CEMAC authorities issue special foreign exchange regulations for extractive companies

Following a period of three years punctuated by discussions and moratoria on the enforcement of CEMAC Regulation No. 02/18/CEMAC/UMAC/CM relating to foreign exchange (the “2018 Regulation”), extractive companies with activities in the CEMAC area may finally see some light at the end of the tunnel thanks to two new CEMAC foreign exchange regulations specifically designed for them by CEMAC authorities in an attempt to adapt the 2018 Regulation to the operational complexities of the extractive sector while ensuring compliance with the 2018 Regulation.

As a result of the uproar among hydrocarbon and mining companies caused by the entry into force of the 2018 Regulation, the Bank of Central African States (“BEAC“) addressed the concerns of the extractive companies by granting two moratoria extending the deadline by which extractive companies were required to comply with the 2018 Regulation, in order to allow the BEAC and extractive companies to discuss possible adjustments to the 2018 Regulation.

Discussions between the CEMAC authorities and representatives of the extractive companies which took place during this time span finally led to the adoption by the CEMAC authorities of two new regulations on 23 December 2021:

  • CEMAC Regulation No. 01/CEMAC/UMAC/CM on the application of certain provisions of the 2018 Regulation to resident extractive companies; and
  • CEMAC Regulation No. 02/CEMAC/UMAC/CM on the non-seizable nature of extractive companies’ foreign currency accounts.

In order to further expand on and implement the specific exemptions granted to extractive companies under the new CEMAC Regulations, the BEAC replaced the existing instructions governing the opening of foreign currency accounts, imports and exports by three new instructions specifically designed for extractive companies on 4 February 2022[1]:

  • Instruction No. 001/GR/2021 on the declaration, domiciliation, payment and clearance of imports by extractive companies;
  • Instruction No. 002/GR/2021 on the declaration, domiciliation, repatriation and clearance of exports by extractive companies; and
  • Instruction No. 003/GR/2021 setting out the rules for the opening and operating foreign currency accounts by extractive companies.

The CEMAC Regulations and BEAC Instructions (the “New Regulations“) grant a number of exemptions to extractive companies without replacing the 2018 Regulation entirely, as extractive companies remain bound by the 2018 Regulation in respect of all matters not dealt with under the New Regulations.

The key provisions of the New Regulations are as follows.

Scope of the New Regulations

The New Regulations apply to resident upstream oil and gas and mining companies, defined under the New Regulations as ‘extractive companies’[2].

Opening and operation of onshore and offshore foreign currency accounts

Onshore and offshore foreign currency accounts may be opened subject to the BEAC’s prior approval. The approval is granted within 30 days from the request for approval. In the absence of approval within that time period, the application is deemed approved. The authorisation is granted for the duration of the account’s intended purpose.

The BEAC’s decision to approve the opening of an onshore or offshore foreign currency account sets out the transactions which may be made using such foreign currency account.

In addition, the New Regulations set out a list of transactions which may be freely carried out using an onshore or offshore foreign currency account, including but not limited to (i) the payment of external commercial transactions (opérations de commerce extérieur); (ii) the repayment of loans; (iii) the payment of cash calls; (iv) the payment of dividends; (v) the crediting of an onshore account; and (vi) any other transaction necessary in light of the extractive company’s activities.

The New Regulations further provide that any new type of transaction allowed by the BEAC in favour of an extractive company is automatically extended in favour of other extractive companies.

Repatriation of foreign currencies

Like the 2018 Regulation, the New Regulations provide that extractive companies must repatriate their foreign currencies.

However, under the New Regulations, the repatriation requirement is limited to a portion of such foreign currencies. The New Regulations provide that extractive companies are required to repatriate at least 35% of foreign currencies and further specify that this minimum rate can be revised upwards by the BEAC with regards to the CEMAC’s financial situation[3].

In addition, extractive companies are exempted from the repatriation requirement altogether in respect of foreign currencies arising from (i) operations carried out during the exploration phase; (ii) resource backed loans; and (iii) any other financing arrangement similar to resource backed loans allowed by the BEAC.

Payment of suppliers and subcontractors

Like the 2018 Regulation, the New Regulations provide that offshore foreign currency accounts may not be used for the payment of transactions carried out between resident companies. As an exemption to this rule, the New Regulations provide that offshore foreign currency accounts may be used for the payment of transactions between resident extractive companies where such transactions relate to the payment of cash calls.

In addition, the New Regulations expressly provide that onshore foreign currency accounts may be used for the payment of transactions between resident companies.

Debt repayment

The New Regulations expressly provide that offshore foreign currency accounts can be used for the repayment of loans. However, it is unclear whether the exemption applicable to the repatriation of proceeds of loans (allowing extractive companies to not repatriate loan amounts) would also apply to amounts required for the repayment of loans.

