Algeria is a large country, both in size and in the economy. It is Africa’s fourth-largest economy and most competitive market after South Africa, Morocco, and Tunisia. Algeria is an energy producing-exporting country. The principal energy sources are crude oil, followed by natural gas. In fact, the energy sector represents a major industrial activity and an economic contributor to the country. With an annual generation of roughly six quadrillion British thermal, Algeria is the leading primary energy producer in Africa.
However, the country remains a relatively unexplored territory. With a largely state-controlled economy and an unstable regulatory framework, foreign companies find it rather challenging to invest and launch projects in the area. Not to mention the political uncertainty that has so far marred the business stage.
Nevertheless, lately the Algerian authorities have taken up several steps to diversify the economy, thus attracting foreign investments. In fact, until 2019, the participation of a foreign investor in an Algerian company was limited to 49%. Thus forcing Foreign to find local partners for public tenders in Algeria. However, in 2020, the government dispelled the “51/49” restrictive rule that required Algerian majority ownership of all new companies.
Accordingly, significant business opportunities are awaiting foreign exporters in the government controlled sectors. Mentioning especially the oil and gas, power, and telecommunications industries. Headed by the 3 state-owned big companies, Sonatrach, Sonelgaz, and Algérie Télécom.
Given that it is now easier to do business and tender in Algeria (by courtesy of the elimination of the 49/51 rule), it is only fair to acquaint yourself with the tendering climate of the country.
Public Tender Regulations in Algeria:
Algerian government institutions, including ministries, agencies, and local governments, buy foreign-made goods and services through competitive or restricted tenders. In fact, the law on public tenders does not require state-owned companies to purchase goods and services through tenders. Although many still do.
Although the public tenders market was likewise marred with constant changes in regulations, the authorities have recently taken steps to actually improve the transparency of the contracting process.
Government contracts are awarded through a two-step tender process. Technical bids are first evaluated to ensure compliance with tender requirements and to review competing specifications. Financial proposals are then reviewed. Competitors are sometimes short-listed after the technical offers are opened, and companies are occasionally pre-qualified for large tenders, particularly in oil and gas development.
The tender market for the energy and telecommunications sector is pretty robust. Especially that the three companies, Sonelgaz, Sonatrach, and Algérie Télécom, are constantly launching projects. Therefore, this article will guide you through to these 3 big state-owned corporations and their anticipated projects and tenders.
State-owned national oil company Sonatrach is the largest oil and gas company in Algeria and Africa, and twelfth in the world. The company operates in exploration, production, pipeline transportation, transformation and marketing of hydrocarbons and by-products. Sonatrach owns roughly 80 percent of total hydrocarbon production in Algeria, while International Oil Companies (IOCs) account for the remaining 20 percent.
Big names in the Algerian economic reality like Naftal, Tassili Airlines, and Algerian Petroleum Institute are subsidiaries of the Sonatrach group. Estimating thus an impressive package of government oil and gas tenders and business opportunities. Mainly since the national oil company reckons that it will work with many smaller companies. Different projects like drilling, gas processing, and digital monitoring would be launched.
Sonelgaz is a state-owned corporation in charge of electricity and natural gas distribution in Algeria. The company has always played a major role in the economic and social development of the country. Today, the Sonelgaz Group comprises 16 companies directly managed by the Holding. 18 companies in participation with entities of the Group and 10 companies in participation with third parties.
With Algeria hoping to add to its power grid, the company is undoubtedly launching severalpublic works tenders and so on.
Algérie Télécom controls the telecommunications sector in Algeria. The state-owned company monopolizes the national IT market and Internet routing services in the country. It is also the only Internet service provider (ISP). In reality, the telecom company, which also controls the submarine cables, has the total right and privilege to establish a monopoly in the telecommunications sector by the Algerian constitution of 2020. Specifically, stated in the constitution alongside natural energy sources, subsoil, mines and quarries, railways, maritime and air transports, the telecommunications sector shall remain a public property.
The telecom sector is active and has announced many tenders this year.Algérie Télécom tenders are at the top of the list, with many projects launched throughout the country.
On foreign investments, Algeria is ultimately halfway through becoming a foreign, business friendly country. The government is constantly proving its awareness of the benefits that international deals can add to the economy. Since the three state-owned corporations are the pillar of the Algerian economy, in no time will the tender marketplace be teeming with projects and tender opportunities.