Entered into force on December 16th, the Joint Executive Decree no. 331/20, which approved new rules and proceedings concerning the definition and modification of the prices of Crude and Natural Gas Products.
The importance of this new regulation relates with the natural variation of Crude prices on the international markets and the regular revisions of the exchange rate, which have impact on production and/or importation costs, being necessary to periodically adjust the prices of this type of products.
This legal regime applies to the refinement of Crude and import, logistics, distribution and trading of Crude and Natural Gas Products, except fuel, bitumen and lubricants.
The Executive Decree under analysis maintained the Fixed Prices Regime for Kerosene and Liquefied Petroleum Gas, and the Monitored Prices Regime for Gasoline and Diesel.
For the establishment of prices regarding Crude and Natural Gas Products which are not comprised in other regimes, were defined elements that may influence those prices. Among these elements are the shipping to Angola based on the Worldscale for oil products, maritime insurance, customs charges, harbor expenses, warehousing, transport costs, taxes, and profit of each element of the chain of production and supply. The referred elements may be modified by the Crude Products Regulator Institute (“Regulator Institute”).
Maximum costs and profit margins will be published annually in the Newspaper with widest circulation in Angola, by the Regulator Institute, after audition with the Sector’s Companies.
Monthly, the Regulator Institute will update the Reference Prices of Crude and Natural Gas Products, after consulting Sector’s Companies, publishing the price table in the Newspaper with widest circulation in Angola, after homologation by the Finance Minister.
The Regulator Institute will be the entity who supervises and inspects the sale prices of the affected products and may initiate transgression procedures and apply fines and other sanctions to the infringing party.
The infringement of the new legislation is sanctionable with fines from 1 to 5 per cent of the transgressor annual revenue, depending on the culpability and transgression severity. The ancillary sanctions that may be applicable are the suspension and revocation of the transgressor’s activity license.
Considering the actual level of competition in the affected sectors, the intention of the legislator is to grant a better legal framework for these operations, with objective and well-known rules and proceedings which allow to review prices through a flexible adjustment mechanism, according with the variation of the main factors that have influence in the costs of production/importation, permitting greater efficiency on the Oil & Gas and by-products market, as well as the setting of a more effective actualization system, inspired by the best international practices.
Article by Marco Correia Gadanha
Marco Correia Gadanha
Marco Correia Gadanha is a partner of the Portuguese law office MC&A. He is specialised in legal advice to international transactions. Marco has extensive experience of legal practice in Portugal and in the Portuguese-speaking African countries. Since 2008, he has practiced mainly in the areas of labor and litigation, assisting national and international clients in these and other matters, namely corporate law, especially in Portugal, Angola and Mozambique. He graduated at the University of Coimbra in 2005 and he holds post-graduations in Labor and Angolan Law.