In the absence of any specific exemption to the repatriation requirement in respect of amounts required for the repayment of loans, such repayment would likely need to be made from the 65% foreign currencies which may be kept on an offshore foreign currency account.

It should be noted that under the New Regulations, onshore foreign currency accounts may also be used for the repayment of loans.

NB: As of 10 March 2022, the New Regulations (ie the new Regulations as well as the new Instructions) have not been officially published neither in the CEMAC’s Official Journal nor on any “official” website (including the CEMAC’s and the BEAC’s website) and no official statement has been released by the CEMAC authorities in relation to their adoption. From a purely legal standpoint, this does not prevent the two new Regulations from entering into force. Indeed, under the CEMAC Treaty, regulations enter into force on the date they specify or, in the absence thereof, on the twentieth day following their publication. Both Regulations provide that they enter into force on the date of their signature, meaning that technically, both Regulations have entered into force on 31 December 2021. However, the lack of official publication, as well as any public release or acknowledgment in relation to the adoption of the New Regulations can raise doubts as to its enforceability in practice.

[1]       The BEAC initially issued, on 13 December 2021, Instructions No. 6, 7 and 8 relating to the opening of foreign currency accounts, imports and exports, respectively. Instructions No. 1, 2, 3 which were issued by the BEAC on 4 February 2022 have replaced these instructions.

[2]       A limited number of provisions of the New Regulations apply to resident subcontractors and transport companies of the extractive sector. For instance, said subcontractors and transport companies may open onshore foreign currency accounts under the same conditions as extractive companies. However, the rules governing the opening and operation of offshore foreign currency accounts do not apply to subcontractors and transport companies.

[3]       The rate can be revised upwards according to a schedule and under the conditions and procedures determined by an instruction of the BEAC. We understand that this instruction has not been issued by the BEAC at this time.


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


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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When oil, natural gas, or similar natural resources are discovered the expectation is that their exploitation will dramatically and materially benefit the population of the host country. Notwithstanding this, developing nations frequently experience either (or both) increased corruption (through predatory rent-seeking) or paradoxically slower economic growth after the resources are discovered. This anomaly is often described as the Resource Curse.

While studies have shown that there are various drivers behind the Resource Curse, it tends to arise more frequently in countries that have institutions that either facilitate or encourage rent-seeking, as indicated in the case study of Nigeria below. The rent-seeking behaviour, in turn, tends to compete with productive activity and drains the countries’ economic vitality. Weak institutions and associated illicit conduct is commonly referred to as the “Institutions Curse”.

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Bertrand Montembault, a partner in the Paris office of Herbert Smith Freehills who has built particular experience in the oil & gas sector in Francophone Africa, will be moderating an Oil Council webinar on Thursday 25 June at 11:00 BST which will discuss “There Is No Future For Frontier Exploration”.

To register for this event, please visit the Oil Council website here.


Authors: Peter Leon, Paul Morton, Amanda Hattingh and Ernst Muller


A year ago, on 27 February 2019, Total S.A. announced a major discovery of gas condensate in the Outeniqua Basin (Brulpadda prospect, Block 11B/12B) offshore South Africa. This deposit reportedly contains around one billion barrels of oil equivalent. 

This discovery had two significant consequences. First, it identified South Africa as one of the world’s new frontiers for oil and gas exploration. Second, it placed a spotlight on the inadequacy of South Africa’s existing regulatory regime and the urgent need to develop upstream petroleum legislation.

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Author: Peter Leon

Regulatory scheme remains modelled on mining principles 

Much anticipation awaited the release of the draft Upstream Petroleum Resources Development Bill on Christmas Eve after a one-year gestation by the department of mineral resources & energy. The long-awaited bill is intended to create a new regulatory framework for the exploration and extraction of both onshore and offshore oil and gas.

This underdeveloped sector has long been viewed by the government as a potential economic destiny-changer. In 2014, during the Zuma administration’s Operation Phakisa (Sotho for “hurry up”), it was estimated that SA’s territorial waters sit atop 9-billion barrels of oil (40 years’ worth of national consumption) and 11-billion barrels of natural gas (375 years’ worth of consumption).

Drilling 30 exploration wells in 10 years could see SA producing 370,000 barrels of oil and gas a day in the subsequent 10 years — reducing the country’s reliance on oil imports (by up to 80%), as well as the energy grid’s dependence on coal; creating 130,000 jobs; and adding $2.2bn (R32.5bn) to GDP annually.

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Authors: Paul Morton and Bertrand Montembault 

Herbert Smith Freehills is a sponsor of the MSGBC Basin Summit and Local Content Forum taking place in Dakar on 28-30 January 2020. Paris-based Partner Bertrand Montembault will be joining a panel discussion on the business and regulatory environment for operations in the MSGBC Basin, and the event will also be attended by Johannesburg-based Of Counsel Paul Morton. Further details of the event, which is being hosted by the Oil & Gas Council, can be found here. The following article was first published on the Oil & Gas Council website on 21 January 2020.

