Algeria to renegotiate new energy projects
Reuters, Oct 12, 2008 2:35pm EDT
ALGIERS, Oct 12 (Reuters) – Algeria will renegotiate energy projects currently being developed with foreigners to ensure that the Algerian partner has a majority stake, official media reported Energy and Mines Minister Chakib Khelil as saying on Sunday.
He said the move had become necessary following a new law passed in August that limits to 49 percent the stake held by any foreign investor in any sector of the economy, the OPEC member country’s state-owned APS news agency reported.
« All new projects which have not been approved will have to be renegotiated, » Khelil was quoted as saying.
« The renegotiation of the sharing of capital in the projects is related to new directives requiring that national capital have the majority in future projects, above all in petrochemicals and the enhancing of value of our natural resources. »
Khelil did not name any projects.
Algeria’s energy sector plans to invest $45.5 billion in 2008-2012, with $35.8 billion from state company Sonatrach and $9.7 billion from foreign partners, Khelil said in August.
He said in cases where foreign partners indicated that they could not take part on a minority basis, Algeria would try to find a way to involve them in some way in the management of the project or in the transfer of skills and technology.
Among recent petrochemicals deals that have already been finalized, Total (TOTF.PA: Quote, Profile, Research, Stock Buzz) has taken a 51 percent stake in a $3 billion project to develop a cracking unit in western Algeria with state energy company Sonatrach.
Another such deal is an agreement between Sonatrach and Suhail Bahwan Group Holding of Oman to build an ammonia plant worth $2.4 billion, also in western Algeria. The Omani group will take a 51 percent stake.
The new law is part of a package of measures implemented during the summer that have tightened the investment regime in the north African country.
In a speech on July 26, President Abdelaziz Bouteflika attacked poor management of foreign investment, which he said had allowed some foreign investors to profit at Algeria’s expense and not reinvest earnings in the country. (Reporting by William Maclean; Editing by Gerald E. McCormick)