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Development finance facilities: Prospects for APAC
Sponsors and project developers across the renewables and energy transition space are currently facing a challenging macroeconomic environment.
Global | 出版物 | 五月 2020
In October 2019 we had published a short note (https://www.insideafricalaw.com/blog/algeria-any-reason-to-consider-investing-in-2020) about the increased communication by the Algerian Government on the introduction of changes to the 49/51 Algerian majority ownership rule. We had also briefly commented on the reasons for this increase. With an economy severely impacted by the Covid-19 crisis and the related further fall in oil prices these reasons are even more pressing today. The Government seems to have now confirmed that a number of important changes are forthcoming.
On Sunday 10 May 2020 the Council of Ministers issued a press release about the 2020 Finance Bill confirming, yet again, that the 49/51 rule will be changed this year except for “strategic sectors” and resale activities.
It now seems that the “strategic sectors” will include:
Some distinctions could be drawn within these broad categories and it is interesting to note that the press release provides that the President of the Republic has required that “transparent regulations” be issued “in order to avoid any wrong or ambiguous interpretation of the 49/51 Rule as regards the preservation of the country’s national wealth.”
Other activities for the production of goods and services would no longer require a local partner.
The State’s right of pre-emption over the shares held by foreign shareholders in Algerian companies would be replaced by a “prior authorisation” which should apply to the transfer of shares to foreign companies and be limited to the above “strategic sectors.” The details will be set out in an implementing decree and it seems that the President of the Republic has required that this decree should also aim at introducing transparency and protecting national wealth. The preemption right would now fall within the authority the Prime Minister (probably in part because the powers of the “Conseil des Participations de L’Etat” (State Shareholdings Council) are under review) and be subject to thorough examination by experts when exercised.
Finally it seems that the obligation to use local financing will be lifted. The possibility to use international debt financing had already been re-introduced in 2016 for “strategic projects”. The forthcoming change would therefore further open the possibility to other companies and projects.
Some of the other measures announced by the Government include:
As we have previously indicated, the 49/51 rule is not the only challenge for foreign investors and various other changes will be required if its cancellation is to have a major impact. However since some sizeable projects were developed with foreign partners with the 49/51 rule in place, its removal should only further encourage investors to start or continue identifying and doing preliminary or further due diligence on possible project opportunities, including, we would suggest, in the so-called “strategic sectors”.
Until the law is passed all of the above is of course subject to confirmation but we will review the final version and follow closely its implementation and will be happy to discuss any of the above with you.
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Sponsors and project developers across the renewables and energy transition space are currently facing a challenging macroeconomic environment.
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