Federal government clarifies local content rule for oil industry

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  • Posted on January 19, 2016

    The federal government has published this Monday, January 18, a decree expanding what can be considered local content, the minimal percentage for contracting in the Brazilian oil industry. Starting from now, calculations will take into consideration the celebration of contracts for the purchase of goods, services and systems that have made possible the installation of new suppliers in the country; direct investment in expanding production capacity of suppliers; direct investment in the process of technological innovation from suppliers; the purchase of goods and systems in the country, with local content, for customer service operations abroad; and the acquisition of pioneer lots of goods and systems developed in the country. Today, the rules only allow accounting for purchases of equipments and services in Brazil.

    According to the decree, among the program’s goals are the expansion of the supply chain for goods, services, and systems produced in the country, expanding the level of local content from suppliers already installed and stimulate the creation of technology-based companies. Companies that meet the criteria of the program will gain Local Content Units (UCL). UCLs can be used by companies or consortia to prove compliance of local content commitments with ANP.

    A committee formed by representatives from the Civil House, ministries of Treasury, Development, Industry and Trade (MDIC), Mines and Energy (MME) and Science and Technology, as well asn the National Social and Economic Development Bank (BNDES), the National Oil Agency (ANP) and the Financier of Studies and Projects (Finep) will authorize the multiplying of local content. The decree is already in effect and the committee’s internal regiment should be approved within 90 days.

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