Economics Affairs

Invitation to tender for 4,025MW solar project to be launched late March

APS - 13 March 2017

WASHINGTON- Energy Ministry plans to launch, late March, the invitation to tender for the mega solar photovoltaic project of 4,025 MW, said Friday in Washington CEO of Company of Electricity and Gas Engineering (CEEG), Mohamed Arkab.

Speaking on the sidelines of Powering Africa Summit, the GEEC manager told APS that this call for tenders for investors, part of the national policy for renewable energies development will be "launched late March or early April."

The project, divided into three sections of 1,350 MW each, includes two segments: one concerning energy and the other one industry. It also provides for the construction of several plants in the High Plateaus and the South regions which possess significant solar energy potential.

The solar plants will be located in several provinces like Bechar, El Oued, Ouargla, Biskra, Djelfa and M?sila, announced Arkab, adding that the average capacity of each plant would exceed 100MW.

For the industrial aspect, GEEC plans the construction of one or several factories for the manufacturing of photovoltaic plants equipments and components.

Through this huge project, the GEEC is aiming the establishment of an industrial basis in the photovoltaic field, said Arkab.

The commissioning of this ambitious project will drastically reduce gas consumption, used in the electricity production in Algeria.

The solar plants will be functioning in daytime alternating with gas plants, enabling thus significant energy savings.

"At Sonelgaz, we are working to reduce gas consumption, by encouraging the combined cycle plants," he added.?

Sonatrach, important shareholder in project firms

For the energy segment, the call for bids, presented at a round table on renewable energy in Africa, provides for the creation of several financing companies, the EPC, the commissioning of solar power plants and the marketing of the produced electricity.

The share capital of each company will be allocated in accordance with the rule governing foreign investment which grants a 51% stake to the Algerian national investor and 49% to the foreign partner.

Sonatrach will participate in the energy segment by acquiring a 40% stake in each firm, while Sonelgaz and national public and private companies will take 11% of the shares.

The maximum rate of participation in the capital of the project firms is limited to 6% for the Algerian private companies.

Sonatrach Group would benefit from participating in this project, which would allow it to recover large volumes of gas, initially destined for the electricity production and redirect them towards export.

Moreover, the indebtedness needs of the energy segment of the project must be ensured by non-recourse financing, based solely on its profitability, according to the details of the project.

30% of the funding for each solar power plant project will be secured by shareholders' equity while the remaining 70% will stem from bank loan.

The distribution of capital in industrial joint ventures in charge of manufacturing equipment for solar power plants will also be carried out in accordance with the rules governing foreign investment.

The Ministry of Industry and Mines will designate public and private national companies to partner with Sonelgaz and Enie.