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Legislation facilitating service provision by an international company to the Angolan petroleum industry

This article discusses the available legislation for service provision by international companies to the Angolan petroleum industry in association with Sonangol. The applicable legislation in Angola is the Decree n 48/06 of 1 September, which applies to national or international entities proven to have the technical and financial competence to provide services for the petroleum industry and are interested in associating with Sonangol. The Decree 48/06 was promulgated because there existed a gap in the tender process which was not dealt with by Law 10/04 of 12 November1, therefore to provide a more ethical, transparent and competitive environment in contracting with Sonangol, the Decree 48/06 was passed. The other applicable legal provision is Dispatch 127/03, which requires the use of Angolan local content.

Applicable Law
Decree 48/06 of 1 September 2006 Dispatch n127/03 of 25 November 2003

Application of the Law

In terms of Decree 48/062 , when Sonangol decides to associate with a third party to provide services for the petroleum industry, an invitation for public tenders is issued. However, authorization from the Ministry of Petroleum is required prior to the invitation to tender. The invitation to tender must be published in the Official Government Gazette (Dirio da Republica), in major Newspapers, the Sonangol official website and in an international specialized publication, if the tenders are also intended for international companies. Only pre-qualified entities can compete on the basis of an individual company or as a consortium. The pre qualification process takes place 60 days before the tenders are available to the public. The announcement must specify the following information: the concession area, specification on the tenders, the time frame for the presentation, which should not be more than 90 days from the first publication in the Dirio da Republica, the list of entities that have pre-qualified, the form of contract that will be concluded among Sonangol, its associates and the entities that are competing individually or as a consortium. The terms of the tender process should be approved by Ministry of Petroleum.
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Law of the petroleum Activities of 1 September

The proposals from the competing entities should be in Portuguese or in another language. Should the proposal be in another language, other than Portuguese, it should accompanied by an official translation in Portuguese. The proposals must be presented in a sealed envelope, as indicated in tender process. The expiry date for the presentation of the proposal has to done by a way of a public act, in other words, the competing companies should be informed that the expiry date has been reached. The public act mentioned should be before a jury, with prior approval of the Ministry of Petroleum, under the guidance of Sonangol and addressed to the Ministry of Petroleum and the Ministry of Finance. The jury must certify that all documentation present before them is correct and valid. If there is a defect in one of the presented proposals, the jury needs to inform the party and give 15 days to correct the defect. If after the lapse of this term the defect has not been corrected, the party will be excluded from the tender process. The jury will proceed with evaluation of the other proposals and must reply within 30 days, it will pay special attention to the technical specification. After completion of the evaluation, the jury must present the results as well as the proposal for adjudication to Sonangol for approval. The adjudication must be communicated through the Dirio da Republica, the major local and international newspapers and the Sonangol official website. If one of the competing parties requires a recourse they can appeal to the jury within 15 days to have the decision overturned. The appeal has to be addressed to the Ministry of Petroleum. After the adjudication of the contracts has been completed a negotiation commission has to be set up, which is composed of the Ministry of Petroleum, Ministry of Finance and Sonangol. The President of the negotiation commission is appointed by Sonangol. The contract between the international company and Sonangol will be void if the decree is not complied with. The decree does not apply to the contracts entered into before it came into operation. Any doubt about any section in the decree will be resolved by the Council of Ministers. An international company also has to take into consideration, when considering providing service for petroleum industry in association with Sonangol, Dispatch n 127/03, which was passed to also temporarily close an existing gap. The Dispatch requires the use of local content. The dispatch 127/03 of 25 November was promulgated on an interim basis prior to the approval of the final legislation pertaining to local content. The objective of this dispatch is to regulate business relations between international companies and the Angolan petroleum industry. By establishing basic norms to be observed in contracting with national firms providers of services in the petroleum industry, it ensures in early phase, protection of national companies and the use of national services and goods supplied to the petroleum industry. The dispatch has also introduced regimes to assists Angola companies to establish business in the petroleum industry and there are:

Exclusive Angolan entrepreneurship; this regime deals with activities that do not require a specialized know-how are exclusive to Angolan, those activities are: storage of Petrol and gas, catering, cleaning and maintenance; The semi-agreement regime; all foreign companies are subjects to this regime and it demands that all levels of the petroleum industry with a reasonable capital and know-how but not always specialized, it should be done by Angolan companies, example is acquisition and processing geographic data; The competition regime; it is understandable that the competition regime, without excluding the possibility of a joint venture between a Angolan and a foreign company, all the petroleum activities not described in the mentioned regimes and demand high capital in the petroleum industry and specialized knowhow.

The relation that exists between the service providers to the petroleum industry and Angolan companies is that according to the dispatch there are services that must be exclusively provided by the Angolan company. These activities do not require major capital, know-how, specialized knowledge.

However, this does not mean that a national company cannot provide other services to Sonangol, if the company has the capital and has as a business core to provide services to the petroleum industry. The international company is obligated to sub-contract or contract with private Angolan companies to provide services for the petroleum industry in accordance with the general framework. An international company can contract directly with national companies, as long it has technical support, knowledge and authorization of the Ministry of Petroleum. The petroleum companies are also in terms of section 1 of article 9, obligated to acquire all consumer goods necessary for the exercising of their activities from the Angolan market, consumable such as food, equipments, machineries etc. Any doubts or omissions in the interpretation and application of the dispatch have to be resolved by Minister of Petroleum. In my opinion, the Decree 48/06 and Dispatch 127/ 03 can be considered as important investment vehicles to the petroleum industry in Angola. The decree3 has closed a gap that existed in relation to foreign companies interested in providing services for the petroleum industry by setting up norms that should be followed by such companies and making the award of tenders more transparent and structured. The dispatch4 has also helped in creating opportunities for Angolan companies who most of the time do not have the highly specialized know-know to compete with the major multi-national companies such as Chevron, BP and Total. The dispatch provides the means for Government to include the
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Decree 48/06 of 1 September Dispatch n 127/03 of 25 November

Angolan people in the development of the petroleum industry and the huge wealth brought by the industry. Elaborated by : Bernardeth Fernandes Gaspar