Doubt cast on success of Algeria's US$3.5 billion China-built port project
THE Algerian government has started building a new US$3.5 billion port at El Hamdania, 70 kilometres west of Algiers to rival Tanger Med in Morocco, reports London's African Business magazine.
But Arab Socialist restrictions on private sector involvement in the economy casts doubt on the success of the project to tap into a growing transshipment trade, says Arab Business.
The port will be built by China Harbour Engineering Company and China State Construction Engineering Corporation, which will take 49 per cent in the operating company, with the Algerian Port Authority taking 51 per cent.
South Korea-based Yuhill-Yooshin and Algeria's Laboratoire des Etudes Maritimes (LEM) completed a detailed plan at the end of December, and the project has now secured $900 million from the African Development Bank (AfDB) to be repaid 20 years.
At full build-out El Hamdania is to have an annual handling of 6.3 million TEU, "spread over 23 berths".
It has been reported in Algiers that a consortium of Chinese banks are to provide additional finance, although they have not yet been named. However, the involvement of Chinese firms in the scheme indicates that Chinese funding is likely.
The first berths scheduled for completion in 2021. Like Morocco's Tanger Med, the plan is to lure transshipment business from Valencia and Algeciras in Spain and Gioia Tauro in Italy, while attracting export firms to locate in North Africa.
African Business warned of restrictions on private sector participation in Algeria, which has not attracted anything like the manufacturing investment in Morocco and Tunisia.
Algieria's Arab socialist system is propped up by oil and gas income, which accounts for 94 per cent of Algeria's export revenues and 60 per cent of state income.
"Lower oil and gas prices may have put a great deal of economic pressure on state finances, but the government is unlikely to relax state control of key sectors while the current political leaders remain in power," said African Business.
"In the absence of a significantly more attractive investment regime, El Hamdania may fail to have the compound benefits for the rest of the economy that the government intends," said its report.