Risk Management in Transport PPP Projects
In the Islamic Countries
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restrictions apply to foreign investments in Algeria which according to literature represent a
potential deterrent on private sector investments and PPPs. These include the elimination of
free transfer of imports, and the pre-emptive right allowing the government the right to buy
back the assets of private companies. Furthermore foreign direct investments or partnership
investments must also receive approval by the National Investment Council (Conseil National
de l’Investissement – CNI) and are required to present a balance in surplus currency in favor of
Algeria throughout the duration of the project. With the exception of equity, financing of projects
shall be provided by local banks only. Whilst the above elements are clearly aimed at making the
country benefiting from foreign investments and privatization processes – particularly in terms
of transfer of know-how and competences (see Box overleaf) – the same also represent potential
obstacles to the attraction of foreign investments and development of PPP projects as
commented in several literature (EIB, 2011; KDI, 2014, Nesrine Bougriou N., Benterki A. 2018).
The organic Law N. 18-15 of 201843 on finance legislation actually foresees the possibility for
the state to finance either partially or totally, public investment operations, in a contractual
framework or in partnership with a legal entity of public or private nature, provided that the
investment is compatible with medium-term state budgetary framework and that it is in line
with the strategies of the concerned sector.
The above principle that seems to facilitate the implementation of PPP initiatives in Algeria
reflects the targets and objectives set in the current government's action plan adopted in
September 2017 (government of the Republic of Algeria, 2017). The Government Policy in the
Field of Transport of 2015 is also emphasizing the relevance of PPP initiatives, particularly in
the maritime, airport and logistics sectors, albeit making specific reference to Institutional PPP
under the 49/51 rule (Ministry of Public Works and Transport of the Republic of Algeria, 2015).
On the basis of publicly available information44 it is noticed that over the course of 2017 several
discussions occurred at the institutional level involving the World Bank and the Algerian
Authorities including the National Development Equipment Fund (Caisse Nationale
d’Equipement pour le Développement – CNED), responsible for the promotion of PPPs. These
aimed at identifying four pilot projects in the transport sector likely to be financed by the World
Bank under the PPP model, namely: a section of the East-West toll road; the Bus Rapid Transit
connecting Tafourah to the Houari-Boumediene International Airport; the Oran metro; and the
extension of the Algiers metro (Section Place des Martyrs à Chevalley). These projects were
assumed to be subject of feasibility study by the World Bank and CNED, which could represent
pilot initiatives to receive funding support from the World Bank in the transport sector prior to
the possible involvement of the bank in PPP initiatives in other sectors.
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