishing comprehensive statistics on government accounts and macroeconomic indices; and preparing a plan for tax reform.
2 In June and September 2000, Human Rights Watch released "The International Monetary Fund's Staff Monitoring Program for Angola: The Human Rights Implications" a backgrounder that detailed certain provisions and weaknesses of the Oil Diagnostic and recommendations to ensure greater transparency and accountability on the part of the Angolan government. Some statistical figures regarding government revenues and expenditures have been revised since the release of this document, reflecting updated information by the World Bank and IMF.
3 Additionally, the international accounting and consulting firm, Ernst & Young, is conducting an audit of the Angolan central bank (the Banco Nacional de Angola, or BNA) that should be completed by March 2001. The state-owned diamond company, Empresa Nacional de Diamantes de Angola (ENDIAMA), has agreed to conduct its own diamond diagnostic. The IMF and World Bank may negotiate a more comprehensive study of the diamond sector after reviewing the findings of the ENDIAMA diagnostic.
4 International Monetary Fund (IMF), Angola: Recent Economic Developments, IMF Staff Country Report Number 00/111, August 2000 pp. 13, 41. In general, the country's reliance on oil peaked in 1995 but appears to have surpassed this in 2001.
6 Ibid; and "2001 State Budget Presented," ANGOP, February 23, 2001. According to recent estimates, Angola produces approximately 766,000 barrels of oil per day (bpd). Oil production is estimated to increase to 1 million bpd by the end of 2001 and 1.4 million bpd by 2003.The vast majority (approximately 474,000 bpd) of oil production occurs in Block 0 located offshore the enclave of Cabinda. The companies involved are a joint venture between Sonangol (41 percent), TotalFina-Elf (10 percent), ENI-Agip (9.8 percent), and the operator Chevron (39.2 percent) through its Cabinda Gulf Oil Company (CABGOC) subsidiary. At the end of 1999, total production in Block 0 reached 510,000 bpd, or approximately 67 percent of Angola's total oil production. The second largest area of production is Block 3 located offshore the northern coast of Angola, producing approximately 174,000 bpd. TotalFina-Elf (50 percent) is the operator and the other joint-venture partners include Ajoco (25 percent), ENI-Agip (15 percent), INA-Naftaplin (5 percent), and Naftagas (5 percent). Block 2, offshore of the northern city of Soyo produce approximately 84,000 bpd and is a joint venture between the operator Texaco (20 percent), Petrobras (27.5 percent), TotalFina-Elf (27.5 percent), and Sonangol (25 percent).
7 Human Rights Watch, Angola Unravels: The Rise and Fall of the Lusaka Peace Process (New York: Human Rights Watch, 1999), p. 95, citing Human Rights Watch interview with a Banco Nacional de Angola (BNA) representative, Luanda, August 1998.
9 Economist Intelligence Unit (EIU), "Angola: Country Report," August 2000, p. 18; Paul Webster, "Elf Spent Dollars 60 m a Year on Bribes, Investigators Told," The Guardian, July 12, 2000; and "New Corruption Allegations at French Oil Group Elf," Reuters, July 11, 2000.
13 Contract for the Oil Diagnostic between the World Bank, the Government of Angola, and KPMG, Appendix A, "Description of the Services," p. 23. Human Rights Watch has confirmed with KPMG and oil companies that this document accurately details the services provided by KPMG.
26 Human Rights Watch interviews with oil company representatives, Luanda, December 5 and 6, 2000; Human Rights Watch interview with IMF representative, January 23, 2001; Human Rights Watch correspondence with Royal Dutch/Shell, February 6, 2001; and Economist Intelligence Unit (EIU), "Angola: Country Report," February 2001, p 17.
29 Undated letter from BP Amoco (now BP) Chairman Peter Sutherland to House of Lords Member Lord Averbury regarding Averbury's May 18, 1999 letter of inquiry about the government of Angola's use of signature bonus payments paid by BP Amoco.
31 BP Exploration (Angola) Limited, "Annual Report and Accounts 1999," October 16, 2000, p. 11. BP published this payment because it was considered a "material payment" that had to be disclosed to Companies House in London. The other payments were not detailed because they were cash payments and did not require the same level of disclosure.
