Congo Republic reforms state oil firm, seeks bailout

Congo Republic plans to replace the board of directors and appoint an audit committee at state oil company SNPC, as it strives to improve accountability and convince international lenders to bail out the country.

SNPC, which holds equity in fields operated by Italy’s ENI and France’s Total, has been dogged by allegations of corruption and mismanagement, and the government on Wednesday criticised the “dysfunction” of its current set-up.

The reform plans come as the government is negotiating with the International Monetary Fund (IMF) for a bailout following a steep drop in revenues due to low crude prices that has seen public or publicly guaranteed debt balloon to 110 percent of GDP, according to the IMF.

Credit rating agencies judge Congo to be at risk of default on its Eurobond because of its debt troubles, which have been exacerbated by a $1 billion legal dispute in a United States court.

This was despite substantially increased oil production, boosted by several new oilfields. Congo expects to raise output by 25 percent to 350,000 barrels per day (bpd) next year and leapfrog Equatorial Guinea as sub-Saharan Africa’s third-leading crude producer.

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“It is the observation of this dysfunction … as well as the interest in improving the performance of the SNPC that leads the Minister Thystere Tchicaya to submit … the proposal presented today,” notes from Tuesday’s cabinet meeting said.

Government spokesman Thierry Moungalla said the cabinet had approved a bill that would replace the existing board of directors with a director general, who would be assisted by a secretary general and three deputies.

The director general would also serve as chairman of the board of SNPC’s various subsidiaries, while a new audit committee would reinforce internal controls, Moungalla said.

The bill now heads to parliament.

Following a country visit that concluded earlier this month, the IMF said it “took note of the authorities’ intention to improve the governance of public enterprises, including oil companies”.

Analysts say rampant corruption and a dysfunctional bureaucracy have prevented Congo from capitalising on its prodigious mineral wealth.