Algeria to Boost Investor Confidence

Posted 27 November 2006 @ 10:01 am EET     Print     Reprint     E-Mail     Comments

ALGIERS (Reuters) - Algeria, which is introducing tougher investment terms for energy multinationals, said on Saturday it recognised it had to boost confidence among its foreign partners to develop economically.

Energy and Mines Minister Chakib Khelil, addressing the opening of an energy conference, said reforms of the energy sector were aimed at helping create a market based economy that was increasingly competitive.

"The goal of our action is clear. We have to install a permanent climate of confidence among all our foreign partners and investors to encourage them to contribute increasingly to the development of the national economy thanks to attractive and mutually profitable cooperation formulas," he said.

His speech was couched in general terms and he did not elaborate.

Algeria, for decades a Soviet-style command economy, began to liberalise its power sector in 2002 and has permitted foreign participation in upstream energy ventures since the 1980s, while preserving a dominant role for state energy giant Sonatrach.

But this year Algeria reversed a hydrocarbons law passed with Khelil's backing in 2005 that was meant to overhaul the oil and gas industry and turn state energy giant Sonatrach, Africa's biggest company by revenue, into a purely commercial entity.

An amendment to the law entrenches Sonatrach's central role and introduces a windfall tax on international oil companies.

The move, reversing the planned energy liberalisation, has proved popular with a population suffering deep unemployment following years of political conflict and resentful of foreign participation in the Saharan oil and gas riches.

Khelil said earlier his change of policy was for political reasons, arguing he had to assuage concern that Algeria was missing out on tax revenues at a time of high oil prices.