Angolan state oil and fuel company Sonangol has cancelled its contract with the United Shine consortium for the construction of the Cabinda Refinery due to non-compliance with the agreed actions, the state company said in a statement issued on Wednesday in Luanda.
On 4 June Sonangol and United Shine signed a partnership agreement for the construction of a high conversion oil refinery in Cabinda province, during the opening of the Africa Oil and Gas Conference, which took place in the Talatona Convention Centre.
The choice of United Shine was based on a tender launched by Sonangol in 2017 to build a refinery that is expected to have a processing capacity of 60,000 barrels of oil per day for the production of derivatives such as diesel, gasoline, fuel oil and Jet A1.
The statement now issued said that Sonangol was forced last October to terminate the contract following a failure to comply with the agreed actions and the fact that the financing or guarantees had not been effectively, unconditionally and concretely secured to build the refinery.
Sonangol also noted a deficiency in the corporate capitalisation of the consortium that would demonstrate financial robustness at an equity level to ensure project implementation and that it also showed no ability to prepare or carry out core activities within the agreed period (24 months).
The failure to submit additional technical, commercial and financial studies to support the project’s completion within the deadline and documentation for the approval of the private investment project under Angolan law were other shortcomings detected, according to a statement from Sonangol.
In view of the above, Sonangol contacted other potential investors. On 30 October 2019, it signed a memorandum of understanding with Gemcorp Capital LLP for the financing and execution of the project, guaranteeing its execution within the established deadlines, with secured funding.
The statement added that Sonangol holds a 10% stake in the new company’s share capital. (Macauhub)