End to Sonelgaz monopoly is nigh

16 November 2001

The law to open state power company Sonelgazto private investment is expected to come into effect by the end of the year, ending almost 40 years of the state's monopoly in electricity generation and supply, and gas distribution (MEED 16:2:01, Cover Story).

Parliament started to discuss the draft law on 4 December and is scheduled to vote on it shortly. The bill will then be debated by the upper chamber. There will be a transition period of around three years before local and foreign investors can buy into the 30 per cent stake in the company that the government plans to sell.

During the transition period, an independent electricity and gas regulation commission will be established to enforce technical and environmental standards and ensure fair competition and free access to the transport network. The three-year delay will also provide time for the restructuring of Sonelgaz into a shareholding company. It will be divided into two separate bodies, one responsible for the production and distribution of electricity, the other for the supply of gas. Sonelgaz will remain the majority shareholder.

The opening-up of the power sector, which has been a subject of debate for several years, will help the government fund an ambitious $12,000 million investment programme intended to bring an extra 500 MW on stream each year for the next 10 years. Energy & Mines Minister Chakib Khelil told parliament that the new law would result in the sector's modernisation, create jobs and reduce the price of electricity. But he faced stiff opposition from some members who were sceptical that the move would benefit local consumers.

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