Senegal's local content law in full effect
Several Decrees giving guidance on the implementation of the oil & gas local content law (Loi n. 2019-04 du 1er fevrier 209 relative au Contenu local dans le secteur des hydrocarbures) were published in the Senegal’s official Journal on March 04th and 06th in 2021.
In our opinion, the one most companies in the sector were waiting for is Decree 2020-2065 later modified to Decree 2021-249 which sets the rules and regulations and the roles of the Senegalese investors in companies working in the sector. This Decree signed by the President on February 22, 2021 (modified) presents in great detail the categorized goods and services usually procured in the sector. There are three categories or Regimes - The Exclusive regime, the Mixed regime and the Non Exclusive regime.
The exclusive regime is applicable for those goods and services that the local private sector can provide immediately in compliance with applicable standards. this regime favors the local private sector and requires at least 51% Senegalese ownership of the company which will be providing the goods or services.
The mixed regime is applicable for those goods and services which require a higher level of expertise and capital. The idea here is that for these goods and services, the local private sector do not yet have the technical or financial capacity to provide and therefore they require that foreign companies form a partnership with a local company in order to provide such service. The partnership levels are fully described on the Decree and in this regime, local ownership of the entity must be at least 5%.
The non exclusive regime refers to goods and services for which the local private sector cannot at the moment provide in compliance with the applicable standards in the sector. In this case, foreign companies can provide such goods and services without the need to form a partnership with a local company.
The important factor with the Decree is that it provides clear guidance on partnership structures and employee nationality quotas.
The Decree is published and therefore it is applicable. How will this be policed you may ask? another Decree was also published (Decree 2020-2047 portant organisation et fonctionnement du Comité national de suivi du Contenu local dans le secteur des hydrocarbures) which sets up the Committee in charge of implementing the local content law.
Rubiks Advisory