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Wed 11 Aug 2010 04:00 AM

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Algeria’s affliction

The recent embezzlement cases that have hit Algeria's state controlled energy company, Sonatrach, has obliged the government to react and to take serious measurements to avoid any repetition.

Algeria’s affliction

The recent embezzlement cases that have hit Algeria's state controlled energy company, Sonatrach, has obliged the government to react and to take serious measurements to avoid any repetition. The internal strife has caused the cancellation of many contracts which had been awarded in an over-the-counter (OTC) trading basis without tenders. The whole process of reviewing the tendering process and the award of packages is now being completely revamped.

The Sonatrach corruption scandal showed how a national energy company was effectively being run as a family business. Senior executives were creating companies for their sons and sometimes their wives, and then awarding them multimillion dollar contracts. There was no transparency and the swathes of red tape bureaucracy made even legitimate bidders look complicit.

Two years ago, I met one of the vice presidents of Sonatrach when he was in Paris, and asked him about the bureaucratic procedure that characterizes Sonatrach, and whether foreign partners are complaining about this. He smiled and said if these companies want to work and get business with our company, they should be patient as there is no precise time frame to reply them.

This situation, thinly veiled as bureaucratic procedure, opened the door for endemic corruption in the company.

The new measures the government has announced include the cancellation of the shady R15 clause, which dictates the procedures to be followed before a contract, and replacing it with the R16, which bans the award of the contract on OTC basis. These policies aim to fight irregularities which have distorted the image of the company.

I think there is a strong will from the government to avoid previous mistakes, and to change the way of doing business in the country. The government has recently publicly committed to a development plan of US$286bn for the next five years, so if the clean regime can be maintained, is your company positioned for a slice of that action?

Abdelghani Henni, is the editor of Petrochemicals Middle East.

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