ALGIERS: Algeria is looking to step up its campaign to strengthen the country’s transport infrastructure, unveiling a multibillion-euro program of investments aimed at broadening the base of the economy and reducing dependency on hydrocarbons.
On May 24 the Algerian cabinet, during a meeting chaired by President Abdelaziz Bouteflika, approved a five-year, € 230.8 billion investment plan. Some €104.9 billion of this will be used to complete projects already under way, while the balance would be used to finance new schemes.
A statement issued after the cabinet meeting said that the investment program, set to run from 2010 to 2014, was to be the driving force behind government efforts to diversify the economy.
Central to the new program – and to the longer-term development of the economy as a whole – is a continuing upgrade of existing transport infrastructure alongside a raft of new transport projects. A total of €30.6 billion has been allocated to the various segments of the transport sector.
The lion’s share will go to the rail sector, which the government considers vital to broadening the base of the Algerian economy and linking its various industrial production hubs with the expanding land and sea transport centers.
Under the development program, 6500 kilometers of new track will be laid and a further 500 kilometers of the existing network will be upgraded. Urban transport will also receive a major boost with the construction of light rail or tram systems in 14 cities.
Though the list of projects and investments is impressive, some of the funding has been rolled over from previous development programs. Not all of the projects are new and a number have been carried over from the prior five-year plan, which concluded in 2009.
Even before the new investment program was unveiled, the Transport Ministry awarded a joint contract to Spanish firm Fomento de Construcciones y Contratas (FCC) and Algerian firm ETRHB Haddad for the construction of a 185-kilometers-long railway line linking Algiers to Relizane, Tiaret and Tissemsilt in the north-west. The work, which has a price tag of €1 billion, involves the construction of a single, high-performance track that allows for a maximum speed of 160 km/hr.
The FCC contract is just the most recent in a series of tenders awarded in recent months, with Canadian engineering firm Dessau winning a €30.6 million bid to design an electrified rail project that will connect Algiers to Constantine in north-eastern Algeria.
The project involves the preliminary and final design for the construction of a 170-kilometers-long double track to be used by both passenger and freight trains. The Dessau contract is just a small part of a €1.8bn project to be carried out through the cooperation of China Civil Engineering Construction Corporation and Ozgun Construction of Turkey.
President Bouteflika said the government would assess the country’s financial situation at the end of each year in order to determine the viability of the scheduled projects. He emphasized that Algeria would not borrow overseas funds to complete the program.
With energy prices creeping higher and predictions for solid economic expansion on the horizon, Algeria should not be hard-pressed to find funds for its transport investment program.
In late April, the IMF revised its forecast for Algeria’s economy, raising its estimates for GDP growth from 3.9 percent for both this year and 2011 to 4.6 percent and 4.1 percent, respectively. The IMF also predicted Algeria would enjoy trade surpluses of 2.5 percent of GDP in 2010 and 3.4 percent of GDP in 2011.
A strengthened transport backbone is essential as Algeria seeks to promote increased investment in its economy and bolster its agriculture, manufacturing and tourism sectors.
By prioritizing existing projects and fast-tracking new rail schemes, Algeria is well positioned to experience strong economic growth in the coming decade.
