Global Arab Network | Algeria: a generous spending programme on construction sector

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Algeria: a generous spending programme on construction sector

Wednesday, 19 October 2011 00:06

http://www.english.globalarabnetwork.com/images/stories/2010/Dec/Algrie_building_algeria.jpg

Global Arab Network - Recent years have seen a flurry of activity in Algeria’s construction sector, pushed by a generous spending programme on the back of sizeable hydrocarbons revenues. New motorways, ports, trams, industrial facilities and housing projects have all led to significant growth in the sector – and it does not look as though things are going to change any time soon, following the completion of the bidding process for what will be one of the largest mosques in the world, Global Arab Network reports according to OBG.

On August 22, Bouabdallah Ghlamallah, the minister of religious affairs, announced that the government had prequalified two consortia and one construction firm for the main contract to build a grand new mosque with the highest minaret in the world.

In all, 15 bids were considered, with the successful three bidders including a consortium consisting of the Italian-Lebanese firm Astaldi and the Lebanon-based Arabian Construction Company; a Spanish-Algerian joint bid by COSIDER-FCC and ETRHB Haddad; and China State Construction.

The new mosque – which aims to be the third largest in the world after Saudi Arabia’s Mecca and Medina – will be located in Mohammadia, in the eastern outskirts of Algiers. The 20-ha complex will have room for 120,000 worshippers, with the centre of the complex dominated by a 300-metre tower, the world’s highest.

The amount of investment in the mosque has not yet been made public, but early estimates put the cost at around €500m, while later reports suggested €975m as the upper limit.

Given the amount of investment and the importance of the project, bidding was open only to companies with a permanent staff of more than 2000 and an annual turnover of at least €1bn. Placing the bar high was also aimed at ensuring those companies that did qualify would be able to complete the project without delays caused by financing or equipment constraints, highlighting some of the issues that other construction projects in Algeria have come up against.

The prerequisites for bidders come within the context of a broader push by the government to address capacity and standards within the sector.

The government is working on modernising regulations governing the construction industry, with more robust enforcement procedures being put in place. A new law strengthening earthquake safety standards, and based on US and European legislation, is currently in the works. The law will mark Algeria, which lies in a seismic zone, as the first African country to implement a framework for earthquake risk management.

Furthermore, the country is bolstering urban planning regulations in a bid to cut down on illegal habitations and improve coordination amongst municipalities to address issues including overcrowding and traffic flows.

Indeed, with so much of the focus of the government’s $286bn development plan on infrastructure for 2009-14 – €116bn will go to new projects and €96.7bn to existing schemes, including rail, road, water, education facilities, and around 2m new homes – these are very busy times indeed for the sector’s companies and capacity constraints have caused significant issues.

A consistent concern in the construction sector as a whole is materials prices and supply. Regarding the latter, demand for steel has rocketed in recent years, from 4.2m metric tonnes (MT) in 2007 to around 6m MT in 2010. Steel-reinforcing rods, used in construction, account for around half of this demand. This surge is, however, being addressed in part by a €500m investment in the Arcelor-Mittal steel plant at El Hajar. This should see a two-phase facelift, first boosting steel output to 1.4m MT per year, then to 2.4m MT per year in the second phase.

In cement, rising demand has led the state, which currently supplies around 65% of market demand through the recently established Cement Industry Group, to launch an investment project for 2011-15 in a new cement plant that it hopes will boost supply from around 11.5m MT to 20m MT. This comes on top of plans for another new 3m-tonne capacity facility by ASEC Algerie, a subsidiary of Egypt’s ASEC Cement Holding, that is slated to open next year.

These moves should ease some of the supply – and thus pricing – concerns for contractors, as they try to stretch and fulfil the ever-increasing list of construction projects now under way around the country.
(OBG)

Global Arab Network

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