By way of Order 13/23, of 14 December 2023, the Angolan Central Bank (BNA) has issued regulations on forward foreign exchange transactions to take place between banks and their clients. Below is an outline of the new rules:

1- A forward foreign exchange transaction is defined as a transaction between a bank and a client providing for the purchase/sale of an agreed amount in Angolan currency (Kwanza) at a set date in the future in exchange for the sale/purchase of an agreed amount in a foreign currency at an exchange rate agreed at present.

2- Banks can only enter into forward forex transactions with the following clients:

• Importers;
• Exporters;
• Oil companies;
• Diamond companies;
• State entities.

On an exceptional basis, banks may enter into private forward forex transactions with their individual clients.

3- The forward forex transaction must be exclusively aimed at covering/hedging the foreign exchange risk associated with specific import or export operation.

4- Forward forex transactions may involve the Angolan currency – Kwanza – and any freely convertible foreign currency.

5- The maximum term of a forward forex transaction is 1 year for corporate clients and 6 months for individual clients.

6- The general clauses of forward forex contracts must follow the template contained in Appendix I to Order 13/23.

7- The particular clauses of forward forex contracts must contain the minimum information described in Order II to Order 13/23.

8- All transactions in excess of USD 50.000 must be registered in the Bloomberg FXGO platform. In any event, banks must ensure that all forward forex transactions are duly registered in their systems.

9- The bank may request that the client provides a guarantee to secure a forward forex transaction.

10- The client must have funds available in its account to settle the transaction at least 2 business days prior to the settlement date.

11- The bank must inform the client, on a monthly basis, of all pending forward forex transactions with a description of the main terms of each transaction.

The previous BNA Order 22/20, of 27 November 2020, was repealed and replaced with BNA Order 13/23.

Rui Amendoeira, OneLegal Partner

The Angolan Central Bank (BNA) released a new regime for the provision of external audit services to financial institutions by way of Order 12/23, of 4 December 2023. Below is an outline of the new regime:

• BNA Order 12/23 is applicable to the financial institutions operating in Angola and the holding companies which are subject to BNA supervision under the Financial Institutions Law (Law 14/21, of 19 May 2021);
• Financial institutions must be audited by an External Auditor at least once a year, except in the case of banks which must be audited every six months. In addition, BNA may request extraordinary audits at any time;
• The External Auditor is appointed on the basis of a proposal submitted by the financial institution’s Audit Committee which is approved by the Shareholders Meeting. The contract with the External Auditor is entered into by the Board of Directors;
• The External Auditor of banks must be an audit firm licensed to operate in Angola under the Audit and Accounting Regulations, Law 3/01, of 23 March 2001;
• The External Auditor of non-banking financial institutions may be an audit firm or an individual auditor licensed under the same regulations (unless the institution’s annual turnover exceeds Kz. 4.000.000.000,00 in which case an audit firm must be appointed);
• The External Auditor must produce reports on:
  • The financial statements;
  • Other accounting matters to be defined in specific legislation.
• The audit report prepared by the External Auditor must be attached to the respective financial statements and submitted to the Shareholders Meeting for approval at least 30 days in advance;
• The External Auditor must inform BNA of any issues which may impact its audit report, and otherwise must report to and discuss with BNA any adverse findings;
• The External Auditor must prepare and submit to BNA a comprehensive report on the audited financial statements, which must include the minimum information listed in Order 12/13.
• The main focal point of the External Auditor within the financial institution is the Audit Committee;
• The External Auditor must be totally independent in performing its work, which includes respecting, inter alia, the following principles:
  • The External Auditor cannot provide to the financial institution, during the audit period or in the prior 12 months, any tax advisory or reporting services, preparation of financial statements, bookkeeping, salary processing, internal controls and risk management, legal services, human resources services, cost control, among others, and otherwise it cannot participate in any management decisions of the financial institution;
  • The External Auditor cannot have any, direct or indirect, financial interest in the financial institution;
  • The External Auditor cannot be a member of, or otherwise participate in any management body of the financial institution, including those responsible for compliance, internal auditing and risk management.
• The audit teams cannot include any person who has served in a statutory body of the financial institution in the 24 months prior to the auditing work;
• Financial institutions must change their External Auditor after a maximum of 4 years. A minimum period of 4 years must lapse before the same External Auditor can be reappointed;
• BNA may request that a financial institution changes its External Auditor in case:
  • the External Auditor does not have the aptitude, capacity or experience required to performed the job;
  • the External Auditor is not independent;
  • the mandatory reports have not been produced through fault of the External Auditor.

Rui Amendoeira, OneLegal Partner

The bids for the 2023 Licensing Round were opened last week in Luanda. A total of 22 companies submitted bids, of which 12 are foreign and 10 Angolan. The blocks that attracted more interest were KON15, CON8 and KON19 which received 12, 10 and 8 proposals respectively. No bids were submitted for KON1, KON3 and KON14. ANPG will now proceed to evaluate the bids until 31 December 2023. An announcement on the winning bids is expected shortly thereafter.

Below is a list of the companies that submitted bids (noting whether the bid is for “operator” or “non-operator”).

