Isabel dos Santos promises overhaul of Angola's state oil firm

By Ed Cropley

LUANDA (Reuters) - Isabel dos Santos, the billionaire daughter of Angolan President Jose Eduardo dos Santos, pledged a root and branch overhaul of state oil firm Sonangol on Monday to improve its efficiency and margins to offset the "huge" impact of depressed oil prices.

A presidential decree issued last week said Isabel, ranked as Africa's richest woman by Forbes magazine, would become chief executive after the shock firing of Sonangol's existing board by Angola's leader of the last 36 years.

The appointment was seen by some analysts as President dos Santos laying the ground for dynastic, family succession if he follows through on a declared intention to step down in 2018, a year after presidential elections.

However, others said it was possible he was serious about bringing about change at Sonangol. State media said experts from Boston Consulting Group and PricewaterhouseCoopers would be brought in to assist in the shake-up.

After being sworn in as chief executive, Isabel told reporters she was looking to split the firm into three units overseeing operations, logistics and concessions to international oil companies.

The 43-year-old businesswoman, a major investor in various Angolan and Portuguese telecoms, banking, media and energy companies, also pledged to improve transparency at Sonangol, the central pillar of sub-Saharan Africa's third biggest economy.

With militants blowing up pipelines and causing production outages in Nigeria's Niger Delta, Angola is currently Africa's biggest oil producer. Daily output is around 1.7 million barrels.

"Our objective is to increase the revenue, efficiency and transparency of the company," dos Santos said. "We want to implement governance rules similar to the international standards."

Angola, which relies on oil exports for 95 percent of its foreign exchange, is often cited by anti-bribery campaigners as one of the world's most corrupt countries. President dos Santos has said he has a "zero tolerance" approach to graft.

Isabel dos Santos also said she was looking into the possibility of developing a domestic oil refinery to reduce Angola's need to import nearly all its diesel and gasoline - about 6 million cubic meters a year, according to national statistics.

Asked about job cuts at one of the country's largest employers, she said only that she would be looking into ways of lowering production costs.

NEPOTISM CONCERNS

Foreign oil firms have welcomed Isabel's appointment, brushing aside concerns about explicitly political motives.

"The government has acted. It is clear the direction they want to go. I am always optimistic. I certainly support the direction Sonangol is taking," Chevron's (NYSE: CVX) managing director for Angola, John Baltz, said last week.

However, one senior Johannesburg-based banker said the appointment could make it more difficult for international banks to do business with Sonangol, given the perception of nepotism it creates.

"From a compliance point of view, it's going to make it harder," the banker said.

President dos Santos's mild, inscrutable public demeanor belies his tight control of the former Portuguese colony, where he has overseen an oil-backed economic and construction boom in the wake of a devastating 27-year civil war that ended in 2002.

However, the collapse in oil prices has hit the economy hard, sending the kwanza to record lows against the dollar, pegging back growth to around 3 percent and forcing the government to seek IMF assistance.

(Additional reporting by Herculano Coroado; Editing by Greg Mahlich)

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