Herbert Smith Freehills is pleased to participate once again in the annual MSGBC Summit. Now in its fourth year, the event and the region are now firmly established on the African oil and gas agenda. Ahead of the gathering in Dakar this year, we wanted to share some observations from across the continent and the oil and gas sector globally.

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Author: Joanne Elson 

The 21st Africa Energy Forum (AEF) took place on the 11th to 14th June 2019 in Lisbon, Portugal. The annual AEF is the largest Africa energy gathering of the year and easily draws over a 1000 delegates from all over the globe, including many government officials, public private sector representatives, developers, dealmakers, investors and business leaders, each with their focus on energy in Africa. This year renewable power together with new technologies in the battery storage and off-grid sectors were inescapable in their prominence. However, hydro, conventional power, LNG and oil & gas remain of key strategic importance in a number of jurisdictions.

Africa as an emerging market presents an opportunity to investors of all kinds and, in particular, development finance institutions with investment capital. These opportunities were discussed in great detail in highly focused sessions and break away meetings over the four day conference. Both public and private partnership investment opportunities were promoted in order to mobilise inward investment into the region. The delegates found the conference to be insightful and important given the ever prominent issue of power on the continent. Another key focus was on the ever increasing debt of governments either by way of direct guarantee liabilities or contingent liabilities with respect to their State utilities’ obligations.

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Authors: Peter Leon, Paul Morton and Patrick Leyden

With the momentum of Total’s discovery earlier in the year and the promise of an emerging player in the oil and gas sector, 2019 may be South Africa’s best opportunity to set the legal framework for a successful and productive domestic oil and gas industry.

On 7 February 2019, Total announced a major discovery of gas condensate offshore South Africa, on the Brulpadda prospect on Block 11B/12B in the Outeniqua Basin,1 which is reported to contain around 1 billion barrels of oil equivalent.2 Total described the discovery as ‘opening a new world-class gas and oil play’ and the announcement has certainly generated a lot of interest in the South African press. The upstream industry has also taken note and South Africa now features heavily in conversations about exploration on the African continent. Although there has been much speculation on the potential contribution to the South African economy, it is clear that reserves of this magnitude have the potential to transform the energy mix in the country and contribute significantly to public revenues.

Total and its partners plan to continue their assessment of the Brulpadda discovery through further seismic surveys and a number of further exploration wells later in 2019. In the meantime, the discovery has put the spotlight on the regulatory regime governing the upstream sector in South Africa. Oil and gas is covered by the same legislation in South Africa as mining, namely the Mineral and Petroleum Resources Development Act of 2002 (the “MPRDA”). The MPRDA is a regular feature in the South African news, most recently during the course of 2018 with the proposed Mining Charter III and the abandonment of the ill-fated MPRDA amendment bill. However, given the historical dominance of the mining sector in South Africa, oil and gas regulation has never been the centre of attention. That is now likely to change.

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Author: Stéphane Brabant

The hereunder presentation is adapted from a speech given during a seminar on ‘Mining and Oil and Gas Law: Transactions and Dispute Resolution’, jointly organised by the International Association of Lawyers and the Senegalese Bar Association in February 2017.

A few years ago, it was still unrealistic to raise the topic of compliance with human rights with companies, and particularly with mining and oil & gas companies. This area was still largely perceived as States’ exclusive realm while the primary purpose of companies was to generate profit. This is true. But should it be at all costs? Can companies operate at the expense of fundamental rights?

The idea that companies must also promote fundamental human rights is new. It is an idea of a new century – the 21st century. We owe this awareness to the late Kofi Annan, a man from the African continent, and probably amongst, if not the greatest man of the 21st century.

This wake-up call was brought about thanks to Kofi Annan’s efforts, then UN Secretary-General, and John Ruggie, Professor at Harvard Kennedy School, appointed in 2005 as Mr. Annan’s UN Special Representative on human rights and transnational corporations and other business enterprises. Together, they elaborated principles and procedures to ensure that companies embrace this new mindset and acknowledge that going forward they will have to reconcile their activities with the respect for fundamental human rights of all affected stakeholders such as workers, local communities or even consumers.

Promotion of fundamental rights is indeed the most important element for a project to be sustainable and profitable, for banks to be reimbursed, for insurers to be spared, for shareholders to obtain return on investment, for the State to find a balanced source of income and for local communities to be respected.

No one is mistaken in that respect. Nowadays, even banks, especially banks in fact, agree that a sustainable mining or hydrocarbons project must be a project that complies with all fundamental rights. How can we concede that a mining project could lead to the pollution of waterways? How can we accept that a mining project will result in the expropriation of entire local communities without fair compensation and relocation for each community member, and especially the most vulnerable?

