ANGOLAN TRANSPORT MINISTER DISCUSSES PLANES, TRAINS AND

UNCLAS SECTION 01 OF 03 LUANDA 001210

SIPDIS

SENSITIVE, SIPDIS

STATE FOR AF/S; EB/IFD/OMA and EB/CBA
JOHANNESBURG FOR USFCS and USTDA
CAPETOWN FOR USFCS
DEPT PLS PASS EXIM BANK
DOT FOR CONNIE HUNTER

E.O. 12958
TAGS: ETRD BEXP EAIR EFIN AO
SUBJECT: ANGOLAN TRANSPORT MINISTER DISCUSSES PLANES, TRAINS AND
AUTOMOBILES

LUANDA 00001210 001.2 OF 003


BUSINESS SENSITIVE - NOT FOR INTERNET DISTRIBUTION

REF: Luanda 1197


1. (U) This is an Action Request. TDA, EB and AF/S please see para

13.


2. (U) Summary. Angolan Minister of Transportation Andre Luis
Brandao and the GRA are pleased with the arrival of the Boeing jets
to Luanda. While interested in US quality locomotives for purchase
for the Angolan rail system, Brandao appeared frustrated at the lack
of USG-backed financing available for rail systems. Finally, he
requested USG help in providing technical assistance in developing a
strategic plan for Angolan highway expansion and for technical
capacity building in highway safety and hazardous spill clean-up.
End Summary.


3. (U) Coincident to the arrival of the five Boeing jets, Ambassador
Efird and P/E Chief met with Angolan Transport Minister Andre Luis
Brandao on November 9, 2006, to discuss developments in civil
aviation; plans for rehabilitation of the national rail lines; to
formally advocate, as requested through a USDOC advocacy request, on
behalf of General Electric's bid to rehabilitate locomotives, and to
discuss plans for the reconstruction and expansion of the Angolan
highway network. The Boeing planes' arrival is detailed in reftel.

-------------- --------------
Boeing Purchase - A Catalyst in TAAG Modernization
-------------- --------------

4. (SBU) Minister Brandao commented on how pleased Angola is to
receive the new planes on its Independence Day. He added the
Angolan National Airline had always flown Boeing and planned to
maintain that tie. He noted the last 737 will arrive in early 2007,
allowing TAAG, the national airline, to expand operations
dramatically. In addition, he discussed the September ouster and
replacement of TAAG's board of directors, noting that the old
administration had concentrated just on the new purchase and not on
the company restructuring necessary to accommodate the maintenance
and servicing of the additional planes and its expanded flight
plans. (Note: Angolan Finance Minister Pedro de Morais had held up
the sale for several months pending a restructuring plan what would
make TAAG profitable. Implementation of the plan has been delayed
by threatened labor actions in response to required layoffs.)
Brandao added that under the old TAAG direction, there were no
flight crews in place and the technicians "couldn't have managed to
fix a flat tire if one had occurred." Brandao said the new board
had concentrated on remedying this situation and while there were
still some kinks to be worked out, he hoped the planes would be
flying by the end of the week of November 12th. He said the GRA
would like to take advantage of Boeing's expertise to discuss
further restructuring of TAAG operations. He also noted that it was
important for Angola to focus on Open Skies, noting that Angola
could follow the Cape Verde experience.


5. (U) Ambassador Efird commented Boeing was not only selling
aircraft but providing significant technical assistance as well,
including evaluating the safety of all the airports in Angola in
conjunction with its sale in moving towards Safe Skies. She noted
other assistance and other training Boeing was providing as well.
Brandao said that the GRA had issued contracts to begin
rehabilitating all the airports in Angola and had stepped up its
technical training. Ambassador Efird urged the Minister to continue
to work on necessary security upgrades with the Embassy, Boeing,
Connie Hunter of DOT and TDA.

-------------- ---
Rehabilitating Angola's War-Damaged Rail System
-------------- ---

6. (SBU) Ambassador Efird then raised the rehabilitation of the
railways in Angola, strongly advocating on behalf of General
Electric and its bid to overhaul twelve locomotives for the Luanda
and Mocamedes Railways and to modernize twenty-one locomotives for
the Benguela railway. (Note: Mocamedes is the railway running
through the southern provinces of Angola.) Minister Brandao said
the GRA had already purchased some locomotives from India for the
Mocamedes line and from China for the Luanda line on a trial basis.
He said that the GRA believed the US-made locomotives and engines
were of high quality but in this case, after initial interest, GE
had not followed up on negotiations for the sale. (Comment: GE
formally filed an advocacy request for Embassy Luanda assistance in
promoting its bid for overhaul of Angolan locomotives. GE has made
several visits to Angola and recently hosted a large exhibition of

LUANDA 00001210 002.2 OF 003


projects and services of many of its divisions.)