BLOCK CON 2

Operator

Etu Energias

Soconinfa

Walcot Group

Non-Operator

Effimax Energy, Lda

Monka Oil

Simples Oil

BLOCK CON 3

Operator

Kebo Energy

Index Petrolube

Non-Operator

None

BLOCK CON 7

Operator

Ace Consults

Kebo Energy

Index Petrolube

Non-Operator

Enagol, Lda

BLOCK CON 8

Operator

Ace Consults

Etu Energias

Kebo Energy

Tusker Energy

Non-Operator

ANM Energy/Quimene

Effimax Energy, Lda

Enagol, Lda

Gesp Energy

Monka Oil

Simples Oil

BLOCK KON 1

No bids

BLOCK KON 3

No bids

BLOCK KON 7

Operator

5C Oil & Gas

Non-Operator

Enagol, Lda

BLOCK KON 10

Operator

5C Oil & Gas

Whazimi Investment

Non-Operator

Soconinfa

BLOCK KON 13

Operator

Intank Group

Serinus Energy

Simples Oil

Whazimi Investment

Non-Operator

Effimax Energy, Lda

Sonangol

BLOCK KON 14

No bids

BLOCK KON 15

Operator

5C Oil & Gas

ACREP, SA

Apex/Corcel

Kebo Energy

Serinus Energy

Simples Oil

Sonangol

Transoceanic Group

Tusker Energy

Non-Operator

Afentra

ANM Energy/Quimene

Intank Group

BLOCK KON 19

Operator

5C Oil & Gas

ACREP, SA

Kebo Energy

Transoceanic Group

Tusker Energy

Whazwimi Investment

Non-Operator

Afentra

Enagol, Lda

If you have any questions, please get in touch with Rui Amendoeira at rui.amendoeira@onelegal.pt

Presidential Decree 213/23, of 30 October 2023, enacted a new “Legal Regime to Incentivize Domestic Production”. Highlights of the new regime:

DP 213/23 is applicable to the following entities:

• Domestic producers of “consumer goods” and “made in Angola” products;
• Wholesalers and retailers which aggregate domestic goods/products;
• Importers of consumer goods;
• Public entities.

The Ministry of Industry and Commerce will define the list of “consumer goods” covered by DP 213/23. This list may be updated from time to time;

The state must support the installation of factories and other industrial facilities for the processing and improvement of consumer goods produced domestically;

Wholesalers and retailers which aggregate domestic goods/products are eligible to obtain incentives from the state, including access to credit in favorable terms;

The above is also applicable to cooperatives or “alliances” of domestic producers, wholesalers, retailers and other entities;

The importation of goods and products is subject to authorization from the Ministry of Economy. In order to obtain an authorization the importer must have consulted the local market first, and agree to acquire any available local production or otherwise engage in initiatives to promote or support such production;

Public entities must acquire goods/products made in Angola on a preferential basis. Importation is only permitted in case the goods/products are not available in Angola;

The Ministry of Industry and Commerce must collect and publish, on an annual basis, a forecast of:

• The supply needs of domestic producers to be imported from abroad;
• The consumer goods to be imported from abroad.

This information must be made available by no later than 15 September each year.

Domestic producers must upload information on the Ministry of Industry and Commerce portal regarding their production (types of goods/products, quantities and prices).

Presidential Decree 23/19, of 14 January 2019, is repealed.

PD 213/23 is effective 90 days from its publication (on 29 January 2024).

Rui Amendoeira, OneLegal Partner

The activity of freight forwarder and logistics provider (hereinafter “freight forwarder”) is subject to a new legal regime in Angola as enacted by Presidential Legislative Decree 9/23, of 23 October 2023 (PLD 9/23). Below is an outline of the new regime:

1. Classification of Freight Forwarders: There are four types of freight forwarders as follows:

• Class A – A company that provides the basic service of moving products from one place to another on behalf of a client;
• Class B – A company that is internationally defined as a Third Party Logistics (3PL) provider;
• Class C – A company that is internationally defined as a Fourth Party Logistics (4PL) provider;
• Class D – A company that is internationally defined as a Fifth Party Logistics (3PL) provider.

2. Excluded entities: The following entities are specifically excluded from PLD 9/23:

• Customs brokers;
• Shipping agents;
• Ship owners;
• Port, airport, railway or road operators.

4. License: The freight forwarder activity is subject to licensing to be issued by the regulator “Entidade Reguladora de Certificação de Carga e Logística de Angola” (Angolan Regulator for Cargo and Logistics Certification). License applications must be processed within 15 days. The license is valid for 5 years, renewable for equal periods.

4. Special Purpose Entity: Freight forwarder companies must be exclusively dedicated to freight forwarding and ancillary activities.

5. Minimum Share Capital: Freight forwarder companies must have a minimum share capital equivalent to USD 10.000,00.  In the case of 3PL and 4PL providers the minimum share capital is set at USD 30.000,00.

6. Reporting obligations:  Freight forwarders must submit their financial statements to the regulator on an annual basis. In addition, the appointment of board members must also be informed to the regulator.

7. Insurance: Freight forwarders must have civil liability insurance as required by law.

8. Technical Director: The staff must include a “freight forwarder technical director” with a minimum 5 years’ experience approved by the regulator.

