The European Investment Bank, the European Union's financing institution, is providing a further USD 15 million to the Algerian Cement Company Spa (ACC), the country's only private sector cement producer, for expanding its existing cement works near M'Sila, 240 km south-west of the Algerian capital, constructed with EUR 66 million EIB loan and other financing over the period 2002-2004.
The EIB finance agreement has been signed today in Paris by Mr. Ph. de Fontaine Vive, EIB Vice-President, with special responsibility for EIB's financing arm for the Mediterranean Partner Countries, the FEMIP, and Mr Nassef Sawiris, Orascom Construction Industries (OCI) Chief Executive Officer.
Mr Philippe de Fontaine Vive at the signature ceremony stated: This is an exemplary South-South private sector investment, building on the experience of the Orascom Construction Industries group and bringing together Egyptian, Algerian end European investors for the development of a crucial economic sector for Algerian economy. It ties in with the objectives of FEMIP, which aims at liberalisation of the economy and economic cooperation between the Mediterranean Partner Countries underpinned by the Barcelona Process.
The first production line built on a greenfield site has been commissioned in early March 2004, contributing according to Mr Nassef Sawiris, to the Group's enhanced economic performance.
The project consists of one single, additional production line with a capacity of 2m tons of cement. It will use the classical, state of the art and energy efficient dry process, with modern pollution control equipment, as the first line.
The investment will generate major economic benefits for the Algerian economy: 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 substantially boosted. In addition, this expansion will be creating employment, exploit local raw materials (clay, gypsum, limestone) and replacing imports, so enabling the country to make appreciable hard currency savings.
ACC is the wholly-owned Algerian subsidiary of the leading Egyptian group OCI traded since 1999 on the Cairo and Alexandria Stock Exchange. This follow up investment, is cofinanced with the other international financial institutions (International Finance Corporation-IFC (World Bank Group) and Deutsche Entwicklungsgeselschaft-DEG), as well as with local and international commercial banks (Caisse Nationale d'Epargne et de Prévoyance banque - CNEP, Citibank Algeria, Citibank International London) and Eksport Kredit Fonden-EKF, which had participated to the financing of the first production line. This continued involvement of the lenders demonstrates their lasting confidence on the role and possibilities for private sector operators in Algeria.
European Investment Bank (EIB) lending in the Mediterranean Partner Countries is provided under the Facility for Euro-Mediterranean Investment and Partnership (FEMIP). Through FEMIP, the Bank focuses particularly on developing the private sector and financing socio-economic development infrastructure. To this end FEMIP will assist quantitatively with a EUR 2 billion annual lending volume, but also qualitatively with new lending instruments and techniques specifically designed to foster private sector development.
FEMIP was set up in response to the conclusions of the Barcelona European Council (15-16 March 2002) and Valencia Euro-Mediterranean Conference (22-23 April 2002). It was reinforced according to the Brussels European Council decision in December 2003, with the following new features mainly in support of private sector development:
- stepping up financial support in the region through a special facility for risk financing for the private sector (the SFE) and by setting up a trust fund;
- diversifying the range of financial products offered, notably by seeking possible ways of providing local currency financing;
- intensifying dialogue with the MPCs by organising meetings of the Committee of Experts to prepare the ground for the deliberations of FEMIP's Ministerial Committee and by establishing local offices in the Mashreq - where the Cairo office was established in June 2003 - and, some time in 2004, in the Maghreb.
MPCs are closely involved in FEMIP's implementation with an enhanced role to the Facility's Ministerial Committee, set to become the Mediterranean ECOFIN Council, whose annual sessions are prepared by a high-level experts group meeting twice a year (this year in Marseilles, in February, and in Amsterdam, in October). Furthermore, the FEMIP has expanded its local presence by adding two new offices in Rabat and Tunis to the existing Cairo office, inaugurated in September 2003, and by forging close links with the business communities in the Partner countries as well as in Europe.
The FEMIP's purpose is to help the Mediterranean Partner Countries (MPCs) meet the challenges of economic and social modernisation and further regional integration in the run-up to establishment of a free trade area between the EU and those countries foreseen for 2010.