Algeria vows tax reform in energy sector, eyes shale gas cooperation

The headquarters of Algeria’s state-owned energy giant Sonatrach in the capital Algiers. (AFP)
Updated 25 March 2018
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Algeria vows tax reform in energy sector, eyes shale gas cooperation

ORAN, Algeria: Algeria plans to offer tax incentives in a planned new energy law to attract more investment and is in discussion with foreign energy firms including BP and Anadarko to exploit its shale gas reserves, officials said on Sunday.
OPEC member Algeria is a key gas supplier to Europe, but growing domestic consumption has been hitting energy exports, the main source of the state budget.
In a bid to reverse the fall, the energy ministry has started drafting amendments to the energy law, promising more incentives for foreign investors.
“We will remove all obstacles, wage a battle against bureaucracy and change tax procedures,” Energy Minister Mustapha Guitouni told a gas and gas conference in the western city of Oran.
“The amendment is required by our energy security,” he said. “The current system must change. We will intensify consultations with our partners.”
The law has been in the works for years and is seen as key to attracting more investment but no draft or details have been presented yet.
In the latest bidding round in 2014, Algeria awarded only four of 31 blocks on offer after a disappointing auction in 2011 as foreign firms balked at the terms.
Algeria was already preparing to exploit shale gas to boost output after failed attempts in the past years due to protests by residents of affected areas over fears of pollution.
“Evaluation studies on shale gas potential are going on. This will take 5 to 10 years,” he said, without providing further details.
Arezki Hocini, the head of the National Agency for the Valorization of Hydrocarbon Resources (Almaty), said Algeria had already started discussions with oil majors including BP and Anadarko to help evaluate and exploit shale gas.
“We hope these discussions will lead to talks over possible contracts,” he told reporters, without providing details.
While seeking to attract foreign investors state-run oil and gas company Sonatrach is also trying to expand abroad, mainly in the Middle East, Guitouni said.
“Egypt is interested in working with us,” he said, without elaborating.
Sonatrach earlier this year signed an agreement with Iraqi companies to form joint ventures for gas projects.
Sonatrach had already started operations in Peru and neighboring Libya, Niger and Mali.


Japan, Philippines meet to advance infrastructure plans

Updated 46 min 56 sec ago
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Japan, Philippines meet to advance infrastructure plans

  • Japanese loans so far dwarf those of China, whose pledges for projects are still largely ideas
  • Duterte has made a $180 billion infrastructure overhaul the centerpiece of his economic policy agenda, but people are looking for progress

MANILA: Philippine government ministers met with a top adviser of Japan’s prime minister on Wednesday, in a effort to move forward major infrastructure projects, just hours after a visit by the Chinese president pledging to do the same.
Philippine leader Rodrigo Duterte has made a $180 billion infrastructure overhaul the centerpiece of his economic policy agenda, but already into the third year of his presidency, he is under some pressure to show signs that his ambitious “Build, Build, Build” program is making much progress.
While attention has been focused largely on fanfare of Duterte’s “pivot” to China and his frequent praise for Beijing’s economic support, agreed Japanese loans so far dwarf those of China, which has pledged billions of dollars of financing and investment for projects that are still largely ideas.
Japan will finance 156.4 billion yen ($1.39 billion) for the construction of a subway in the capital Manila, rehabilitation of one of its troubled elevated rail lines, a new Manila bypass road and a new airport on Bohol, a tourist island.
The loans are part of an 1 trillion yen aid and investment package offered in 2017 by Japanese Prime Minister Shinzo Abe, whose special adviser, Hiroto Izumi, is in Manila to discuss revamping a railroad across the capital, a flood control system, and jointly operating an industrial zone, Finance assistant secretary Antonio Lambino told Reuters.
Edmund Tayao, a Manila-based political analyst, said the strong performance of the Philippine economy meant it had outgrown its infrastructure, and there was public pressure to modernize it.
“This is a long-delayed requisite,” he said. “When we speak of trains, mass transit systems, disappointment is an understatement. It is frustrating to compare it with neighbors.”
Expectations have been high since Duterte left China two years ago with $24 billion of investment and loans pledges, and there were hopes that this week’s visit of Chinese President Xi Jinping, the first in 13 years, would have seen firm commitments for those to advance.
However, of Tuesday’s 29 agreements, the only loan agreed was $232.5 million financing for a dam. Others counted as deals included two feasibility studies, memorandums of understanding for arrangements that already existed, or a handing over of certificates.
Michael Ricafort, an economist at RCBC bank in Manila, said that with the spotlight on foreign interest in the infrastructure program, the government was keen to show progress was being made.
“The government is now put on the spot. People are looking for the promises to be fulfilled.”