Algeria awards US$4 billion of power and gas sector contracts

Sonelgaz announced on 19 February the award of contracts worth US$4 billion to South Korean and Spanish companies to build six power plants with a combined capacity of 1,200-1,600 MW. The contracts were awarded to three South Korean enterprises - a partnership of Hyundai Engineering and Daewoo International; Samsung and GS/Daelim; and Spain's Duro Felguera. 

The US$1.37 billion contract with the South Korean consortium is to build two power plants for Sonelgaz’s Société Algerienne de Production de l'Electricité (SPE) subsidiary in Biskra and Jijel wilayas. Construction is expected to be completed 39 months. 

Samsung C&T Corp said on February 20 that it had won two orders worth a combined US$1.37 billion to build two power plants for SPE in Mostaganem and Naama wilayas, worth US$763.64 million and US$608.89 million, respectively. Both contracts are expected to be completed by August 2017. 

Samsung has also been awarded a contract worth US$800 million by the Groupement Timimoun (GTIM) - a joint venture between Sonatrach (51%), Total (37.75%) and CEPSA (11.25%) – for the construction of a central processing facility and related pipelines for the Timimoun gas field in south-west Algeria. The turnkey project, to be completed by April 2017 calls for Samsung Engineering to draw up the plans, handle procurement, carry out construction, and conduct a trial run. 

Details of the Duro Felguera contact have not yet been released. It is therefore unclear whether this is the same contract awarded to the company in December for the construction of a combined cycle plant in Djelfa, or a new contract.

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

© 2014 Menas Associates

Baku interested in Iraqi natural gas

Azerbaijan has offered Iraq access to the Southern Gas Corridor, in a bid to help the war-torn country to export its gas to Western markets. Azerbaijani foreign minister Elmar Mammadyarov visited Baghdad on 10 February for talks with high-ranking Iraqi officials on deepening bilateral ties. 

“It is a huge project […] and it is open if Iraq has an interest in delivering its own natural gas,” Mammadyarov said during a joint press conference with his Iraqi counterpart Hoshyar Zebari. He added that other countries had already signalled to Baku their interest in contributing gas to the Southern Gas Corridor, although no details were revealed. 

Iraq produces limited quantities of natural gas, most of which is used for domestic consumption. Considerable volumes of associated gas is still flared due to the lack of facilities to use it more productively. But the government is increasingly focused on stepping production for export. 

During his meeting with Iraqi prime minister Nouri al-Maliki, Mammadyarov said that Azerbaijan was planning to open a full-fledged embassy in Baghdad in the near future. A permanent diplomatic mission in the Iraqi capital has already been authorised by the Azerbaijani parliament. “Our companies want to work and invest in Iraq, especially in its energy sector,” he added. 

Azerbaijan is not the only country interested in Iraq’s natural gas resources. Earlier this month, an Istanbul-based newspaper  quoted Turkish energy minister Taner Yildiz as saying that Ankara might prefer gas imports from Iraq to its current gas supplies from Russia, Azerbaijan and Iran. He said the price of Iraqi gas might prove much lower, because it would not have to cross foreign territory and would travel a shorter distance. 

Last June, Ashti Hawrami, minister of natural resources in Iraq’s Kurdistan Regional Government, told the press that his government envisaged the start of natural gas supplies to Turkey as early as 2016. At the initial stage, around 10 billion cubic metres of gas is planned to be supplied across the border. Iraqi Kurdistan is set to begin oil deliveries to Turkey this September.

For more news and expert analysis about the Caspian region, please see Caspian Focus.

© 2014 Menas Associates

Libya: JCP responds

The crisis of confidence in the General National Congress (GNC) has thrown the Justice and Construction Party (JCP) into a spin. Some viewed the protests on 7 February as aimed specifically against them – so much so that JCP member Khalid Al-Meshri tried to mobilise party supporters in a counter-demonstration.

In what appeared to be an attempt to replicate events in Egypt during President Mohamed Morsi’s last weeks in power, when the MuslimBrotherhood called on its supporters to counter those demanding the president’s downfall, Al- Meshri declared, ‘The supporters of the extension will come out into the streets on Sunday.’ Luckily for Libya, they did not. A counterprotest in Tripoli’s Algeria Square numbered only a few dozen.

The JCP has since distanced itself from this kind of action. In a response to the public mood and a bid to show that it is not seeking to hold onto power at any cost, the party has taken to presenting itself as neutral on the issue of the extension of the GNC. ‘We are not a part of those who are saying “yes” to the extension nor to those who are saying “no,”’ it declared this month, somewhat insipidly.

