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New Local Content Regime for the Oil Sector in Angola

Presidential Decree no. 271/20, of 20 October approved the new Local Content Regime for the Oil Sector (the "Presidential Decree 271/20" or "New Local Content Rules"), thus repealing and replacing Order no. 127/03, of 25 November.

The aforementioned Presidential Decree brings significant changes to the previous regime, from which we highlight the following:

New Local Content regimes applicable to the acquisition of goods and services in the sector: the New Local Content Rules still provide for three different regimes, which are now the (i) exclusivity (ii) preferential and (iii) competition regimes.

Angolan Commercial Companies: only companies incorporated in Angola, with 100% share capital held by Angolan citizens or Angolan companies (defined as “Angolan Commercial Companies”) may benefit from the exclusivity and preferential regimes. Under the previously applicable rules, companies with the majority share capital held by Angolan nationals could benefit from such regimes.

Lists: goods and services falling under the exclusivity and preferential regimes must be listed by the National Concessionaire (“Agência Nacional de Petróleo, Gás e Biocombustíveis” – "ANPG") after consultation with the Competition Regulatory Authority. The lists shall be published in the ANPG's official website and should be updated on an annual basis.

Goods and services listed therein must be, as applicable, exclusively or preferentially acquired from Angolan Commercial Companies, while those which are not included in said lists will be subject to the competition regime and may be acquired from either Angolan or foreign companies.

Local Content Plan: Another significant aspect of the New Local Content Regime is the Local Content Plan. It must now be prepared by the oil sector companies and by all companies supplying goods and/or providing services to the Oil Sector and submitted to the ANPG for monitoring of local content-related activities.

Sanctions: Finally, breach of the New Local Content Rules is now punishable with fines that may range between the amount in domestic currency equivalent to USD 50.000,00 and USD 300.000,00. Additional penalties may also be applied, such as

(i)    activity interdiction for a period of 1 (one) to 2 (two) years;
(ii)    suspension of the authorization for operation of establishment; or
(iii)    prohibition of entering into new contracts.

Presidential Decree 271/20 entered into force on the date of its publication, 20 October 2020.

Authors

Alberto Galhardo Simões
Alberto Galhardo Simões
Partner
Lisbon