AFRICA EUROPE FORUM

Herbert Smith Freehills was a proud supporter of the Africa Europe Forum which was held virtually on 17 – 18 May 2021.

Thomas Kessler, a partner in the firm’s Frankfurt office, joined a panel discussion on the “Role of Renewable Energy in Sub-Saharan Africa’s Power Supply” together with Mario Ledic, Director Governmental Affairs, ANDRITZ HYDRO GmbH, Ravensburg; Dr. Daniel Schroth, Acting Director Renewable Energies, African Development Bank, Abidjan; Peter Schrum, Chairman, Sunfarming GmbH, Alensys AG, Erkner; Barton Shasha, Business Development Manager Afrika, ib Vogt GmbH, Berlin; and moderator Karsten Fuelster, Managing Director, Polaris Consulting & Invest GmbH, Frankfurt.

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ROLE OF ENERGY STORAGE SYSTEMS IN AFRICA’S GREEN ENERGY BOOM

Authors: Christophe Lefort and Mathias Dantin

The following article was first published in the May 2021 edition of The Lawyer – The In-House Issue

According to the International Renewable Energy Agency, renewable energy capacity in Africa could reach 310GW by 2030, which would make Africa the world’s top producer of green energy. If this prediction comes true, it would be the result of a strongly proactive political approach that was already visible in 2015, when member states of the West African Monetary and Economic Union (also known under the French acronym UEMOA) set a goal to produce 82 per cent of their energy from renewable sources by 2030.

The rapid increase in energy production capacity (whether from renewables or other energy sources) is exacerbating existing power grid concerns, such as network congestion, inability to extract the totality of the power produced by independent power producers (IPPs) for buyers using grids, and lack of noticeable improvement during peak consumption periods. The intermittent nature of renewables adds a further challenge.

Energy storage is key for integrating renewables onto the grid – however, there is currently no applicable regulatory framework

With the backing of the World Bank and in coordination with the concerned governmental authorities, the West African Power Pool is looking into launching calls for tender for the development of large-scale regional solar parks with storage capacity in Burkina Faso and Mali to help to smooth the flow of solar energy and redirect some of the power produced during the day to evening peak hours.

This approach of combining renewable energy production with storage can be used immediately by private operators in any country that allows private power generation, since producers can both inject and withdraw power from the grid. However, the regulatory or contractual framework must address the need to encourage producers to use the power plant’s storage system (especially during periods of peak demand) so that they are better able to meet energy demand from the market. In particular, energy storage has a pivotal role to play in the deployment of mini-grids by enabling supply and demand optimisation on a small scale, in parallel with the development of self-sufficient energy solutions (including, for example, residential solar PV systems).

Energy storage can also play a key part in grid management (reduction in voltage and frequency deviations, capacity mechanisms to safeguard the security of electricity supply during peak periods, management of surplus energy production, etc, thereby reducing the need for costly grid infrastructure investment), usually via services agreements entered into with the local transport system operator.

The involvement of private sector actors, notably via services agreements, could help to address some of the challenges that we have identified in the development of energy storage capacity in sub-Saharan Africa.

In most jurisdictions, there is no clearly defined regulatory framework governing the role of energy storage operators, including the related taxes/fees for use of the grid. The existing rules relate to energy production and trigger the application of public procurement regulations (i.e. PPPs and concessions).

Investment costs (and related financial fees) form the largest component of expenditure in the implementation of energy storage, particularly when compared to the low operating costs. The scale of the installations, the duration of the services agreements and the level of services required will therefore have an impact on investment costs and on the level of attractiveness for private investors.

In addition, as for other types of infrastructure investment in sub-Saharan Africa, relevant private sector actors are sensitive to key risks such as the non-payment risk from national companies, political risk, currency risk and security risk.

As a result, there is an urgent need to define a new contractual and regulatory framework which brings together private sector energy storage developers and operators with other industry players in order to optimise power grid usage and efficiency.

For this purpose, we can flag that the International Finance Corporation is working to finalise a roadmap for integrating independent energy storage systems in Burkina Faso.


We are keen to speak with you about how we can help you achieve your strategic goals in the African renewable energy space. For more information, please contact the lawyers below or your usual Herbert Smith Freehills contact:

Christophe Lefort
Christophe Lefort
Partner, Paris
+33 1 53 57 74 00
Mathias Dantin
Mathias Dantin
Partner, Paris
+33 1 53 57 65 48

HYDROGEN AND AFRICA

As part of the energy transition, clean hydrogen has emerged as a critical tool in decarbonising our economies. In this article, we discuss the hype around hydrogen, provide a quick recap of hydrogen technology and explore reasons why the African continent is well placed to leverage the opportunities that the push for clean hydrogen will provide.

