French giant Total Energies has ditched a petrochemical project in Arzew in Oran in Western Algeria, a withdrawal that analysts blamed on Algeria’s bureaucracy.
Africa Intelligence news outlet relayed the news on the eve French President Emmanuel Macron’s visit to the country.
Sonatrach has agreed to create a 1.4 Billion dollar petrochemical facility to produce 550,000 tons of polypropylene per year.
Sonatrach was informed that Total Energies would withdraw its investment citing the project’s inability to make a profit, but French experts believe the project’s abortion is due to excessive bureaucracy.
Due to insecurity concerns, major oil and gas companies have shunned Algeria since the 2013 bloody attack at Ain Amenas, one of its largest oil sites.
The country is behind in the business climate surveys, and has been left behind in the Doing Business Index as well as the Economic Freedom Index.
The perception of Algeria’s unfriendliness towards foreign investors is worsened by facade investment reforms that left unchanged a rule requiring 51% of national ownership of any projects.
The 51/49 rule stipulates that at least 51% must be owned either by Algerian residents or Algerian nationals.
Investors have been pushed away by the archaic bank system. Algeria’s banks remain state-dominated and highly corrupt thus thwarting foreign direct investments.
The political instability and the opacity surrounding the military-dominated regime also contribute to undermining the flow of foreign direct investments in Algeria’s oil and gas sector.
Algeria’s willingness to weaponize gas and use the resource to achieve its regional agenda is also deterring many Western companies.
Source: north africa post
