CONGO – Congo Republic aims to reach a deal with energy traders Glencore and Trafigura to restructure a US$1.7 billion debt before a meeting with the International Monetary Fund (IMF) in April 2020.
Maixent Raoul Ominga, director general of state-owned SNPC, said lawyers for Congo Republic were working with representatives of Glencore and Trafigura to get all the parties talking.
“The government’s objective is to have an agreement with them before the next IMF review in April,” Ominga said.
According to Reuters, in January, talks between Congo Republic and the Swiss energy traders had broken down after the firms rejected a haircut on the debt.
The IMF agreed a US$449 million, three-year lending program in July – but only US$45 million has been disbursed with other funds subject to semi-annual reviews.
A requirement for further disbursements is the restructuring of Congo’s oil-backed loans from the Swiss traders.
If they agree to a haircut or accepting lower than market value for the assets that are collateral for the loans, Congo Republic would spend less on debt servicing.
The IMF has said it delayed submitting a 2019 year-end review to its executive board as it waits for Congo Republic to finalize a deal with the traders.
Ominga told Reuters the situation escalated in February when Glencore tried to recover its funds and sought to prevent the delivery of some Congo Republic crude cargoes.
Had Glencore succeeded, he said that would have blocked negotiations and paralyzed the central African country, which is heavily indebted.
Ominga denied reports that Congo Republic had withheld all oil deliveries to Glencore since 2018.
But he said Congo Republic had suspended some cargoes at the end of last year, “with the aim of finding a solution on the restructuring”. Once a deal is reached, he said shipments would resume.
The IMF estimated Congo Republic’s debt burden at nearly US$9.5 billion or 85.5% of its GDP, when it approved its three-year lending program.
Environmental and rights group Global Witness said in January that audited accounts of the SNPC reviewed by the group showed the state oil firm owed more than had been estimated in the IMF report.
Its debts included US$3.3 billion in advances and other debt to joint venture partners, and a consortium of banks led by African lender Ecobank (ETI.LG).
Ominga said SNPC’s debt and the production and sharing agreements signed with oil majors did not add to Congo Republic’s total debt, although he said SNPC was talking to the consortium of banks on restructuring a US$600 million loan and would meet them in Paris at the end of March.
“This debt is not part of the state’s debt. It has nothing to do with it. There are guarantees on the debt, backed by SNPC’s assets. They are structured in a way that they don’t impact the state’s debt,” Ominga said.
Congo Republic, one of sub-Saharan Africa’s biggest oil producers, has pledged billions of dollars to develop oil fields as part of production agreements with oil majors.
Ominga said a potentially huge discovery by the oil company Societe Africaine de Recherche Petroliere et Distribution (SARPD) could boost Congo Republic’s oil output by a million bpd.
Although the nation’s output has increased, in 2019 production of around 342,000 barrels per day (bpd) missed the government’s target by 2.2% because of technical problems at a field operated by Italy’s Eni (ENI.MI), which has yet to resume production.