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We are keen to speak with you about how we can help you achieve your goals in the hydrogen sector in Africa. For more information, please contact the lawyers below or your usual Herbert Smith Freehills contact:

Nina Bowyer
Nina Bowyer
Partner, Paris
+33 1 53 57 70 73
Jeremy Griffin
Jeremy Griffin
Solicitor (Australia), Paris
+33 1 53 57 65 30

WHERE NEXT FOR SOUTH AFRICA’S UPSTREAM SECTOR AND WOULD-BE INVESTORS?

It has now been over two years since Total made its significant gas condensate discovery in the Brulpadda block, offshore Mossel Bay. The announcement led to much anticipation for the rapid development of an upstream petroleum industry in South Africa.

Recognising the need for a dedicated legislative framework for the oil and gas sector (which is currently governed by the long-standing, mining-focused Mineral and Petroleum Resources Development Act, 2002), in December 2019 the Government published a draft Upstream Petroleum Resources Development Bill (the Upstream Bill). Although the benefit of having dedicated, stand-alone legislation is undeniable, the draft Bill failed to deliver on a number of fronts (see our previous briefing on the Upstream Bill here). Since then, no updates to the Bill have been published (comments from the public were invited before 21 February 2020) and the text has not been submitted to Parliament.

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AFRICA EUROPE FORUM – Global Virtual Conference 17 – 18 May 2021

Herbert Smith Freehills is a proud supporter of the Africa Europe Forum. Thomas Kessler, a partner in the firm’s Frankfurt office, will join a panel discussion on the “Role of Renewable Energy in Sub-Saharan Africa’s Power Supply”. Nina Bowyer, a partner in our Paris office and global co-Head of the firm’s Africa Practice Group will join a panel discussion on “The Next Big Thing between Germany and Africa – Hydrogen ?”.

 

 

Register (free of charge) 


For more information, please contact Rebecca Donovan or your usual Herbert Smith Freehills contact:

Rebecca Donovan
Rebecca Donovan
Business Development & Central Management Executive, Paris
+33 1 53 57 70 90

NEW EXTENSION OF THE DEADLINE TO COMPLY WITH THE NEW CEMAC REGULATION

On November 5th, the Governor of the Central Bank for Central African States (the “BEAC”) issued a decision to extend the moratorium period granted to extractive companies to comply with CEMAC Regulation No. 02/18/CEMAC/UMAC/CM relating to foreign exchange (the “New CEMAC Regulation”) until 31 December 2021.

This is rather good news for mining and petroleum companies, which were bound to comply with the New CEMAC Regulation from early next year, although this concession from the BEAC should not necessarily be construed as evidence that the BEAC is giving up its intention to fully enforce the New CEMAC Regulation towards extractives companies.

The New CEMAC Regulation was adopted on 21 December 2018 and entered into force on 1 March 2019. Companies were originally granted a six month period (starting from the New CEMAC Regulation’s effective date) in order to comply with the New CEMAC Regulation.

Following the expression of various concerns by the extractive companies relating to the impacts of the regulation on the conduct and financing of their operations (especially with regards to the restrictions on the opening of offshore accounts), as well as lobbying initiatives at BEAC level, the BEAC agreed to enter into discussions with the extractive companies regarding the postponement of the date for compliance with the New CEMAC Regulation.

As a result, the Governor of the BEAC issued a decision, dated 12 November 2019, whereby it granted to extractive companies a moratorium period up to 30 December 2020 in order to comply with the New CEMAC Regulation. The rationale of that decision was to allow the BEAC and extractive companies to discuss the conditions in which the New CEMAC Regulation would be applied to extractive companies.

The decision also provided for the extractive companies’ obligation to share sensitive information with the BEAC no later than 31 January 2020, including but not limited to:

  • information on their onshore and offshore accounts and agreements thereto related;
  • loans, borrowings and other agreements entered into with banks located outside of the CEMAC area; and
  • contracts entered into with CEMAC Member States (including oil and mining contracts).

The discussions reached a dead end in the first quarter of 2020, as BEAC representatives and extractive companies were having difficulties to hold meetings due to the COVID-19 pandemic and, consequently, the Governor of the BEAC issued a decision to extend the moratorium period granted to extractive companies, thus giving them additional time to comply with the New CEMAC Regulation.

Interestingly, this decision expressly provides in its preamble that the extension is granted for the purposes of allowing the BEAC and extractive companies to resume workshops relating to the enforcement of the New CEMAC Regulations which could not be convened due to COVID-19.

