Foreign firms in Algeria face stringent new rules

The Algerian government has set stricter conditions on foreign corporations in Algeria, prompting fears of bankruptcy among some Egyptian firms with operations in the country.

Algiers on Monday announced that any foreign company bidding on local infrastructure projects–for which it has budgeted some US$286 billion–must first enter into a formal partnership with an Algerian firm.

Companies such as Germany's Siemens and Egypt's Orascom have already signed contracts with the Algerian government for projects worth billions of dollars. But according to an Orascom official, the new regulations will not be applied retroactively, meaning that business already contracted for will not be affected.

However, the official, speaking on condition of anonymity, added that Egyptian companies with Algeria operations would likely be affected in the future, since Algerian companies preferred partnerships with European firms.

“The ban on participating in bids for 18 months now has reduced our turnover from US$100 million last year to US$30 million this year,” said Arab Contractors Chairman Ibrahim Mahlab, whose company is currently in the process of building an airport, a shopping mall and several presidential palaces in Algeria.

Osama Battah, chairman of Egyptian firm Hidelico, also said his company had ceased winning new business in light of the new regulations. “Our last project was for an electricity line for no more than US$30 million,” he said, going on to note the "difficulties" associated with finding  qualified Algerian partners to work with.

Translated from the Arabic Edition.

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