Algeria risk analysis:

[Al-khiyal]

Telecoms

The telecommunications sector has made great strides since the passage of a law in 2000 that paved the way for privatisation of the industry. The first step was the establishment of a new joint-stock company, Algérie Telecom, to take over the operation of fixed-line services and of the Global System for Mobile Communications network from the Ministry of Posts and Telecommunications. This was accompanied by the creation of an independent regulatory agency, Autorite de regulation de la poste et des telecommunications (ARPT). The agency has since issued three mobile-phone licences and one fixed-line licence, while Algérie Telecom has invested heavily in upgrading its own services, especially mobile phones. The government has also appointed Banco Santander of Spain to advise it on the privatisation of Algérie Telecom.

The lack of investment in the sector in the past meant that Algeria was comparatively poorly served, although the picture has changed markedly in recent years. According to the International Telecommunication Union, there were just over 500 telephone subscribers (fixed-line and mobile) per 1,000 people in Algeria in 2005, compared with 325 per 1,000 in Egypt, 436 in Morocco and 700 in Tunisia.

Mobile-phone penetration has risen more than tenfold since the licensing of private operators in 2001, and reached about 400 per 1,000 people in 2005, roughly the same as in Morocco, but more than double that of Egypt. According to the most recent figures issued by the ARPT, the number of mobile subscribers had reached 16.5m by end-April 2006. Egypt's Orascom Telecom paid US$737m in 2001 for the first private licence, and in June 2005 had 5m subscribers to its Djezzy service. At end-June 2006 Djezzy's subscribers numbered 9.5m, according to Orascom. ATM Mobilis, the mobile arm of Algerie Telecom, started to roll out its new equipment in 2003, and now boasts over 6m subscribers. Kuwait's Wataniya Telecom, which paid US$421m for the second private licence, launched its Nedjma service in the third quarter of 2004 and celebrated reaching 1m subscribers in August 2005. By April 2006 Nedjma had 1.8m subscribers, according to the ARPT.

Orascom announced in March 2005 that, in partnership (50:50) with the state-owned Telecom Egypt, it had won a 15-year licence to build and operate a fixed-line network in Algeria. The licence will allow the Egyptian consortium to develop high-speed data and other specialised services as well as meeting the large unfulfilled demand for basic residential telephony. Orascom, which was apparently the only bidder for two fixed-line licences on offer, said that the consortium will pay US$65m for the licence and expects to invest some US$1bn during the licence period in building an advanced next-generation telecommunications network. It added that the licence includes a two-year exclusivity period to operate both national and international fixed-line network services.

Sweden's Ericsson has long held a dominant position in the Algerian telecoms equipment market, partly by virtue of its 35% stake in Sitel, which is based in the western city of Tlemcen and which manufactures telephone switches. However, rival companies have managed to secure major orders from the new mobile-phone operators, and in 2004 China's Huawei signed a strategic partnership agreement with Algérie Telecom. One of the fruits of this deal has been an order to set up a code-division multiple access (CDMA) network, allowing for the expansion of the fixed-line service using wireless networks.

[Al-khiyal]

Energy

At about 850 kwh per head, electricity consumption in Algeria is low compared with Egypt's 1,200 kwh per head (both 2005 figures). Algeria's existing 7,000 mw of generating capacity largely comes from gas-fired power plants at Algiers, Annaba and Oran. The country also has a series of small hydroelectric power stations in the Kabylia region. However, demand is growing at around 5% a year and the country will have to add substantially to its generating capacity over the next decade, as well as upgrading the transmission and distribution system. A number of new power plants have been linked to the production of desalinated water. The government passed an electricity and gas law in 2001, aimed at liberalising the sector. However, private investment has so far been restricted to new power and desalination plants.

