Local expertise in AngolaMay 11, 2022
Francisco Monteiro, chairman and CEO of BRIMONT, talks to The Energy Year about the possibility of a new, positive oil cycle, challenges within the supply chain and the company’s latest procurement contracts. BRIMONT is an Angolan company that operates in the areas of consulting, HR, procurement, real estate and energy.
Do you believe we’re starting a new positive oil cycle, and if so, how will it impact the industry here in Angola?
As of today, it is too optimistic to say that. But naturally, if it occurs, it will substantially impact the oil and gas industry here in Angola.
In the context of new projects coming and the inherent increase in Angolan production with the expectation of local content participation maximised, we are preparing ourselves for higher levels of demand for our services.
We are now ISO 9001 certified and in these last two years we have been taking the opportunity given by the pandemic to test and redesign some of our procedures; invest in technology, local production and training of our staff; reinforce our regional presence; and improve our facilities in Luanda, Soyo and Lobito.
What are the main challenges within the supply chain that prevent local companies from growing and covering more sectors?
We are a country dependent on importation. Most of the requirements that come from the oil and gas sector, as well as other sectors, are based on imports. However, to import local companies have to pay in advance – and then get paid from their customers 30-60 days after delivery – and then risk the cargo being stopped for some unforeseen reason. Recently we assisted in the Suez Canal incident, when prices increased tenfold.
Thus, I have to summarise that the main challenge is related to finance. On one side, this is due to the operational planning paradigm where financial commitments are often neglected. Payment performance should start being considered as a mandatory KPI. While in oil and gas this issue can be minimised by the public image concern of the stakeholders, in other sectors different behaviour can be found.
On the other side, there is the absence of adequate financial instruments from the financial system. The best example is that a letter of credit takes one month to be issued, normally with a collateral of almost the same amount (under a context of a very volatile exchange rate and a solid two-digit inflation).
Supply chain management’s main goal is to lower costs and improve results, and for that financial stability plays a key role.
To what extent do you think the government’s preference and exclusivity lists will impact the activities of local companies?
We Angolans are well known for being moderate in our approach, and thus the protectionist approach always gives great expectations.
As a country that aims to continue to be attractive to foreign direct investment, we are well aware of the importance of defining balanced measures and having everyone happy. The preference and exclusivity lists are a substantial step in that regard.
If the capability to attend with local competency – products and services – is available or can become available with a reasonable level of contribution from the stakeholders, it is common sense that it has to be preferred.
Can you provide us with a specific example?
In chemicals, for instance, we are quite interested in sodium hypochlorite, which is one of our niche products for all the conditions and technologies that we put together to assure quality.
The quality we are able to deliver on our sodium hypochlorite represents investment –local investment, representing value creation in Angola and for Angola.
Having the existing status of preference or exclusivity – sodium hypochlorite is already a Customs duties aggravated product – will definitely assist in creating the necessary sustainability for this investment.
Please note that this is an example of a commodity that, despite the substantial production challenges (dependence on imported raw materials and the requirement of a consistent supply of energy), can be assured in Angola with a superior quality than the imported alternatives.
What are the main challenges for local content to be enforced purposefully?
According to Angolan law, all of the contracting plans in the oil and gas sector are developed by international companies which then will have to submit contracting plans to the ANPG [National Oil, Gas and Biofuels Agency]. These contracting plans require an easy-to-understand filter for what can be reserved for Angolans. However, there is a lack of information on this, and this is one of our concerns about local content.
The results on local content are still focused on the workforce since many of the larger companies lack Angolan operational managers.
What are the details of BRIMONT’s latest contracts?
We have been awarded a contract for the procurement of speciality chemicals for Sonangol across their operated blocks. The tender was launched in 2017 and we were awarded it in 2021. It required substantial work, patience and investment. There are other companies involved, but we are glad to have made some room for an Angolan company.
The contract runs for two years and may be extended. We deliver the chemicals and reagents and even assist with the services related to production.
Resulting from this contract we started developing injection services, for which we have a specialised team, laboratory and corrosion monitoring services. We have been able to make significant strides in upgrading our services.
BRIMONT is now a local company with such expertise in the country. It is interesting, because speciality chemicals are the more complex chemicals to supply. We are well versed in commodities and specialities and have a young talented and certified Angolan engineering team ready to work onshore and offshore.
We are now targeting directly supplying other operators because these products and services are generally required.
How did the company’s diverse business units perform during 2021?
Since the last time we spoke [January 2021], we have more than doubled our turnover and our business is still growing. Last year, we received ISO 9001 certification, which was important for us. At this stage, we are searching for more contracts. This year, we expect to grow even more and plan to continue this growth moving forward.
Procurement wise, we can supply and deal with the whole spectrum of chemicals and lubricants, from those used in operations requiring simple technology to those that require high technology. We also have good prospects with PPE, which was in high demand during the pandemic – despite this being challenging, it has been positive because we were able to deliver in a timely manner.
Regarding real estate, our recent move to convert the guest houses into quarantine facilities and manage them is going well. The only problem is that the prospects are quite unpredictable because these are always short-term contracts.
For consultancy, surprisingly it has been a time of many requests for support in procedures design and implementation and also a few feasibility surveys/market insights.
Another area of our business that grew was workforce and HR solutions. It has expanded out of the oil and gas sector. We are also working with banks, which have approached us for process outsourcing. We developed this service – for instance, everything related to archiving and the management of the warehouses, which clients previously did internally.
What’s your strategy for growth via new partnerships?
We are investing in the relationships that we have, as well as in new local and international partnerships that we are trying to create. In doing this, we hope to gain leverage that is important for the business, especially for our procurement activities, where we see that the dynamics at play are completely different from what they used to be. If before suppliers were offering products to sell, now products in general have become scarce (with prices highly inflated).
Recently we have provided assistance to a company acting as a selective supplier, which used to be unusual before the pandemic. It means they were not selling to certain markets. For example, despite having chemicals, they are only supplying them to the A-list markets, like Europe. This is part of the new reality that we have to face. There were a couple of products that were very hard to bring in and manage a consistent supply of at the moment.
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