After more than a decade of public debate on a matter crucial to the national economy, the Government has finalized the drafting of the proposed Local Content Law, which requires oil and gas projects and operations to preferentially — and in some cases exclusively — hire Mozambican labor and procure local goods and services. The bill now awaits review and approval by the Council of Ministers.
According to Article 7, entities covered by the law must ensure the recruitment of national workers “with the aim of training, transferring knowledge and sector-relevant skills,” in alignment with the Petroleum Law and other applicable legislation.
In the same vein, Article 6 requires companies to prioritize the purchase of goods, services, and works produced and provided within national territory by Mozambican companies, while simultaneously promoting the development of local entrepreneurship.
To enforce compliance, the law creates a Local Content Agency, a public body responsible for regulation, oversight, and the application of penalties in cases of non-compliance. According to Article 21, all oil and gas projects must submit to the Agency an annual detailed report on their approved Local Content Plan, indicating the degree of compliance and the results achieved.
The exclusivity regime, established in Article 25, stipulates that only goods and services meeting at least one of the following criteria may be acquired under this regime:
- they are produced or provided using at least 80% national production inputs,
- they come from Mozambican companies with at least 40% Mozambican ownership, or
- they are provided by companies whose payroll is mostly national.
Penalties for violating the law include monetary fines, contract cancellations, and even suspension of operating licenses within Mozambican territory.
The draft Local Content Law seeks to respond to longstanding criticism that megaprojects in hydrocarbons have not sufficiently benefited local businesses and workers, aiming instead to strengthen the participation of Mozambican citizens and companies in the sector’s value chain.
Source: O País
