(Updates with comment from ExxonMobil Corp. and Chevron Corp. in seventh paragraph)
Oct. 26 (Bloomberg) -- Angola plans to pass a law that will require oil companies operating in Africa’s second-biggest oil- producing nation to use local banks to carry out their financial operations, Agencia Angola Press reported, citing a proposal submitted to parliament today.
Currently, oil companies have benefited from a “special regime” that didn’t require them to use domestic banks to carry out financial transactions related to prospecting, searching, and the production of oil and natural gas as lenders couldn’t handle the volume of transactions, the state-owned news agency, based in the capital, Luanda, said.
The new legislation, once approved, will require all financial transactions from the oil industry to be carried out in Angola, it said. Angola Press did not say when parliament would vote on the proposed law. Exxon Mobil Corp., BP Plc, Chevron Corp. and Total SA are among the oil companies operating in Angola, Africa’s biggest producer of the fuel after Nigeria.
“The Angolan government is set to win a long battle with foreign oil companies to force them to deposit their money in local banks,” Alves da Rocha, an economist at the Catholic University in Luanda, said in a telephone interview today.
Political instability and a weak banking system has in the past been used as an “excuse” for some foreign oil companies not to use local banks to carry out their transactions, said Alves da Rocha.
“The new law means the banking system will benefit from the injection of billions of dollars from the oil sector,” Alves da Rocha said.
David Eglinton, a spokesman for Exxon, and Scott Walker, a spokesman for Chevron, said by telephone and e-mail, respectively, that they could not immediately comment on the planned legislation. BP didn’t reply right away to an e-mail with questions sent after business hours in the U.K. and Angola.
Angola, which emerged from a civil war in 2002, has been carrying out measures to increase transparency in the banking sector. Last year, President Jose Eduardo dos Santos signed into law a bill that aims to prevent money laundering and the funding of terrorist activities.
There are about 21 banks operating in Angola, including Standard Bank Group Ltd., Africa’s largest lender, and Banco de Fomento Angola, which is controlled by Portugal’s Banco BPI, according to Alves da Rocha.
--With assistance from Colin McClelland in Toronto. Editors: Vernon Wessels, Gail DeGeorge
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