Ivanilson Machado, CEO Pumangol
Energy Capital & Power spoke to fuel retailer Pumangol CEO Ivanilson Machado about championing the liberalization of Angola’s downstream sector in a bid to eliminate illegal petroleum trading and improve the availability of fuel for everyday Angolans.
Are there any changes in Pumangol’s structure or activities since Sonangol’s acquisition of the company in 2021?
Pumangol is no longer part of the Puma Energy Group and is now owned by Sonangol. Sonangol handed over its participation in the Puma Energy Group, and in exchange, was given a business entity belonging to the group in Angola. The company still functions as Pumangol, but instead of reporting results to Puma Energy Group, it now reports directly to Sonangol. There were no other changes in our operations, activities or staff. Our assets continue to be our assets and we are still operating our business in the marketing of petroleum products and B2B. Our modus operandi has not changed.
How did the onset of the COVID-19 pandemic impact Pumangol as a fuel retailer?
Our business depends upon the circulation of people, vehicles and merchandise. If there are restrictions on mobility, then naturally people will consume less fuel. The most significant impact from the health crisis was on overall volume of sales, as well as restrictions on the times we could operate and a sales curfew. However, from an analytical point of view, I was expecting worse results. This shows the importance that fuel has within our economy, as regardless of the restrictions that were imposed, fuel was still consumed. There was certainly an impact, but I was expecting a more aggressive one, and fortunately, we are now in the process of recovery. We had to undertake a limited number of layoffs, as well as tried to push lubricant sales up in an effort to bring in new customers.
To what extent will the construction of planned refineries in Soyo, Cabinda and Lobito improve Angola’s supply and distribution of refined petroleum products?
From my point of view, what will improve the market is not so much the construction of a new refinery, but rather the liberalization of the market. Each operator should be responsible for its own imports and relieve the state of this burden. Doing so would greatly relieve pressure, eliminate inefficient subsidies and foster growth within the market. The actual implementation of a refinery could take years; we simply cannot wait to solve the issue of fuel shortages throughout the country. The immediate solution is liberalization. If a company does not have money to import the necessary petroleum products, then that company will be out of fuel, thus losing potential revenues. Each should import their own products, as they can forecast the volumes needed. Unfortunately, we are still in a centralized model, in which only Sonangol can import and distribute. The state imports what it can pay and sometimes this is not enough to meet actual demand. The market is very constrained and we cannot wait for refineries to solve this issue. We need to put in place more immediate and practical solutions.
If market liberalization had already taken place, then we could have also stopped illegal petroleum trading activities. Our country has the cheapest fuel in the region, which is why illegal activities will never end. Here, the price is around $0.20 per liter. Nowhere in the world you can find that. Fuel prices have to rise and the fiscal burden has to be removed from the state. For operators, the current situation is unsustainable. We are selling at the same volume we sold years ago, but are making less money now. As a result, we have had to put our investment plans on standby because our margins do not allow for them. Prices have not been raised since 2015/ 2016. How can we follow through with strategic plans? We were supposed to open new fueling stations and add more people to the workforce. We have a terminal in Malange that is currently closed, as keeping it open is not feasible. We also need to invest more in the Lobito terminal. We have land throughout the country ready to host new service stations. If the market fosters business, then Pumangol will be able to fulfill its investment plans and grow even further.
