AEC stipulates local finance for desal projects

29 July 2005
State-owned Algerian Energy Company (AEC)has decided that future desalination projects must be financed by local banks in an effort to help absorb banking liquidity of more than $14,000 million. Those companies affected by the move say that it is likely to make the process of securing project finance much more difficult and may be a deterrent to their future involvement in the sector.

The decision will affect arrangements made for the financing of existing contracts. Caja de Madrid and Spanish export credit agency Instituto de Credito Official (ICO) had been mandated to arrange the $77 million debt package on a planned 100,000-cubic-metre-a-day (cm/d) plant in Skikda. Project company Aguas de Skikda, a consortium of AEC and Spanish group Geida, is understood to be assessing its options. Financing from Spanish banks was also being sought for a seawater reverse osmosis (RO) facility at Beni Saf, also run by a Geida/AEC consortium.

Deadlines for commercial offers for new capacity at Zeralda, Cap Djinet, Mostagenem and Tlemcen are to be delayed until documentation on the new project finance structure is finalised. Interested parties expect the new deadlines to be announced in September. AEC has cancelled the estimated $60 million project to build a 50,000-cm/d plant at Jijel. The planned facility may be replaced by another in the west of the country (MEED 11:2:05).

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