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February 28, 2018
Reconciling Employment Laws with Local Content Requirements in Africa:
Focusing on Natural Resources and Extractive Industries
Moderator
Lusanda RaphuluSouth Africa
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Speakers:
Mary EkemezieUdo Udoma & Belo-Osagie, [email protected]
Sonal SejpalAnjarwalla & Khanna | ALN, [email protected]
Shamiza RatansiATZ Law Chambers | ALN, [email protected]
Bahieldin ElibrachyIbrachy Dermarkar, [email protected]
Ernest Sembatya KaggwaMMAKS Advocates | ALN, [email protected]
Sonal SejpalKenya
Introduction• Kenyan Citizen as defined under the
Constitution of Kenya
• Defining Local Content
• Who is a local person?
Local Content: Subsisting Provisions Set out more specifically in the PSC & the Mining Act
• Preferential recruitment of local persons• Submission of a local content plan as a licensing
requirement• Training and development of local persons.• Succession plans
Local Content: Proposed Statutes• Local Content Bill, 2016
• Petroleum Exploration, Development &
Production Bill, 2017
Local Content: Why?• African countries are emerging as critical players in
global hydrocarbon production
• Case studies - Positive impacts of Local Content
laws various countries
Proposals Under the Local Content Bill, 2016
Employment of locals Provision of insurance and reinsurance
Provision of banking services
Provision of legal services
Local Ownership Requirements
Local Content: Challenges
• Training & capacity building
• Defining Locals
• Technology Transfer
Local Content: Way Forward How Can Employers Protect Themselves?
• Stakeholder Interaction
• Employers acquainting themselves
with the local content regulations
• Training Audits
Avoiding Challenges of Non-Compliance with the Local Content Laws
Mary EkemezieNigeria
Overview of Nigerian Situation• Classes of employees – Workers and
“Non Workers”
• General Restrictions on employment of foreigners – expatriate quota approval requirements
Legal Regime / Applicable Laws
Nigerian Oil and Gas Industry Content Development Act 2010
(the “Act” or “NOGICDA”)
NCDMB Handbook of Operational Guidelines 2016
NCDMB Public Notice, December 2013
Petroleum (Drilling and Production) (Amendment)
Regulations 1988 issued pursuant to the Petroleum Act,
chapter P10, LFN 2004
DPR Guidelines and Procedures for the Release of Staff in the Nigerian Oil and
Gas Industry 2015
Local Content Protections in the Oil & Gas Industry
NOGICDA Established the Nigerian Content Development and Monitoring Board (the “NCDMB”)
Requires operators to submit Nigerian content plan (the “NC Plan”) to the NCDMB
Prescribes minimum Nigerian content required in any project in the industry (man-hours, spend, volume)
Local Content Protections in the Oil & Gas Industry (cont’d)
NOGICDA Requires that Nigerians be given first consideration for employment and training in any project executed by any operator/project promoter in the Nigerian oil and gas industry
Compliance with its provisions major criterion for award of licences, permits and any other interest in the Nigerian oil and gas sector
Requires that ‘‘Nigerian Independent Operators’’ to be given “first consideration” in the award of oil blocks, oilfield licenses, oil lifting licenses and in all projects for which contract is to be awarded in the oil and gas industry
NOGICDARequires exclusive consideration to be given to Nigerian indigenous service companies, which demonstrate ownership of equipment, Nigerian personnel and capacity to execute work for contracts and services to be executed on land and swamp operating areas in the oil and gas industry
Labour Clause - any contract exceeding $100 million is required to include a labour clause, which mandates the use of a minimum percentage of Nigerian labour in specific cadres as stipulated by the NCDMB.
Operators to submit quarterly returns on employment and training activities (Employment and Training Plan)
Local Content Protections in the Oil & Gas Industry (cont’d)
Local Content Protections in the Oil & Gas Industry (cont’d)
NOGICDAOperators must utilise local Insurance, legal and financial services, with limited exceptions.
Maximum of 5% of management positions reserved for expatriates. Approval of the NCDMB required prior to submission of application to the Federal Ministry of Interior
Penalties for non-compliance with requirement of the Act
Release of Employees in the Oil & Gas Industry–Restrictions
• NCDMB Public Notice, Petroleum Regulations and DPR Guidelines:
• Operators and service companies to notify NCDMB of any proposed staff rationalisation exercise
• Obtain consent of the DPR prior to the “release” of any Nigerian employee
• Non-compliance with DPR Guidelines = significant penalties
Challenges• Lack of clarity: definition of the term
“operator”• Gap in local skills and knowledge• Training obligations • Myriad reporting obligations
NOGICDA
• Questions around validity/legality of guidelines
• Compliance levels
DPR Guidelines on “release” of employees
Way Forward: Protection for Employers
1.• Designate a local content compliance officer.
2.
