The sharp decline in oil prices may prompt the Angolan government to postpone some building projects in Africa’s second biggest oil producer, according to Portugal’s main construction-industry association.
“Angola is the biggest foreign market for Portuguese builders and it’s natural that fewer construction activity will have an impact on some of these companies,” Ricardo Gomes, president of the lobby group, known as AECOPS, said in a Jan. 13 interview. “I don’t think Portuguese companies have felt this impact yet because many of these companies have projects for this year.”
Angolan President Jose Eduardo dos Santos said on Dec. 29 that 2015 will be “economically difficult” and that some public spending would be scaled back and projects postponed due to low oil prices. Angola ranks second to Nigeria in oil production in Africa, relying on the industry for more than three-quarters of revenue.
Portugal’s biggest construction companies, including Mota-Engil SGPS SA and Teixeira Duarte SA, have expanded operations in the former Portuguese colony of Angola and other emerging markets in Africa and South America to counter a slump in the building sector at home.
A drop in oil prices in 2008 left Angola with as much as $6.8 billion in late payments to building companies. The crude-rich nation is rebuilding infrastructure ravaged by a 27-year civil war that ended in 2002. The government this time is unlikely to delay contractors’ payments, as it’s able to sell debt on the market to make ends meet, Gomes said.
“There are other oil-producing countries, such as Venezuela, with much bigger problems than Angola because of their difficulties in selling debt,” said Gomes.
Fitch Ratings Ltd. rates the debt of both Angola and Nigeria at BB-, three steps below investment grade.