April 2000

Algeria Master Report

1. The Interaction Between Business and Regulatory Constraints

1.1 Regulatory Background

Despite the fact that the telecommunication company is a state-owned one commanded by the ministry of telecommunications (PTT) since December, the 3^rd 1975 (ordinance n° 75-89), this latter is willingly intending to privatise new sectors under the ordinance n°95-22 of August, the 26^th 1995 which stipulates the privatisation of public enterprises. This ordinance also defines the general rules of the privatisation process on which the state directly or indirectly have a part or totality of the authorised capital.

On the other hand, the decree n°96-106 of March, 11^th 1996 reinforces the above ordinance by the creation of an institution that will have in charge this privatisation process.

Algeria’s privatisation law offers advantages to private investors-tax incentives, deferred payments and an employee ownership option. The investment code (1993) presents significant medium and long term opportunities to foreign firms seeking a market in Algeria.

1.2 Business Constraints and Entry Barriers

Progress on economic reform and oil and gas sector expansion have contributed to a recovery since 1995. The hydrocarbons sector is the backbone of the economy, accounting for roughly 60% of budget revenues, 25% of GDP, and over 97% of exports earnings. Algeria is the fifth largest reserves of natural gas in the world and is the second largest gas exporter with Europe as main market.

1.3 On going regulatory developments concerning alternative networks

A privatisation program has been launched by the previous government and the program of the new government (23 December 1999) shows its willingness to accelerate the started process.

The targeted sectors to be opened to liberalisation process are the energy, banks and insurance, services, and telecommunications.

In the telecommunication sector, deep changes will occur and are expected to reform the current organisation and even the functioning of the PTT ministry. A project law is under elaboration and is to reform the current PTT code established since 1983. It also intends to open the sector to private and public operators in priority for the exploitation of the GSM.

2. Inventory of the Major " Public " Utilities with a Potential for use in IS Applications

Even though the Ministry of Posts and Telecommunications (PTT) is the sole public operator and provider of telecommunication services and infrastructures, there are some companies that have a big potential for developing their own alternative networks such as SNTF, SONATRACH, SONELGAZ and ENGEOA.

By the end of 1999, the Algerian railways company (SNTF) started the installation of its own alternative network infrastructure to meet the needs of the private telephony and data transfer of the company.

Concerning radio-satellite communications, the PTT ministry has recently declared a forthcoming implementation of two new radio-satellite communication systems (VSAT and INMARSAT). These systems will meet the national needs especially for those isolated areas of the national territory, the Saharan region for instance, as well as abroad like embassies and other Algerian organisms.

In June 1998, a law ended up the national monopoly that AIR ALGERIE used to hold since its creation in 1963. Less that a year, in1999, not less that five private companies opened to competition the aerial space. These new companies are : SAHARA Airlines, KHALIFA Airways , ANTINEA Airlines, ECO AIR International, Air Fret Service and Tassili Airlines a mixed company between AIR ALGERIE and SONATRACH.