All this is no longer acceptable and it is this 21st century idea that now prevails. This paradigm shift has extra territorial legal consequences. It is interesting to note that recently, a Canadian mining company was brought before Canadian courts with regard to allegations of slavery, forced labour, torture and crimes against humanity. Harsh words for a 21st century mining company. The applicants claim that the company aided and abetted abuses perpetrated in Africa by its local subcontractors, controlled by the State and the army.

Today, mining activities can only be viable and acceptable if they are indeed socially responsible. Yet the above-mentioned case reflects a grim reality: according to the International Labour Organization, 21 million people worldwide are victims of forced labour, trafficking or modern slavery and the illegal profits from their exploitation are estimated at 150 billion dollars.1

It is against this bitter background that the new trend that companies shall be compelled to promote human dignity emerged. Through a number of texts, amongst which the United Nations Guidelines on Business and Human Rights adopted unanimously by the Human Rights Council in 2011, procedures and tools are now in place to ensure that projects are compliant with human rights.

Thanks to the adoption of these Principles – some of them having been incorporated into positive law – globalization, which was primarily economic and financial, now extends to social and human concerns. As a matter of fact, these issues are not evolving in a legal vacuum but we must go even further than positive law.

These new principles apply to everyone and in all countries. They affect not only all companies, whatever their size, but also every human being in every country of the world. These are principles without borders as they embody universal rights. These principles are in issue before international arbitration tribunals in investment disputes. They are even increasingly incorporated in investment treaties, constitutions and laws. In Senegal, the 2016 Mining Code states this very clearly with the obligation to respect and protect human rights,2 in accordance with the 2009 Ecowas Directive on the Harmonization of Guiding Principles and Policies in the Mining Sector.3

Nowadays, companies are being challenged to think further, to assess risks, not only to themselves, but also henceforth, to any potential victims. The mindset of companies must indeed change. In our modern world, our approach must be not only to identify where tax or commercial risks lie, but also to pay attention to human rights risks generated from or even simply related to their activities and track, prevent, mitigate or provide remedies in relation to those risks to women and men involved in any project.

Time has come for companies to get involved in more than just philanthropy. The construction of a hospital is satisfactory, but is no longer sufficient. It is also necessary to anticipate any adverse impacts that business activities may have on humans. We must therefore go further in our way of thinking the law, our way of thinking projects or companies, and at the end of the day, our way of thinking the role of corporate lawyers as promoters of fundamental rights.

Mr. Kofi Annan with Professor John Ruggie, by inviting us to reconsider the law, may have also invited us to re-evaluate a part of the legal profession. Corporate lawyers’ role is to advise and to defend. This defence is very important and it is twofold. It first concerns companies, and through them, local communities and the fundamental rights of those who take part in the projects of these companies.

Lawyers therefore have a role that goes beyond the traditional but essential role of reading the law. This role must indeed address something new that is no longer just hard law but also incorporates soft law. Whether the expression “hard law” and “soft law” is used, they both contain and refer to the term “law”. Albeit hard law is enforced by the courts, soft law – which is subject to principles that must be respected but not necessarily incorporated into positive law – is enforced by “new judges”.

New judges are the ones that companies face. Companies face serious or hard sanctions when these judges raise their voices against them, for example when a company’s name is on the front page of a newspaper for failing to respect local communities’ or workers’ rights. These sanctions are final. Hence, as the scope of the law expands, so too do the possibilities for action and the role of lawyers. Lawyers must now advise and assist companies to ensure that their clients do not incur the sanctions of these new judges.

All this compels lawyers to expand their advisory role. This ongoing movement may even lead to new accountability for lawyers. Lawyers are expected to handle the expansion of the law, especially as this expansion may disrupt the hierarchy of norms and the international public order. These new rules and international standards now taken into account in international arbitration proceedings, by banks for financing, are perhaps indeed in the process of integrating the international public order without even the need for positive law.

In this perspective, lawyers and bar associations – which remain lawyers’ regulators – are invited to engage with the IBA Practical Guide on Business and Human Rights for Business Lawyers and to integrate these rules in order to pursue this important role, this essence and soul of the legal profession that is the promotion of fundamental rights.

1. https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_243295/lang–fr/index.htm 

2. See Article 94 of the Law no. 2016-32 dated 8 November 2016 enacting the Mining Code.

3. See Article 15 of the Ecowas Directive on the Harmonization of Guiding Principles and Policies in the Mining Sector dated 27 May 2009.

For more information, please contact Stéphane Brabant or your usual Herbert Smith Freehills contact.

Stéphane Brabant
Stéphane Brabant
Co-chair of Africa Group, Paris
+33 1 53 57 78 32