Party leader Mohamed Sawan, meanwhile, made clear that the party would accept early elections to the GNC if they were called for. The JCP knows that it is skating on very thin ice. It knows, too, that it has to make the proposed roadmap work if it is to have any chance of surviving. But this entails not only getting public acceptance but also winning over the National Forces Alliance (NFA), which is still imposing tough conditions of its own.

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

© 2014 Menas Associates

Yemen: A plague of kidnappings

On 10 January, Al-Qa’ida in the Arabian Peninsula released Yolande Korkie, a South African it had held since May 2013, but only to facilitate demands for a ransom of $3 million for her husband, Pierre. Both are teachers working with a South African charity, Gift for Givers Foundation, which had been in touch with the kidnappers for some time to try to arrange their release.

Korkie explained that they had failed to persuade the kidnappers that their families were too poor to pay such a sum. AQAP suggested they ask Qatar or another government to intervene, perhaps hoping for a repeat of the part played by Oman in arranging freedom for two Finns and an Austrian last year (for what was said to be a very large ransom).

Gift of the Givers was given three weeks to come up with the money but said in early February that it had lost contact with the kidnappers shortly before the deadline expired, though it later received assurances that Pierre was alive and would not be executed. The couple had been in Yemen for four years and must have been aware of the risks they were running.

The UN Security Council has again called in governments and other organisations not to agree to ransom demands from kidnappers as the money is used to finance terrorism and encourages the further use of this form of extortion.

A German in his 60s studying Arabic was taken in central Sana’a on 31 January but apparently by tribesmen from Marib in dispute with the government. He should eventually be released unless the kidnappers sell him on to AQAP. A British oil worker was kidnapped on 3 February along with two Yemenis outside a supermarket at Hadda in Sana’a. Nothing is known of the motive, nor has there been any news.

An Iranian commercial attaché was killed in early January as he was leaving the residence of the Iranian ambassador in what appeared to be a bungled kidnap attempt. Another Iranian diplomat taken several months ago is still being held but the Tehran government says that he is in good health – contrary to reports that his body had been found in Marib. AQAP is also still holding the Saudi consul in Aden and there may be at least one other western hostage whose name (and even news of his kidnapping) has not been made public.

For more news and expert analysis about Yemen, please see Yemen Focus.

© 2014 Menas Associates

Kenya's Eurobond delays highlight pressure on Ghana

As Ghana’s economic star wanes - with high inflation, interest rates and fiscal deficit, and a declining currency detracting from what is still respectable annual GDP growth - a major focus of an improving East African economy is facing problems in its plans to issue what prominent economists hope could be a landmark Eurobond for the East African region.

Ghana, whose finance ministry hopes to issue a third Eurobond sometime this year - although concerns over the country’s international debt ratings have prompted calls that Ghana should improve its ratings position before doing so - might watch events in Kenya with interest.

According to the Fitch ratings agency, Kenya, which had planned to issue a US$2 billion or more Eurobond early this year, now looks set to delay its plans from a currently contemplated March date until April at the earliest. This is largely due to global market conditions and the volatility in emerging and frontier markets.

Much as in the case of Ghana’s broader economy - rather than just the Eurobond itself - the current and anticipated US Federal Reserve’s recent tapering is seen as a major factor. The Kenyan authorities are wary of paying a high coupon rate in the same way as Ghana did last year with its second poorly-timed Eurobond. All this is despite a relatively positive current view of Kenya’s economy and the likely partial use of the proceeds from the Eurobond to repay an existing US$600 million syndicated loan.

Although not apparently reflecting contagion from the delay to Kenya’s Eurobond - and merely reflecting expected delays in receiving a credit risk assessment from international Citigroup which it requires to apply for and receive an international credit rating - neighbouring Tanzania has indicated also that it will delay its planned Eurobond issuance until probably next year.

This contradicts the earlier confidence of Tanzania’s central bank governor, Benno Ndulu, that a Eurobond of up to US$1 billion would be issued during the second half of 2014. It raises further questions given that Citigroup bankers recently denied they are responsible for the delay.

Meanwhile, Zambia, which has issued a Eurobond in the past, is also planning a second Eurobond later in the year. Like Ghana, it has recently received IMF backing, despite the high yields on its existing Eurobond issuance which, in part, is due to its low debt levels and strong growth. Ghana, although with a manageable debt level, faces a deficit problem that could make future Ghana bond investors nervous.

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

© 2014 Menas Associates

Libya: Violence in Benghazi continues

It has been another week of violence in Benghazi with state forces clearly no closer to curbing the campaign of assassinations and attacks that have blighted the city for months. As the spokesperson of the Joint Security Chamber in Benghazi, Ibrahim Al-Sharaf, described, “the security situation in Benghazi is still tense… The assassinations are continuing.”