The model for these new build-own-operate (BOO) plants involves the private developer forming a joint venture with the Algerian Energy Company (AEC)owned equally by the state energy company, Sonatrach, and the state power utility, Sonelgaz. AEC will also guarantee to purchase the power produced by the plant. The offtaker for desalinated water is Algerienne des Eaux. The first such project is being carried out at the oil and gas terminal of Arzew in the north-west. Black and Veatch of the US initially acted as the lead investor, with an initial equity interest of 80%. However, the US firms share has since been reduced to 5%, as AEC has injected fresh capital and increased its own stake to 95%. The plant will generate 314 mw of electricity and produce 88,000cumetres/day of water. The main contracts were placed in 2002, and it was inaugurated by the president, Abdelaziz Bouteflika, in September 2005. The second major BOO project was awarded in 2003 to Canada's SNC Lavalin for an 800-mw combined cycle power station in the eastern port-city of Skikda. A partnership of GE-Ionics of the US and Japan's Mitsui has also been selected for a project to build and operate a desalination plant in Hamma, in Algiers. It will produce 200,000 cu metres/d of water, using reverse osmosis technology. It will draw its electricity needs from a recently completed 400-mw power station nearby. The project got under way at the start of 2005 after the developer concluded a US$200m financing package with the Overseas Private Investment Corporation, a US government agency. AEC has since awarded several more contracts for desalination plants in Algiers, Skikda, Tlemcen and Mostagenem. Assuming all these projects go ahead, Algeria will have more than 600,000cumetres/d of desalination capacity installed by 2009.

In June 2005 parliament passed a law allowing for foreign companies to be awarded management contracts for urban water-supply systems, as part of a policy to tackle chronic waste in Algerias main water systems. The manage-ment contracts will focus on the distribution networkwhich accounts for most of the losses from the systemas well as on training and on the introduction of new technology. The first such scheme is likely to go ahead in Algiers, where the government has proposed setting up a joint venture between Algerienne des eaux, Office nationale dassainissement and Frances Suez group. It will be named Societe des eaux dAlger. Similar structures are envisaged for the other cities, including Oran, Constantine and Annaba. The water resources minister, Abdelmalek Sellal, said that the foreign partner will receive a management fee for an initial period of five years, after which the question of developing the relationship into a full concession may be broached.

Two power stations are set to come on stream during 2006Skikda II (825 mw) and Berrouaghia (484 mw). The next plant to enter service will be the 1,200-mw Hadjret Ennous power station, for which SNC-Lavalin of Canada was recently selected as main contractor. The sector regulator, Commission de Regulation de l'Electricite du Gaz (CREG) estimates that between 2008 and 2014 a further 5,600 mw of capacity will be required. Most of this is likely to be gas turbine or combined cycle, but CREG also envisages some 725 mw of renewable capacity being installed, including solar, thermal, wind and cogeneration.

Demand for power will be driven partly by the government's commitment to expand the housing stock, in order to relieve social tensions. Industrial investment, particularly in the hydrocarbons sector, will also feed demand. The capacity expansion required to meet the demand will be costlyaround US$12bn over ten yearsand the government is eager to attract substantial foreign investment to the sector.

The enabling legislation for this investment is the 2001 electricity and gas law, which ends the monopoly of Sonelgaz over the domestic power and gas markets. The law was supposed to clear the way for liberalisation of the sector by 2005, through the following actions:

Opening electricity generation to full private competition. CREG will act as the commissioning authority and will be responsible for enforcing technical, environmental and economic regulations. It will also ensure transparency and fair competition between all participants, and will be responsible for setting transmission prices.

The creation of two new subsidiaries of Sonelgaz, one for the transmission of electricity and one for gas. They operate under licences from the Ministry of Energy.

The creation of a system operator, which will have the challenging job of ensuring that supply and demand are in balance. This will be a private firm with no interest in power generation.

The creation of a new market operator, whose main role will be to match the offers from the generators with bids by the suppliers, traders, retailers, and others.

