Angola’s parliament on Thursday approved a law that forces overseas oil companies to pay their taxes and other transactions through the country’s banking system, state news agency Angop reported.
The new law means oil companies active in Africa’s second-largest crude producer after Nigeria will have to pay their taxes and bills from overseas subcontractors and suppliers in dollars through local banks.
Analysts have said the government has shown determination in winning its long battle with the oil companies to force them to use the domestic banks.
Delays in passing oil legislation have deterred foreign partners from investing in Nigeria and turned their focus to Angola, enticed by the prospect of huge finds in ultra-deep water blocks known as sub-salt.
Britain’s BP PLC , France’s Total SA , and Italy’s Eni SpA are among the international majors that were awarded concessions this year to explore deep water blocks off the coast of Angola.
Until now, international oil firms were allowed to use overseas banks for their activities in Angola under a special regime, mainly because the African country’s banking system was seen as still developing and unable to handle the transactions.
Angop said the wording of the bill shows the government believes the national financial system has now developed sufficiently to take an active role processing the oil industry’s transactions.
Analysts say the Angolan banking sector is solid, with its banks well managed and boasting resilient asset quality.
The country’s main banks, which include state-owned Banco Africano de Investimento and local units of Portugal’s Banco Espirito Santo and Banco BPI, are set to get a capital boost from the law, with some analysts saying around $10-billion (U.S.) could enter the financial system each year.
Angola’s economy relies heavily on oil revenues, which make up around 45 per cent of gross domestic product and more than 90 per cent of export income.
Central bank governor Jose de Lima Massano said last month the new law will help shore up the country’s foreign reserves, an effort seen as crucial to protect the economy from the risk of shocks from possible oil price and demand drops.