9. Fees: The fees that freight forwarders can charge are regulated as follows:

• Customs clearance services provided by the freight forwarder – To be agreed between freight forwarder and client;
• Customs clearance services provided by a third party – Maximum of 1.5% of cargo value;
• Cargo transportation – Maximum of 3%;
• Stevedoring services – Maximum of 2%;
• Storage – Maximum of 2%.

10. Penalties: Penalties/fines of a minimum of Kz.308.000 (roughly USD 370) and a maximum of Kz. 3.000.000 (roughly USD 3.600) can apply in case of breach of PDL 9/23. In case of serious offences, the license may be suspended or cancelled.

The following previous laws are specifically repealed:

• Order (Portaria) 5.560, of 12 June 1946;
• Decree 68/89, of 11 December 1989;
• Executive Decree 9/90, of 31 March 1990;
• Executive Decree 95/09, of 29 September 2009
• Joint Executive Decree 64/10, of 16 June 2010.

PDL 9/23 will enter into force on 22 December 2023 (60-day grace period).

If you have any questions, please get in touch with Rui Amendoeira at rui.amendoeira@onelegal.pt

The ongoing licensing round for the Lower Congo and Kwanza onshore basins will award a total of 12 blocks under a Production Sharing Contract (PSC) model. The PSC economic terms have been designed to be internationally competitive so as to attract investors and incentivize investment. Below is an outline of the key economic parameters:

(1) Cost Recovery Crude Oil Ceiling: The cost oil ceiling is set at 65% for all blocks with the exception of CON7 and KON19 where the ceiling is increased to 75%. Full recovery is to be achieved within 4 years (25% per year) of the expense (capex) being incurred, or the start of commercial production whichever is later. In the event full recovery is not attained within 5 years of such date, then the ceiling will be increased to 75% (or 85% in the case of CON7 and KON19) until all costs are recovered.

(2) Investment Premium: The investment premium applies on capital expenditures (designated as “Development Expenditures”) and is set at 35% for all blocks.

(3) Profit Oil Sharing:  The profit oil sharing between the investor/oil company and the Angolan state (National Concessionaire ANPG) is based on the oil company’s accumulated Internal Rate of Return as follows:

For Blocks CON3, CON8, KON3, KON7 and KON15

For Blocks CON2, KON1, KON10, KON13 and KON14

For Blocks CON7 and KON19

If you have any questions, please get in touch with Rui Amendoeira at rui.amendoeira@onelegal.pt

On 6 October 2023 the Angolan petroleum regulator and National Concessionaire ANPG has launched a licensing round for the onshore basins of Lower Congo and Kwanza (the “2023 Licensing Round”). Below is an outline of the Licensing Round in a questions and answers format:

1- Which blocks will be awarded? – A total of 12 blocks will be awarded, of which 8 are located in the Kwanza basin (KON1, KON3, KON7, KON10, KON13, KON14, KON15 and KON19) and 4 in the Lower Congo basin (CON2, CON3, CON7 and CON8). The blocks are depicted in the following map:

2- Who can participate? – The tender is open to national and international companies.

3- Can bids be submitted by consortiums? – Yes, bids may be submitted individually or in consortium.

4- What information must be provided? – In the addition to the offer per se, the bid must indicate whether company is applying for operator/non-operator position and the participating interest sought.

5- In what language must bids be submitted? – Portuguese language. If submitted in a foreign language, a Portuguese official translation must be provided.

6- When are the bids due? – Bids must be submitted by 15 November 2023.

7- Is an entry fee due? – Yes, bidders must pay an entry fee to access the technical data as follows:

                (i)           US$ 400.000,00 for the data of both the Lower Congo and Kwanza basins;
                (ii)          US$ 300.000,00 for the data of the Lower Congo basin only;
                (iii)         US$ 200.000,00 for the data of the Kwanza basin only;
                (iv)         US$ 70.000,00 will be due for each block awarded.

8- Is a Financial Guarantee required – Yes, bidders must present a Financial Guarantee as follows:

                (i)           Seismic Program – US$ 10.000,00 per km2
                (ii)          Exploration Well – US$ 3.000.000,00 per well

9- How will bids be evaluated? – Bids will be evaluated based on the following criteria:

• Minimum Work Program – 70% weight
  – Seismic Program – 50%
  – Drilling of 1 Exploration Well – 20%
• Period for Completing Minimum Work Program – 10%
• Bonuses & Contributions – 15%
  – Production Bonus – 10%
  – Contributions to Social & Environmental Projects – 5%
• Local Content (% of exploration budget allocated to Angolan companies) – 5%

10- What type of contract will be signed? – Blocks will be awarded under a Production Sharing Contract model. The model is available through the ANPG website (www.anpg.co.ao)

11- What are the main economic parameters of PSC – The economic parameters (cost recovery ceiling, investment premium profit oil sharing) can be consulted in the attached document.

Additional information can be obtained through the ANPG website or additional document.

If you have any questions, please get in touch with Rui Amendoeira at rui.amendoeira@onelegal.pt

Terms of Reference, here.