This approach suggests that the BEAC has not given up its intention to enforce the New CEMAC Regulation towards extractive companies. The following also seem to be strong indications which further suggest that the BEAC intends to pursue a strict application of the regulation:

  • the new decision, unlike the previous one, expressly provides that extractive companies will lose the benefit of this new extension and will be subject to the New CEMAC Regulation with immediate effect if they fail to send to the BEAC the information referred to above before 30 April 2021; and
  • the new decision includes an additional provision (in comparison with the previous one) whereby, upon the expiry of the moratorium period, extractive companies will be bound by the obligation to regularise the situation of their accounts as well as all operations which were performed before the entry into force of the New CEMAC Regulation and during the moratorium period by complying with all the relevant obligations and formalities set out under the New CEMAC Regulation.

For more information, please contact Bertrand Montembault, Louis de Longeaux and Sina Abadie or your usual Herbert Smith Freehills contact:

Bertrand Montembault
Bertrand Montembault
Partner, Paris
+33 1 53 57 74 19
Louis de Longeaux
Louis de Longeaux
Partner, Paris
+33 1 53 57 74 07
Sina Abadie
Sina Abadie
Associate, Paris
+33 1 53 57 78 50

NOTABLE DEVELOPMENTS IN SOUTH AFRICAN AND AFRICAN COMPETITION LAW IN 2020

This brief addresses notable developments in competition law in South Africa and across the rest of Africa during the course of 2020. It includes the measures introduced by various competition law regulators in light of the COVID-19 pandemic and related cases and prosecutions.

Please click here for the detailed report.


For more information, please contact Jean Meijer, Nick Altini, Leana Engelbrecht, Sandhya Foster, Lesetja Morapi and Stewart Payne or your usual Herbert Smith Freehills contact:

Jean Meijer
Jean Meijer
Partner, Johannesburg
+27 10 500 2642
Nick Altini
Nick Altini
Partner, Johannesburg
+27 10 500 2679
Leana Engelbrecht
Leana Engelbrecht
Associate, Johannesburg
+27 10 500 2674
Sandhya Foster
Sandhya Foster
Associate, Johannesburg
+27 10 500 2643
Lesetja Morapi
Lesetja Morapi
Associate, Johannesburg
+27 10 500 2677
Stewart Payne
Stewart Payne
Associate, Johannesburg
+27 10 500 2649

HERBERT SMITH FREEHILLS’ JOHANNESBURG OFFICE CELEBRATES ITS 5TH ANNIVERSARY

 

Herbert Smith Freehills celebrated the fifth anniversary of the launch of its office in Johannesburg, South Africa on 1 November 2020.

  • The office has grown from a small team of two to a total staff complement of more than 85 including partners, lawyers and business services staff.
  • With 7 partners and 5 senior consultants and directors on the ground, the firm provides a full-service offering to its global and local clients, covering corporate, disputes, competition and finance.
  • The firm regularly advises JSE-listed clients, including 11 of the Top 40 companies. Some key examples of the firm’s clients include Anglo American, BHP, Harmony Gold, First Rand, Standard Bank and Bombela.
  • We have successfully built a cross-practice team of 31 Alternative Legal Services (ALT) professionals, which has quadrupled in size in less than three years.
  • Over 50 graduates have been trained through ALT’s innovative International Legal Development Programme, the first of its kind in the South African market. The 18-month programme is designed for talented legal graduates to work on high profile global matters while being trained in process and tech-enabled legal service delivery. They will be prepared for the next step in their career through mentoring and coaching.

Ed Baring, managing partner of the Johannesburg office, commented: “Our investment in South Africa has surpassed our expectations. From our hub in Johannesburg, we have been able to expand our African business, providing clients across the Continent with access to exceptional legal expertise, combining the best of local and international experience. We are especially proud to have been able to create over 85 jobs in South Africa since opening our doors in 2015, and to provide global best practice and experience to many young lawyers.”

Over the past 5 years, the office has advised on over 1,500 matters. Selected mandates include:

  • Bombela (the preferred bidder and now concessionaire) on all legal aspects of the bid preparation for the Gautrain Rapid Light Rail PPP (the first light rail PPP in Southern Africa); then on the negotiations as preferred bidder, including all finance and project documents, as well as drafting and reviewing those documents
  • Absa Bank Limited, Nedbank Limited, FirstRand Bank Limited, and The Standard Bank of South Africa Limited (the lenders) on the the expansion, upgrading and improvement of the Beitbridge border post in Zimbabwe
  • Harmony Gold Mining Company Limited in relation to the acquisition of AngloGold Ashanti’s Mponeng Mine (the world’s deepest mine) and related operations in South Africa for circa US$300m
  • CFAO Group in relation to the acquisition of Steinhoff’s Southern African auto dealerships division, one of South Africa’s largest auto showrooms and a network of trucks dealerships with annual sales of more than 23 billion Rand ($1.6 billion)
  • Gartner Inc. in relation to its representation at the Nugent Commission of Inquiry in respect of consultancy services provided to SARS regarding the restructuring of SARS’ IT systems
  • Afgri Grain Silo Company, a borrower, on the ZAR billion transaction involving the subscription of shares in the borrower, by FirstRand Bank Limited (acting through its Rand Merchant Bank division), and contributions of shareholder loans to the borrower by its shareholders
  • Acting for four banks in two international banking groups in the Competition Commission’s continued prosecution of multiple banks on allegations of collusion in ZAR / US$ exchange transactions.
  • the Kingdom of Saudi Arabia as international legal counsel on the Ministry of Industry and Mineral Resources’ mineral law reform project
  • a globally diversified natural resources company on disputes with the Government of Zambia including developing and facilitating an international advocacy strategy
  • Government of Malawi in relation to the development and financing through a PPP model of the proposed 450MW Mpatamanga Hydropower Project funded by the IFC
  • Standard Chartered Bank and Standard Bank on a sovereign bridge loan facility of USD500,000,000 advanced to the Government of the Republic of Ghana (acting through its Ministry of Finance) to fund various infrastructure development projects and liability management in the Republic of Ghana as approved in its 2019 budget