The gradual opening of the retail market to private competition. The law provides for a 30% opening of the market within three years; energy users consuming above a fixed amount will be able to choose their own supplier.To date, however, little has been achieved beyond the creation of CREG and the establishment of independent power and desalination projects. In June 2002 the government had furthermore announced that Sonelgaz's subsidiaries would be opened up to private investors, including foreigners. However, none has so far taken the opportunity and there remains considerable uncertainty about the degree of official commitment to full-scale deregulation of the energy sector.

Algeria risk: Infrastructure risk

[Al-khiyal]

Alors qu’elle place 47 pays dans le monde sous surveillance négative :
La Coface maintient inchangé le risque Algérie

Lundi 13 Avril 2009 -- Les pays d’Afrique du Nord ont su se protéger plus ou moins bien contre les contrecoups de la crise financière mondiale, selon la société française de l’assurance-crédit Coface. Dans son dernier état des lieux sur l’évolution des risques pays, publié le 8 avril dernier, à la lumière des dernières données économiques et financières internationales, la Coface a estimé que, «parmi les principaux partenaires commerciaux des entreprises françaises, les pays d’Afrique du Nord semblent relativement épargnés par la crise». Sans citer nommément l’Algérie, l’assureur français relève que les pays pétroliers d’Afrique du Nord et du Moyen-Orient ont «abordé la crise avec une situation financière renforcée (provenant du boom pétrolier des années 2003-2008), dont toute la région a bénéficié». La Tunisie et le Maroc possèdent, selon la Coface, «une économie diversifiée et un système bancaire peu exposé aux actifs toxiques».

La Coface «ne constate pas à ce stade de détérioration du comportement de paiement des entreprises» au niveau de ces deux pays. Elle estime que, globalement, la zone de l’Afrique du Nord et du Moyen-Orient «n’a subi aucun changement de note». Cela signifie que pour l’Algérie la notation de A4, déjà confortée en janvier dernier, n’a pas été révisée. À l’époque et à l’occasion de son colloque annuel sur le risque pays, la Coface avait estimé à propos de l’Algérie qu’avec «un endettement faible et un niveau confortable des réserves officielles de changes, la situation financière extérieure de l’Algérie est solide et sa situation politique stable». Toutefois, la Coface estime que «les perspectives politiques et économiques peuvent être marquées par quelques fragilités. Une relative volatilité de l’environnement des affaires est susceptible d’affecter les comportements de paiement, la probabilité moyenne que cela conduise à un défaut de paiement restant acceptable».

Par ailleurs, et même si la note du risque pays reste satisfaisante, celle relative à l’environnement des affaires est, quant à elle, moins reluisante. Il s’agit d’une note qui a été introduite en 2008 par la Coface pour savoir si les comptes des entreprises reflètent bien la réalité de leur situation financière et si, en cas d’impayé, le système juridique local permettrait un règlement équitable et efficace. Les notes se situent sur une échelle de 7 niveaux, de A1 à D, et l’Algérie n’obtient que la cinquième note, soit un B, ce qui signifie que «l’environnement des affaires est moyen». La fiabilité et la disponibilité des bilans d’entreprise sont très variables. Le recouvrement de créances est parfois difficile. Les institutions présentent certaines fragilités. Les entreprises évoluent dans un cadre instable ou peu performant. C’est un facteur de risques à prendre en compte pour les transactions interentreprises.

Si la Coface n’a pas changé sa notation pour les pays d’Afrique du Nord, 47 pays dans le monde ont été placés sous surveillance négative ou vu leur note baisser dans la dernière appréciation de la Coface. L’Allemagne a ainsi vu sa note baisser de A1 à A2, de même que la France, la Belgique ou la Norvège. Le président de la Coface, M. François David, a déclaré : «Nous devrions atteindre le pic de la crise au premier semestre 2009.» Le scénario principal «privilégie toujours la fin de la crise de crédit dans la seconde moitié de l’année 2009», affirme-t-il, en envisageant une reprise début 2010, mais molle».