Wednesday, 25 January 2012

Algeria: Priority for national pipeline constructors

Domestic pipe manufacturers will be given priority when Sonatrach issues procurement tenders for future pipeline construction projects. In his lengthy press conference at the end of December, Energy Minister Youcef Yousfi confirmed that he had instructed Sonatrach to ensure that this happened. The renewed emphasis on this appears to be related to the financial difficulties being suffered by ArcelorMittal's Annaba-based subsidiary TSS El Hadjar.

In principle, domestic producers and service providers have a competitive advantage built into public tender legislation. They are entitled to win with bids that are more expensive than those of international competitors. However, Sonatrach has recently been subjected to high level criticism of its failure to issue pipeline manufacturing contracts to a key local provider.

On 28th December, the powerful general secretary of the Union Générale des Travailleurs Algériens (UGTA) Abdelmadjid Sidi Saïd wrote a public letter to Yousfi about the difficulties faced by TSS El Hadjar in obtaining pipeline sales contracts from Sonatrach.

In his response, the minister refused to accept Saïd's view that the company had been subject to “exclusion” from such contracts. He said he preferred to approach the problem from a technical and qualitative point of view. “We are ready to work with the national companies on condition that they respect qualitative standards and manufacture all diameters of pipe that are needed,” he said. In addition, Yousfi said that energy companies had been issued with guidelines to use locally manufactured pipes, but that these guidelines also set standards on quality and diameter.

For more news and expert analysis about Algeria, please see Algeria Focus and Algeria Politics & Security.

© 2012 Menas Associates

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