Navigating Angola’s local content regimes

Angola

Fátima Freitas, founder and managing partner of Fátima Freitas & Associados (FFA), talks to The Energy Year about the key takeaways of Angola’s recently published local content exclusivity and preference regimes and how companies can best navigate them. FFA is a full-service law firm with offices in Luanda, Cabinda and Lobito and a member of the Miranda Alliance network of legal firms.

What are legal firms’ challenges and opportunities in deepening their collaboration with Angola’s oil and gas-related companies under current market conditions?
With the progressive lifting of the restrictions imposed by the Covid-19 pandemic, Angola’s upstream sector has been increasingly active, with interesting opportunities for investors in all phases of the projects (e.g., the recent limited licensing round and the negotiation of the relevant contracts, as well as various farm-in and farm-out transactions). These investment opportunities have a direct impact on law firms.
Also, the sonangol/”>Sonangol at the time it acted as national concessionaire for the petroleum sector, which could be deemed a challenge to investors. This notwithstanding, common grounds are typically reached taking into account the interests of all stakeholders involved.

What are the key takeaways of the recently published exclusivity and preference regimes of the local content regulation for the oil and gas sector?
The main principle is that whenever local capacity is available, the relevant goods and services should not be provided by companies other than locally incorporated companies. As such, the goods and services included in the exclusivity regime list should be provided solely by Angolan companies (i.e., companies entirely held by Angolan citizens or companies). The goods and services included in the preference regime list may be provided by Angolan Companies and Angolan Law Companies (i.e., companies incorporated in Angola irrespective of their share capital structure) that are in equal circumstances in terms of quality, technical capability, price and terms of delivery as foreign companies.

Can you explain in detail which type of companies can benefit from the exclusivity and preference regimes?
As you may recall, under the prior regime in order to benefit from the exclusivity regime a local company had to be majority owned by Angolans. With the enactment of the new rules, however, the concept of an “Angolan Company” has been expanded and currently only local companies with 100% of its share capital held by Angolans are deemed “Angolan Companies,” and are entitled to provide goods and services of the exclusivity regime. The preference regime also applies to Angolan Law Companies, but Angolan Companies have a preferential right. Foreign companies are also allowed to provide goods and services of the preference regime provided that it is impossible or difficult to procure the same in Angola and that is duly certified by the ANPG.

What are the timelines and deadlines for the full application of these new regimes?
The new local content regimes (exclusivity, preference and competition) entered into force on the date of publication of Presidential Decree 271/20. Despite the above, as the lists of the exclusivity and preference regimes were not published for a long time, many uncertainties arose during this period. With the publication of the lists in 2021 those uncertainties have been overcome and currently the regime is deemed fully applicable.

Has the firm noticed an increase in demand for its services related to local content since the publication of the regimes?
From the outset, local content matters have always been an area important to clients and, as a result, important to the firm in the sense that this same influence – together with other factors – key investment decisions, such as the business structures and the vehicles used to provide goods and services to the Angolan petroleum industry.
The enactment of the new local content regulations was expected for a long time, but their implementation process was far from being smooth (e.g., the time gap between the approval of Presidential Decree 271/20 and the publication of the lists or publication of the ANPG’s Instructive 6/21).
This difficult path led to certain practical hurdles, which in turn contributed to the increase in the assistance required on this matter. The increase in the demand for assistance in local content matters has been a natural consequence of the legal changes and not the result of a specific strategy to increase work on this area.

What are the main challenges companies face while submitting their annual Local Content Plan to the ANPG and the Program Contract with the Ministry of Petroleum?
Prior to specifically addressing your question, it is worth pointing out that companies face a major challenge in respect to the new rules. This challenge is common to the Local Content Plan and the Program Contract, and overall applies to the entire local content regime: the lack of clarity of some provisions, which gives rise to different readings of some of the provisions.
The main difficulty companies face while submitting the Local Content Plan is to determine the exact scope/content thereof and in respect of the Program Contract is that in some aspects this obligation is apparently not entirely consistent with the existing rules.

How can private legal firms collaborate with international companies and potential investors to reduce levels of uncertainty and navigate the changes in the annually updated exclusivity and preference regimes?
Legal advice in these situations becomes crucial to help companies planning their operations in advance, together with other specialised advice required. Also, FFA is part of a global alliance of law firms and offices in different jurisdictions. This allows us to share experiences in the implementation of local content rules in different countries each with its specificities and challenges (historical, economic and cultural background, to name a few), but all with the same common goal: to increase local participation in the petroleum sector across the entire value chain. Therefore, our clients benefit from our experience not only in Angola over the years, but also in other jurisdictions that have adopted local content policies.

Can you give us an update on your Energy and Natural Resources Department’s activity during the last 12 months?
The Energy and Natural Resources Department has been fairly active. We would highlight a couple of projects that were on hold for some time which have finally taken the first steps to see the light, and also truly innovative projects that we had the opportunity to assist on during the past 12 months. In addition, unlike the previous year, face-to-face meetings with clients and business partners and participation in conferences, seminars and workshops as speakers or attendees in industry-related events have become part of our attorneys’ day-to-day work.

What are some of the specific objectives rolled out by Fátima Freitas & Associados for 2022?
In general terms, our firm’s objectives for 2022 are to keep providing the best legal services to our clients, in line with international standards, taking into account local specificities, in a timely manner, while employing top professionals and using state-of-the-art resources.
Our objectives are directed towards our clients, business partners and friends, who look to FFA for high-quality legal assistance focused on the commercial aspects of the businesses, but also towards our lawyers and professional staff, in order to keep FFA a place for personal and professional growth. Also, recent initiatives adopted by Miranda Alliance which had great feedback from the general public are to be maintained during this year (such as the Miranda Alliance “Short Talks” webinars and the Miranda Alliance podcast Investing Beyond Borders). Other interesting initiatives are in the pipeline, and will be disclosed in due course.

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