The European Investment Bank, the European Union's financing institution, is making available more than EUR 60 million to Orascom Construction Industries (OCI), a leading private Egyptian group, for building and operating a new cement works near M'Sila, 240 km south-west of the Algerian capital.

The project, which is also attracting support from the International Finance Corporation (World Bank Group), constitutes the first private-sector operation in the cement industry in Algeria; it ties in with the goals of liberalisation of the economy and economic cooperation between the Mediterranean Countries underpinned by the "Barcelona Process" linking the European Union and the Mediterranean Partner Countries. The EIB finance comprises both an indirect EUR 6 million equity participation from risk capital in the company and a loan for USD 55 million. This mix is particularly well suited to the establishment of a private company, combining equity funding and long-term resources, a financing package difficult to contract in Algeria at present.

The cement works, scheduled for commissioning by 2004, will be operated by OCI's Algerian subsidiary, the Algerian Cement Company (ACC); its aim is to meet significant demand in the country for cement and concrete for housing construction, for which there is a pressing social need in Algeria's main urban centres. By virtue of the transfer of technical and corporate management expertise entailed by this private-sector venture, high-quality cement supplies will be boosted substantially compared with those currently offered by public-sector Algerian cement works. In addition, the new company will generate major economic benefits for the Algerian economy by creating around 400 highly skilled local jobs, exploiting local raw materials (clay, gypsum, limestone) over almost 50 years and replacing imports, so enabling the country to make appreciable hard currency savings.

These EIB loans to Orescom constitute the EIB's first private-sector operation under the new "Facility for Euro-Mediterranean Investment and Partnership" (FEMIP), set up by the Bank in the wake of the Barcelona European Council (15 and 16 March 2002). Launched in Barcelona on 18 October 2002, FEMIP will boost the EIB's financial cooperation with the Mediterranean Partner Countries, enabling the Bank gradually to scale up its annual lending activity in the region from EUR 1.5 billion to EUR 2 billion and fully involving the beneficiary countries in implementation of the assistance provided.

In qualitative terms, the new facility will accord priority to financing private-sector ventures with the dual aim of helping to liberalise the economies of the Mediterranean Partner Countries and expanding their potential in the run-up to the creation of a Euro-Mediterranean Customs Union in 2010. Accordingly, the EIB's goal is to increase the proportion of private-sector operations to 33% of its financing. FEMIP will likewise focus on cross-regional infrastructure and social-sector projects, particularly in the fields of health and education and environmental protection, major factors in achieving social stability and encouraging productive investment.

In 2001, EIB lending in the Mediterranean Partner Countries reached a record EUR 1.5 billion, confirming the position of the EU's financing institution as the key player in promotion of the region's economic and social development. Algeria, which has attracted EUR 1.5 billion in loans since 1974, numbers among the leading beneficiaries of EIB activity, alongside Egypt, Morocco and Tunisia.