Oil & Gas Industry: Additional Legislation on Local Content - Alerts - Publications - Miranda Law Firm

Senegal | 2021.05.21

Oil & Gas Industry: Additional Legislation on Local Content

A number of important pieces of legislation aimed at supplementing the industry-specific local content legal framework applicable to oil & gas activities in Senegal were published in two March issues of the Official Gazette, which have finally been made available by the National Printing House.

Those statutes are:

• Decree 2020-2047 of 21October 2020, on the organization and operation of the National Local Content Monitoring Committee (Comité National de Suivi du Contenu Local, or CNSCL);
• Decree 2020-2048 of 21 October 2020, on the funding and operation of the Local Content Development Support Fund (Fonds d’Appui au Développement du Contenu Local, or FADCL);
• Decree 2020-2065 of 28 October 2020, defining the terms of participation of Senegalese investors in companies engaging in oil and gas activities, and classifying the oil and gas upstream activities in the exclusive, mixed and non-exclusive regimes;
• Decree 2021-248 of 22 February 2021, repealing and replacing Decree 2020-2048 on the funding and operation of the FADCL; and
• Decree 2021-249 of 22 February 2021, amending Decree 2020-2065, on the participation of Senegalese investors in companies engaging in oil and gas activities, and the classification of the oil and gas upstream activities in the exclusive, mixed and non-exclusive regimes.

Organization and Operation of the National Local Content Monitoring Committee (Decree 2020-2047)

According to this statute, the general responsibilities of the CNSCL are to coordinate the preparation of the local content strategy paper, to promote and supervise the proper implementation of the local content development policy – which aims to achieve a ratio of 50% of local content by 2030 –, to ensure compliance with the obligations and measures to which companies directly or indirectly engaged in oil and gas activities are subject, and to issue mandatory guidelines on matters such as the employment and training of local personnel, the use of national goods and services, and the participation by local investors in companies acting as subcontractors, service providers and suppliers.

Amongst its specific powers and duties, the CNSCL is tasked with reviewing the local content plans submitted by the operators, subcontractors, service providers and suppliers, and approving the hiring of foreign employees in coordination with the Ministers of Employment and Hydrocarbons. It is also responsible for implementing, supervising, managing and monitoring the electronic platform, through which the local capabilities in terms of service providers / suppliers are to be posted, and the procurement of goods and services is to be launched.

Detailed information on the local content plans and on the procedures to be observed by the operators, subcontractors, service providers and suppliers, as well as the local content-related infringements and the associated penalties, may also be found in Decree 2020-2047.

More Details on the Local Content Requirements (Decree 2020-2065, as amended by Decree 2021-249)

Aimed at implementing some of the general principles and rules laid down in the industry-specific Local Content Law approved in 2019, Decree 2020-2065, as amended by Decree 2021-249, confirms and details the general rule under which the majority of the companies operating in the oil and gas upstream sector must be incorporated as a company organized under Senegalese law, registered with the Trade and Companies Registry (Registre du Commerce et du Crédit Mobilier). There are however a few exceptions to this local incorporation rule, depending on the type of activities to be carried out and the time those activities will last.

Also, depending on the local content “regime” in which the relevant activities are classified, locally-incorporated companies may be required to have part of its share capital, work force and managerial positions held or filled by Senegalese companies or individuals. The table appended to Decree 2021-249 sets out the types of goods and services classified in each of the exclusive, mixed and non-exclusive local content regimes, although it leaves a considerable number of aspects (such as the minimum percentages of the share capital to be held by Senegalese investors and of the Senegalese personnel to comprise the workforce) to be defined by the CNSCL.

Funding and Operation of the Local Content Development Support Fund (Decree 2021-248)

For its part, Decree 2021-248 (which repeals and replaces Decree 2020-2048) places the FADCL under the financial supervision of the Ministry of Finance and the technical supervision of the Ministry of Hydrocarbons. The FADCL is chaired by the Chairman of the Board of the CNSCL.

The main purposes and responsibilities of this fund are to support the initiatives for promotion of local content, to contribute to the capacity-building of the officers entrusted with implementing the local content policy, to define (in collaboration with State-owned financing bodies and other financial institutions) custom-made solutions intended for entrepreneurs investing in the oil and gas industry, to participate in the training and financing of the industry’s players, and to contribute to the making of qualified staff available.

The FADCL is funded, inter alia, by budgetary appropriations, the revenues of the electronic procurement platform, and the fines levied for failure to comply with the local content requirements applicable to the upstream activities.

The above recently-published pieces of legislation should be read in conjunction with Law 2019-03 of 1 February 2019 (approving the Petroleum Code), Law 2019-04 of 1 February 2019 (on Local Content in the Hydrocarbons Industry), Law 2020-06 of 7 February 2020 (approving the Gas Code), and Decree 2020-2061 of 27 October 2020 (defining the terms of implementation of the Petroleum Code).