32 At the time Block Thirty-One was awarded, the press estimated that the total bonus payment would be approximately U.S. $350 million. For example, see "Signature Bonuses In Angola 'Much Higher' Than Expected-Sonangol," Dow Jones Energy Service, April 13, 1999. Based on the figures supplied in the BP annual report, the calculated total appears to be approximately U.S. $333 million. Since joint-venture partners in oil blocks pay amounts according to their percent ownership of the block, the BP payment represented 26.67 percent of the total bonus payment. The total bonus payment would have been about U.S. $416,531,684, but Sonangol is a 20 percent owner of the block and would not have paid a bonus payment, so 20 percent (approximately U.S. $83,306,336) of the total can be subtracted. The new total, minus Sonangol's share, would be approximately U.S. $333,225,347, which is consistent with estimates that the bonus payment would be about U.S. $350 million. Based on this figure, Exxon-Mobil (25 percent) paid approximately U.S. $104,132,921; Statoil (13.33 percent) paid approximately U.S. $55,398,714; Marathon Oil (10 percent) paid approximately U.S. $41,653,168; and TotalFina-Elf (5 percent) paid approximately U.S. $20,826,584.
38 For a comprehensive account of violations by all parties to the conflict see generally Angola Unravels; and Human Rights Watch, Angola: Arms Trade and Violations of the Laws of War Since the 1992 Elections (New York: Human Rights Watch, 1994).
39 Human Rights Watch field work in Angola in August 1998. These included: (1) seeing new minefields being prepared in Luena in August 1998, and also establishing that the provincial authorities had refused to allow mine clearance operations in these areas; (2) interviewing newly-arrived refugees in Zambia who said that the Angolan National Police had protected their police station in Cazombo by placing mines on their roof; and (3) speaking with Angolan soldiers who admitted to planting mines under orders from their superiors in August 1998 during operations in Piri and in Uige. Human Rights Watch fieldwork in Angola and Zambia, May 2000; and IRIN, "Namibia: Angolans faces terror charges," May 24, 2000.
41 See generally Ibid., pp. 108-154; The United Nations, Report of the Panel of Experts on Violation of Security Council Sanctions Against UNITA, U.N. Security Council Report S/2000/203, March 10, 2000; and The United Nations, Final Report of the Monitoring Mechanism on Angola Sanctions, U.N. Security Council Report S/2000/1225, December 21, 2000.
46 U.S. Energy Information Agency, "Angola: Country Analysis Brief," July 2000.; Angola Unravels, pp. 97-98 citing Africa Confidential vol. 40, no. 10, May 14, 1999; and the Economist Intelligence Unit (EIU), "Angola Country Report, 2nd Quarter, 1999," p. 26; and Human Rights Watch interview with French intelligence source, Lisbon, December 1999. The other joint-venture partners in Block Thirty-Three are ExxonMobil (the operator), Naphta, Petrogal, Sonangol, and TotalFina-Elf.
59 Catherine Reagor, "Falcones Hold Record for the Priciest Estate," The Arizona Republic, January 12, 2001; and Catherine Reagor, "Hopping on the Trail of a Real Estate Maze," The Arizona Republic, January 12, 2001.
61 Arizona Republican Committee, Report of Receipts and Disbursements: July 15 Quarterly Report to the U.S. Federal Election Commission, July 13, 2000, p. 12; and Governor George W. Bush Presidential Exploratory Committee, Report of Receipts and Disbursements: July 15 Quarterly Report to the U.S. Federal Election Commission, July 15, 1999, p. 1211.
65 McCain 2000 Inc., Report of Receipts and Disbursements: October 15 Quarterly Report to the U.S. Federal Election Commission, October 15, 1999; and McCain 2000 Inc., Report of Receipts and Disbursements: Monthly Report to the U.S. Federal Election Commission, March 20, 2000.
74 Dennis Wagner, "Jet-Setter's Life Marked by Intrigue: Arms-Deal Allegations Don't Fit, Many Say," The Arizona Republic, January 12, 2001; and Economist Intelligence Unit (EIU), "Angola: Country Report 2nd Quarter, 1999," p.26.
80 "Sonangol: U.S. $455 Million Crude Oil Contract Repayment Facility," Standard Chartered Bank Press Release, March 9, 2001. According to banking and oil industry representatives that Human Rights Watch spoke to in March 2001, the loan scheduled for early repayment is reportedly from a UBS-backed oil mortgaging agreement and BP is reportedly the purchaser of the mortgaged oil.
87 United Nations High Commissioner for Refugees (UNHCR), 2001 Global Appeal, Addendum I: Angola IDP Programme in Short, January 2001, pp.12-16. This document is also available on the Internet at: www.unhcr.ch/fdrs/ga2001/addago.pdf; and Economist Intelligence Unit (EIU), "Angola: Country Report, November 2000," p. 14.
91 Human Rights Watch telephone interview with PADPA representative, Luanda, March 1, 2001; and Human Rights Watch interview with Fernando Macedo of the Angolan human rights organization, Justice, Peace and Democracy, London, March 13, 2001.
|HUMAN RIGHTS WATCH||HOME | SITEMAP | SEARCH | CONTACT | REPORTS | PRESS ARCHIVES|