• Retain services of expert on Nigerian content –keep your advisers very close to hand
3.• Conduct periodic staff audits
4.• Engage the regulators – NCDMB and DPR
Shamiza RatansiTanzania
Introduction
• Defining local Content –Shareholding –Employees –Supply chains• Tanzanian Bank• Indigenous Tanzanian Bank
Laws & Regulations• Employment laws • Insurance laws• Banking sector• Petroleum Laws and local content Regulations• Mining Laws • The Natural wealth and resources
Local Content - Mining• Preference to Tanzanian Companies for acquisition of
goods and services• Priority to Tanzanian employees -Requirement to only
employ Tanzanians for junior level or middle level positions
• Long term local content plan • Local content Committee
Local Content Mining (cont.)• Detailed program for recruitment and training of
Tanzanians• Minimum employment local content for any mining
activity in Mainland Tanzania• Succession plan
Local Content Petroleum• Mandatory requirement for employers to prioritize
Tanzanians• Ring fencing of jobs for Tanzanians in semi-skilled and
unskilled labour positions• Employment and training sub-plan• Semi-annual report on its employment and training needs• Succession plan
Why Local Content• Capacity Building for Strategic sectors• To increase local participation in natural resources sector• To increase employment and business opportunities for
Tanzanians
Challenges in Enforcing Local Content • Lack of qualified professionals • Unrealistic compliance dates • Training and Capacity building timelines• Ambiguity in legislations• Inconsistences between different legislations• Numerous reporting obligations
Challenges in Enforcing Local Content (cont.)• Stringent offences and penalties under various
legislations • Risks of Employers LC content plan being rejected• Lack of guidance and Support from the relevant
Authorities.
Way Forward • Employers familiarizing with local content regulations • Undertaking Training for employees• Having regular audits to ensure compliance • Interaction with Regulators • Investing in capacity Building
Bahieldin ElibrachyEgypt
General Legal Background• General Restriction:• 90-10 Requirement: Based on Headcount• 80-20 Requirement: Based on Salaries
• Exceptions:• Smaller operations: e.g. Scientific/Representative
Offices (Studying the market and potential of investment in Egypt)
• Work permit based on Investment requirement.
Major Projects: Concessions• Extractive Industries are among the major projects that
require authorization of the GOE. This authorization isgranted in a concession agreement.
• Concession agreements are passed by law. The SVEbecomes governed by the concession agreement thatcreated it as a special law that precedes the applicationof the general provisions of the Egyptian law.
Special Benefits to Foreign Employees• Imports, subject to reexport, duties of personal belongings
including a single car. This is a special benefit since customs atthe time of sale, are assessed at its value at the time of sale.
• GOE grants residence to the foreign employees of theConcessionaire and its contractors.
• Foreign employees could be paid up to 75% of their salary inforeign currency (this is contrasted to the obligation of employeesin general to pay their employees in Egyptian pounds).
• Concessionaire is obliged to undertake training programs to itsemployees and to give priority to the employment of Egyptiansprovided they are qualified.
Taxation of Foreign Employees• Even though foreign employees are subject to Egyptian
taxes, the various relocation expenses and a generous assessment of expenses including:• Rent expenses;• Transportation during holidays;• Transportation of personal effects;• Educational expenses for the children of foreign employees;• Storage expenses of their personal effects;• Retirement deductions;• Group life insurance; and• Health insurance
Ernest Sembayta KaggwaUganda
Local Content Protections in the Natural Resources Sector in Uganda
Overview• The legal regime
• Preference to local employees
• Challenges to employers
• Way forward
The Legal Regime• The Petroleum (Exploration, Development and
Production) Act, 2013.• The Petroleum (Exploration, Development and production)
(National Content) Regulations, 2016.
• The Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act, 2013. • The Petroleum (Refining, Conversion, Transmission and
Midstream Storage) (National Content) Regulations, 2016.
• The Non Governmental Organizations Act 2016. • The Non Governmental Organizations Regulations 2017.
The Legal Regime• Application of the petroleum laws
• Regulator • Petroleum Authority of Uganda (the “PAU”)
• Definitions• Registered entity• Ugandan Company• National content
Priority in Employment (National Content Regulations)
• Employment:• Priority to be given to Ugandan citizens.• Ring fencing of certain goods and services to be
provided by Ugandans.• Licencees to submit a policy and annual plans to PAU
on employment and training of Ugandans.• Labour clause in contracts exceeding USD 1million.• Succession plan for positions held by expatriates.• Work permits for expatriates.
Preference to Local Employees• Licensee to ensure that the annual recruitment and training plan
take into consideration a minimum percentage of Ugandan citizens.
• Preference in procurement of goods and services.
• Formation of a Joint Venture company where goods and services not available in Uganda.
• Penalties for non compliance with Regulations.
Staffing Requirements-NGOOrganizational Structure
• A chart showing organizational structure specifying:• Foreign staff requirements where necessary; and• Indicating the period for the replacement of its foreign
employees with qualified Ugandans
Rationale of Local Content• To ensure participation of Ugandans in the natural
resources sector.
• To generate employment and business opportunities for the national economy.
• To build capacity in Ugandan citizens.
Challenges to Employers • Training staff without factoring in the continuity of
the day to day running of the business.
• No guarantee that staff will acquire requisite skillsets.
• Ambiguity in the Regulations.
Level Playing Field• Secretive natural resources administration in
Uganda.
• Lack of transparence in petroleum activities.
Way Forward• Need for transparency
• Capacity Building
Conclusions & Wrap Up
Mary EkemezieUdo Udoma & Belo-Osagie, [email protected]
Sonal SejpalAnjarwalla & Khanna | ALN, [email protected]
Shamiza RatansiATZ Law Chambers | ALN, [email protected]
Bahieldin ElibrachyIbrachy Dermarkar, [email protected]
Ernest Sembatya KaggwaMMAKS Advocates | ALN, [email protected]
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