New Regulations on Local Content in the oil sector

20 Oct 2020

On 20 October 2020, Angola implemented Presidential Decree no. 271/20 on Local Content Regulations. The Decree introduces the following changes among others: • Local content rules are now applicable to all companies providing goods and services to the oil sector and not only to oil companies acting in the country as associates of the National Concessionaire (E&Ps). • A restrictive concept of "national company", limited to companies fully owned by Angolan citizens or Angolan companies as opposed to the previous framework that deemed as Angolan company entities held at least 51% by a local citizen or company. • Inclusion of the definition of "other companies" incorporated in Angola (but not fully owned by local shareholders) as companies incorporated under Angolan law. • The new law maintains three regimes for the acquisition of goods and services in the oil sector (exclusivity, preference and competition): (1) Activities subject to the exclusivity regime shall be performed and provided by Angolan companies as defined above (100% held by Angolan citizens or companies). (2) Activities that fall into the preference regime may be performed by companies incorporated under Angolan law, however preference is given to Angolan companies. (3) Goods and services not included in the exclusivity and preference lists may be provided by foreign entities.

Companies aiming to provide goods or services to the oil sector shall be registered and certified by the National Concessionaire before being hired for a particular contract (this includes Angolan companies, companies incorporated under Angolan law and foreign companies).

All contracts shall now include a local content clause. All technical assistance and foreign management agreements shall include a detailed programme on training, transfer of knowledge and technology and evidence of improvement of local staff skills. The contracting process involves now more than a simple commercial agreement between client and supplier/ provider. Companies in the oil sector value chain shall deliver to the National Concessionaire and/or the relevant ministry documents evidencing the commitment with the promotion of local entrepreneurship, diversification of the economy and training of local staff.