Energy Capital & Power

Filling the Vacuum

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As COVID-19 has led to the repatriation of oil and gas workers and a temporary halt in operations by some International Oil Companies (IOCs), the opportunity for national companies to fill the vacuum has emerged.

Through legislation, contracts and bidding practices, resource-rich countries like Angola are proactively driving local content requirements to be included into their legal, fiscal and regulatory frameworks. As Angola faces a prolonged four-year recession, policies with a view toward local content offer the ability to spur job creation, drive private sector growth, facilitate technology transfer and forge a competitive local workforce.

However, in February 2020, only 20% of the companies certified by the Angolan Business Support Center’s national oil and gas database were local, with more than 3,000 companies registered and only 600 meeting local content requirements. Low participation of national companies in the sector is often attributed to the high standards of safety, efficiency and technical expertise required by the oil and gas industry.

Moreover, local content regulations in Angola are notoriously opaque. The country currently holds nine different laws on the subject, yet there is no legal definition for local content or an official Angolanization policy. Between 2003 and 2009, the government drafted several laws and decrees to establish local content policy, with the decree-law on human resources development being the most comprehensive and a detailed contract program regarding the development of human resources required for submission by companies. Other key components include the creation of a three-tier framework – exclusivity, semi-compliance and competition – for the provision of national goods and services, and the establishment of preference granted to Angolan concessionaires.

A new local content law has been in the works since 2018, when the government announced its intention to set clear, feasible and non-bureaucratic procedures to drive increased local participation and consolidate the existing legislation. The new law would require program contracts, national development plans and the creation of a management and regulatory body for local activity in the sector, among other objectives.

Under the current requirements for training and employment in Angola, expatriates can be employed only upon authorization from the Ministry of Mineral Resources, Petroleum and Gas and upon evidence that there is no qualified Angolan who can fill the position. Angolans must be employed upon the same conditions as expatriates, and companies are required to make financial contributions to human resource development. Companies must also ensure that their training programs result in the transfer of technology and know-how to Angolan nationals.

In the procurement of goods and services, public tenders are allowed to be limited to Angolans. Angolan bidders must be pre-approved by the Ministry of Mineral Resources, Petroleum and Gas, and are defined as having at least 51% Angolan ownership. In the award of public tenders, Angolan companies are given preference, as long as their fee quotes are not more than 10% higher than the other bidders.

In the implementation of local content regulations, Angola’s Petroleum Law stipulates that the government is responsible for the promotion of Angola’s business climate within the oil and gas industry. For human resources development, the Law sanctions the Ministry of Mineral Resources, Petroleum and Gas to develop an incentive-based policy around fiscal, financial and technical support.

To monitor and enforce compliance with local content legislation, companies must submit annual human resources development plans, along with a detailed list of the expatriates who have been hired and regular reports on company contributions to training initiatives. A failure to meet the reporting requirements represents an offense, for which a fine is payable. Meanwhile, failure to comply with preference given to national providers of goods and services can render a contract void.

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Sihle Qekeleshe is a Web Editor at Energy Capital & Power. She has experience as a Copywriter and Editor in various industries.