Key milestones

  • October 2015: Launch of the Johannesburg office with two partners – energy and infrastructure finance lawyer Brigette Baillie and top mining lawyer Peter Leon
  • May 2016: Rudolph du Plessis joined as a corporate partner
  • February 2017: Competition partner Jean Meijer and project finance consultant Biddy Faber expanded the office offering. Meanwhile, finance partner Ed Baring relocated from Moscow to become the Johannesburg office’s managing partner
  • August 2017: Launch of ALT team in Johannesburg
  • January 2018: Jonathan Ripley-Evans joined as Disputes Director, adding arbitration capability to the offering
  • August 2018: Cameron Dunstan-Smith joined the Corporate Crime and Investigations practice as Disputes Director
  • July 2019: Nick Altini joined as a competition partner, Ross Lomax as a corporate partner, Rohan Isaacs as a senior consultant in technology and privacy, resulting in a total of 13 appointments
  • June 2020: Vanessa Kingsmill appointed Head of Alternative Legal Services in Johannesburg

About Herbert Smith Freehills Africa Practice
Herbert Smith Freehills has an unrivalled understanding of the African market derived from a deep track record acting on matters on the continent for over 40 years, and across all practice groups and industry sectors. The Africa Practice is serviced by more than 180 partners from across the firm’s global network of offices, including over 80 lawyers from its Johannesburg office. The firm has Africa desks in each of its international hubs comprising lawyers who have experience in Africa and who work regularly with specialist Africa lawyers from elsewhere across the firm’s network. Herbert Smith Freehills has worked on matters in all of Africa’s 54 countries (covering French, English, Portuguese, Spanish and Arabic-speaking jurisdictions), and over 1000 matters in FY2019-20.

About Herbert Smith Freehills
Operating from 26 offices across Asia Pacific, EMEA and North America, Herbert Smith Freehills is at the heart of the new global business landscape providing premium quality, full-service legal advice. The firm provides many of the world’s most important organisations with access to market-leading dispute resolution, projects and transactional legal advice, combined with expertise in a number of global industry sectors, including Banks, Consumer products, Energy, Financial buyers, Infrastructure & Transport, Mining, Pharmaceuticals & Healthcare, Real estate, TMT and Manufacturing & Industrials.

Follow us online:
Twitter: http://twitter.com/hsflegal
LinkedIn: https://www.linkedin.com/company/herbert-smith-freehills/
Web: https://www.herbertsmithfreehills.com/

For more information, please contact Ed Baring or your usual Herbert Smith Freehills contact:


Edward Baring
Edward Baring
Managing Partner, Johannesburg
+27 10 500 2630

AFRICA RENEWABLE ENERGY: ENERGY TRANSITION AND THE AFRICAN RENEWABLES MARKET

For our clients looking to invest in the “green” energy sector, the African renewables market is occupying a growing space in strategic thinking. Projected GDP expansion and rapid population growth will drive up energy demand in Africa, which combined with the presence of rich renewable resources (including wind, solar, geothermal and hydropower) means that African renewables is seen as a clear growth market.

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AfCFTA PROTOCOL MUST PROVIDE A FAIR REGULATORY ENVIRONMENT AND PROTECTION FOR INVESTORS

Authors: Peter Leon, Ernst Muller and Natasha Rachwal

Negotiators have an opportunity to fashion a regime that supports modern investment policies by promoting sustainable development. 

With less than three months before the expected conclusion of negotiations on the African Continental Free Trade Area’s (AfCFTA) protocol on investment increasing attention is being paid to the protocol’s likely investment protections and rights of recourse for investors in Africa.

While it should establish a pragmatic framework for investment across the continent, the effect of the global Covid-19 pandemic on Africa and the concomitant economic uncertainty underscores the need for a predictable, fair regulatory environment.

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