7. (SBU) The Minister raised the issue of financing for the
railways, noting that he had spoken to EXIM Board Member J. Joseph
Grandmaison when Brandao was in the U.S. in September. He said that
Grandmaison told him that EXIM was not yet able to negotiate with
the GRA on financing, pending a satisfactory arrangement on GRA
Paris Club arrears. Ambassador Efird asked if the Brazilian line of
credit could not be used for this project since GE would do some of
the actual overhaul work in Brazil using US components. Brandao
responded that the Brazilian line of credit has been used up for
this year, and wouldn't be available for this deal. (Note: There
had been discussion of sourcing some work and parts through the US
company's affiliate in Brazil in order to avail itself of the
Brazilian government line of credit. Coincidentally, the Brazilian
Embassy announced on November 13, 2006, that the line of credit had
been increased from USD 580 million to USD 750 million for
2006-2008. End note.) Brandao commented that when a company is
really interested in securing the deal, it finds creative ways to
offer commercial financing packages. In a meeting November 13,
2006, Ambassador Efird informed the Brazilian Ambassador in Luanda
that she was working on this commercial opening that would benefit
workers in both countries to which he expressed his gratitude.


8. (SBU) Ambassador Efird reminded Minister Brandao that US
companies are great corporate citizens, also providing development
and technical assistance to the GRA and people of Angola. She
emphasized the training and supervisory skills the US company would
provide for the GRA as part of its proposal and the potential for
future technical assistance on railway strategic planning and
maintenance. The Minister appeared very interested in the latter,
noting that, with the Benguela rail links to Zambia and Congo,
Angola is well-positioned to become a maintenance hub for Central
Africa.


9. (SBU) Embassy Luanda communicated the Minister's comments and
perceptions on the GE proposal by telephone to the GE Rail
Transportation office in South Africa, the principal negotiator for
the deal. In addition, we have provided written feedback to the
DOC-ITA office which initiated the advocacy request and the GE
government affairs office in the US.

--------------
Connecting the Country by Road
--------------

10. (U) Brandao also briefly discussed his trip to the US and
discussions with US officials on the state of Angolan roads, noting
that the Ministry of Transportation shares this responsibility with
the Ministry of Public Works. He said that the GRA is faced with
the challenge of repairing and repaving old roads; preserving newly
paved roads, and planning for and building new roads. He believes
Angola needs to build two major national highways - one traversing
the country from north to south along the coastline and one from
east to west. He urged US companies to consider participating in
building highways in Angola.


11. (U) Brandao then (and more realistically) requested USG
assistance for a technical study for highway development; design of
a highway safety system and for technical training on dealing with
hazardous waste spills. Ambassador Efird replied she would alert
USTDA to Angolan interest in technical assistance in the highway
development study. She also mentioned that the US Dept of
Transportation's Federal Highway Administration could possibly help
with technical and training assistance and training on safety
issues.


12. (U) During the delivery ceremony for the Boeing Aircraft,
Ambassador Efird was seated with the Angolan economic team (Minister
of Finance de Morais and Deputy Prime Minister Aguinaldo Jaime) and
raised the issue of US locomotives with the Ministers, emphasizing
again the likely technical training assistance US companies often
offer.

--------------
Action Requests
--------------

13. (U) Action Requests:
A) FOR USTDA - please advise whether a technical study for Angolan
highway development would be feasible and steps necessary to start
process.

B) For AF/S - Please follow up with USDOT-Highway Administration.

LUANDA 00001210 003.2 OF 003


We understand Minister Brandao met with DOT officials in September
and discussed technical assistance. Please advise on status of
discussions and steps Embassy Luanda could take to facilitate
technical expertise.

C) For EB - We have heard that EXIM Bank asset based lending may be
under discussion for locomotives as well as aircraft sales. In
Embassy Luanda's opinion, the window for a multi-million dollar
sales opportunity with the possibility of a continuing partnership
for providing locomotives to this major African rail link will close
by March 2007.
EFIRD