Identifier
Created
Classification
Origin
05ALGIERS2228
2005-11-02 15:27:00
UNCLASSIFIED
Embassy Algiers
Cable title:  

Algeria Economic Highlights

Tags:  ECON EINV EIND ETRD BEXP AG 
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UNCLAS SECTION 01 OF 02 ALGIERS 002228 

SIPDIS

E.O. 12958: N/A
TAGS: ECON EINV EIND ETRD BEXP AG
SUBJECT: Algeria Economic Highlights

UNCLAS SECTION 01 OF 02 ALGIERS 002228

SIPDIS

E.O. 12958: N/A
TAGS: ECON EINV EIND ETRD BEXP AG
SUBJECT: Algeria Economic Highlights


1. Oil Export Revenues expected to hit $40 Billion

2. French Interest in Bank Privatization

3. Booming Mobile Phone Sector

4. Spanish Aquatia Selected for Desalination Plant

5. Algeria Among Least Transparent Countries

6. $51 Billion Foreign Exchange Reserve

7. Algerian Purchasing Power Down by 7.9%


OIL EXPORT REVENUES COULD REACH $40 BILLION
--------------


1. In an October 15 press conference, Minister of Mines and
Energy Chakib Khelil declared that total oil export revenues
reached $32 billion at the end of September, while in 2004
total revenues were $31.5 billion. He added that the total
2005 figure could reach $40 billion if oil prices remained
above $50 per barrel, which was likely to be the case given
the current market situation. Primary energy production
rose by 104% to 136.2 million Tons of Oil Equivalent (TOE)
in the first six months of 2005. Out of this global volume,
the national petroleum company Sonatrach was solely
responsible for producing 98.1 million TOE with the
remainder (38.1 million) produced by the company's partners.
Production for 2004 reached 35.8 million tons of crude oil
and 89.7 billion cubic meters of natural gas. Export volume
reached 78.9 million TOE, which represents 58% of production
volumes. Minister Khelil highlighted several major
investments projects, including a $1.8 billion Sonatrach
project in conjunction with BP and Statoil for the expansion
of a gas field in In Amennas, a $3 billion investment in an
integrated Gassi Touil project, including the development of
upstream reserves, and the construction of a 5.2 billion
cubic meter per year natural gas liquefaction plant near
Arzew.

FRENCH INTEREST IN BANK PRIVATIZATION
--------------


2. In the framework of public bank privatization, three
international banks have bid to participate in the opening
of the public bank, CPA (Credit Populaire d'Algerie).
According to the French Magazine les Echos, the French bank
BNP Paribas expressed interest in this operation, which
should be finalized by end of 2006. Minister of Finance
Mourad Medelci indicated that 51% of CPA's capital would be

offered. This is the second attempt to privatize CPA. The
first offering failed because of outstanding loans without
payment guarantees and the government's offer at the time of
only 49% opening of the capital.

BOOMING MOBILE PHONE SECTOR
--------------


3. Minister of New Technologies and Communication
Information Boudjemaa Haichour presented the latest mobile
phone sector figures in an October press conference. The
growing sector has created roughly 50,000 jobs since the
introduction of mobile telephony. Investments reached $4
billion, with $2 billion coming from the Egyptian company
Djezzy and $1 billion each from the public utility Mobilis
and the Kuwaiti company Nedjma. The Market comprises 11
million subscribers, 3.8 million of whom subscribe to the
long-standing operator Mobilis. Mobilis aims to have 5
million subscribers by end of 2005 and 8 million by 2009,
which would represent 40% of the local market.

SPANISH SELECTED FOR DESALINATION PLANT
--------------


4. The Spanish group Inima Aquatia landed a contract
October 17 for the construction, exploitation and
maintenance of the seawater desalination unit in Mostaganem
(western Algeria near Oran). The $100 million plant is
expected to have a capacity of 100,000 cubic meters of water
daily at a price of $0.73 (52 DA) per cubic meter of
desalinated water. This plant is one of 10 desalination
plants throughout the country anticipated in the
government's five-year program.

ALGERIA AMONG THE LEAST TRANSPARENT COUNTRIES
--------------


5. The recently released report of Transparency
International on corruption ranked Algeria among the least
transparent countries in the world. Out of 159 countries,
Algeria ranked 97th, far behind neighboring Tunisia, which
ranked 43rd and is considered one of the most transparent
Arab countries. Morocco, another neighbor, was ranked 78th.
The Anti-Corruption Algerian Association (AACC) saw no
surprise in the rating and stated that the social and
political situation prevailing in Algeria over the past
years encouraged corruption at all levels, "and everything
is done by the authorities for expanding such a plague".
The Association criticized the anti-corruption government's
speech saying that it aimed at dazzling international
partners and settling accounts for power holders.

$51 BILLION IN EXCHANGE RESERVES AS OF SEPTEMBER
-------------- ---


6. While addressing the budget and finance committee at
Parliament regarding the 2006 government budget, the
Governor of the Bank of Algeria Mohamed Laksaci declared
that exchange reserves as of the end of September were $51.7
billion. He added that external debt decreased to $17.8
billion from $21.4 billion in 2004. The decrease of
external debt resulted from high exchange reserves,
anticipated payments, and improved debt management.

ALGERIANS' PURCHASING POWER DOWN BY 7.9%
--------------


7. According to a survey undertaken by the General Union for
Algerian Workers (UGTA),purchasing power declined by 7.9%
over the last two years. The survey revealed that the price
of 164 targeted products and services increased
significantly between 2003 and 2005. For a 7 member-family,
food expenses increased by 5.9%, health expenses were up 13%
(reflecting the cost of pharmaceuticals, since Algerians do
not pay for public medical services),and budget items for
leisure and culture increased by 8.2%. Only the clothing
budget decreased (by 3.3%),mainly due to the growing
availability at very low prices through the underground
economy of imported products from China, Turkey and Syria.
UGTA indicated that tariff increases on heating and cooking
gas, electricity, water, transportation, health care and
telecommunications in 2005 were not included in this survey.
Inclusion of that data, according to the UGTA, would have
worsened the result. The survey concluded that AD 24,790
($340) a month was essential for a family to live
"normally".

ERDMAN