On 7 February the imam of the Al-Ansari mosque in the Hadaiq area, Sheikh Atif Al-Madouli, was shot dead by gunmen as he was returning from Asr prayers. Al-Madouli is believed to have worked for the external intelligence services under the former regime.

Meanwhile, there have been a series of explosions targeting civilian locations. On 5 February, a gunman threw a grenade into the playground of a private primary school in Benghazi’s Tabalino district. The attack occurred at around 11.00 when the school playground was full. Six children were injured in the attack.

Then, on 9 February, two bombs exploded at dawn in the city. One exploded at the Arous Al-Bahr (Bride of the Sea) restaurant on the corniche. It appears that bags full of explosives had been planted all around the restaurant and destroyed it completely. The other blast occurred in Ghazir Street and was the result of a booby trapped car. It is unclear who was behind these attacks, and why these particular targets were selected, but restaurants are often associated in the minds of Islamist militants as places of vice and decadence.

It was also reported that a booby trapped car was found on the same day behind the headquarters of the Special Forces in Benghazi. Security forces are reported to have discovered 350 kilos of TNT at the site.

These attacks were followed by another explosion at dawn on 10 February in a house in the Al-Laithi district. It is currently being reported that two people were killed in the blast but this explosion actually appears to have been the result of badly stored weapons and ammunition.

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

© 2014 Menas Associates

Egypt: Army Sweep in the Sinai

Military sources said that 13 jihadi militants were killed in an air strike in northern Sinai. They said that the Air Force launched a series of strikes against militants around the city of el-Arish in northern Sinai, targeting houses, shops, vehicles and other gathering points. The army moved in later to targets near Sheikh Zuweyid and picked up four suspects, two of them Palestinians.

The strikes were in response to the downing of a military helicopter by the Ansar Bayt Al-Maqdis (Supporters of Jerusalem) which has said it was behind a spate of attacks on security targets.

Militants have increased their attacks since Morsi was ousted as president in July. The group also said it had carried out the attack last month on the gas export pipeline to Jordan as part of a campaign to "target the regime's economic interests".

The Egyptian authorities have in effect cited the attacks as evidence that the Muslim Brotherhood is a terrorist organisation - without producing evidence that the Brotherhood is behind the attacks. Once again, clashes broke out after Friday prayers between security forces and Brotherhood supporters in Cairo and Alexandria.

A car bomb targeting a bus carrying Egyptian soldiers wounded three civilians near Rafah in the Sinai, security officials said.

A police conscript was killed by unidentified gunmen in Sharqiya in the Nile Delta. Sherif Bayoumi, 30, and another conscript, El-Tablawi Mousa, 31, were shot at by hooded men riding a motorcycle. Bayoumi died soon after being transferred to hospital, while Mousa is in critical condition. Both victims sustained gunshot wounds to the head, reported Al-Ahram's Arabic website.

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

© 2014 Menas Associates

Libya: Son of Benghazi's Special Forces head kidnapped

Ali Ouanis Bukhamada, the son of the head of Special Forces in Benghazi, Ouanis Bukhamada, was kidnapped last week from outside a restaurant behind Benghazi University. Two cars blocked the young man’s way and unknown men forced him inside one of the vehicles and drove him away.

It is not clear exactly who took the young Bukhamada but it is widely believed to be the work of an Islamist militia or group operating in the country’s second city. The Special Forces chief declared, “This is an attempt to blackmail me or to pressurise me so as to hinder us from imposing security and stability.”

According to some rumours, Ali Ouanis Bukhamada’s kidnappers demanded that Special Forces pull out of the Islamist-dominated Qawarsha neighbourhood in return for the young man’s release. Bukhamada denied these rumours and asserted, “I don’t have any forces in Qawarsha. I don’t know what they want. Let them tell us and I am quite open to them.” Other reports circulating on the internet and on social networking sites have claimed that the young man has already been killed by his abductors.

Ali Ouanis’s abduction was followed by a number of clashes between Special Forces and militant groups. One such clash occurred at a farm in Qawarsha, located on the western outskirts of Benghazi, where armed gunmen had holed themselves up and had opened fire on a helicopter engaged in a combing operation. Special Forces troops moved in on the farm, putting the area under siege and closing all the main roads that lead to it. The ensuing clashes left one soldier dead and four others injured.

In a show of support, Justice Minister Salah Al-Marghani flew to Benghazi after Ali Ouanis’s kidnap to meet his father. There is, however, little hope that the young man’s captors will be brought to justice. Going by what has happened to other kidnap victims in the city, there is limited hope too that Bukhamada will be found alive.

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

© 2014 Menas Associates