Dr Mebtoul talks to American Herald Tribune

 

“Any Destabilization of Algeria would have Geo-strategic Repercussions on all the Mediterranean and African Space” stated Dr Mebtoul talking to American Herald Tribune‘s Mohsen Abdelmoumen, journalist in an extensive interview published on 28th December 2016.

American Herald Tribune is a genuinely independent online media outlet.  AHTribune is dedicated to strengthening and supporting independent journalism, and to improving the public’s access to independent information sources.

Here are some excerpts but the whole interview could be accessed in its original setting.

Mohsen Abdelmoumen: We are following your work for a long time. For the economist that you are, does Algeria respect international commitments?

Dr Abdulrahmane Mebtoul: You are referring to the Association Agreement signed in full sovereignty on September 1st, 2015. For Algeria, speaking through the Director-general of economic relations and international cooperation at the Ministry of Foreign Affairs, it is not question of calling into question the general architecture. Europe having acceded to the Algerian demand and agreed to a partial revision of some articles allowing a win/win partnership while underlining for the European part, that the structural reforms for a diversified economy depend first of the Algerian government, in order to benefit from this agreement. There is again talk of a possible membership of Algeria to the World Trade Organization (WTO) which constitutes 97 % of the world trade and 85 % of the world population. End of July 2016, the organization had 164 member countries and 20 observer countries, including Algeria. To date, Algeria led 12 rounds of multilateral negotiations, during which it treated 1,900 issues related primarily to its economic system. For my part, I am favorable to this membership and for the respect of the international agreements, Algeria having always respected them. The recent law passed of the return of the import licenses is part of the respect for the international commitments of Algeria. Freedom of trade and industry is the basis of the economic and trade policy of the Algerian government, enshrined in all the measures of the Algerian legislation. In this context, this legislation following the example of what is planned by the legislation of several countries with economy opened in Europe and elsewhere, offers the possibility of using, in specific and predefined cases, a transitional period in order to upgrade the productive apparatus, to the neutral import or export licenses in their application and administered in a fair and equitable way to manage exceptions to this freedom of trade, in accordance with the rules of the WTO. In general, Algeria’s accession to the WTO will require it to open borders and the increased specialization aroused by globalization. Indeed, both agreements with the European Union than with the WTO are planning to develop trade by putting in place the conditions for the gradual liberalization of trade in goods, services and capitals. Recently, newspapers have poured into the guesswork by taking out the content of its context. There has never been any question, either on the part of the European Union or the USA, of freezing economic cooperation with Algeria. The wish, faced with the fall in the price of long-term hydrocarbons, is a change in the Government policy which will have to accelerate reforms in order to avoid the destabilization of Algeria and, thereby, the region, what the international community does not want. This was confirmed to me during my conference at the invitation of the European Parliament and recently by officials of the European Union. The fight against terrorism by the ANP (Algerian army) and Algeria’s security forces is strongly welcomed by the international community; there are dialectical links between security/development that must over time be pooling the spending by a regional agreement. In the event of an economic recession in Algeria and in the whole of Maghreb, the integration to which I am deeply attached for decades, with the strong demographic pressure, it is all the Maghreb which risks the destabilization and by extension Africa and Europe, especially after the announcement of Daesh’s penetration in the region, by the US intelligence services. This stability depends on the deepening of the internal comprehensive reform which will depend greatly on the relations of political forces between the reformers and the seated on rentier revenues conservatives. To conclude with your question, indeed there have been international disputes in cascade for certain Algerian companies including SONATRACH with their foreign partners, but there is an awareness that a law must conform to international standards in order to encourage both domestic and international private investment. This also raises the issue of the 49/51% rule generalisable that the Algerian Government has not introduced in the new investment code whose I have advocated the easing to the Government since 2010, both to the segments hydrocarbons for the marginal deposits and other non-strategic segments in order to boost non-hydrocarbons exports. The “non-hydrocarbons” exports which remain always marginal with only 5.46% of exports’ global volumes, equivalent to $2.06 billion in 2015, have experienced a 20.1% reduction in year 2014. Exported products apart from hydrocarbons are essentially half-finished products that represent 4.48% of the global volume of exports, equivalent to $1.69 billion, food products with a part of 0.62%, equivalent to $234 million, raw products with a part of 0.28%, in absolute value equivalent to $106 million, and finally industrial capital goods and non food consumer goods with respective parts of 0.05% and 0.03%.

Will the American election and the future French election have repercussions on Algeria?

The United States of America, France and Algeria maintain relations of friendships for a long time. For the USA, it must be recognized that with the Oil/Shale Gas revolution, they became competitors to SONATRACH, and this has had an impact on the value of the trade balance, which increased from $12 billion in year 2008 to $5 billion by 2015. But major US non-hydrocarbon investments are underway. We may recognize that the main customers and suppliers are the Europeans with a breakthrough for China in terms of imports. Despite some seasonal turmoil, like for an old couple, economic relations with France are excellent. Spain remains a key partner of Algeria. In short, the situation is different from that of the 1986 crisis: foreign exchange reserves, although declining, are substantial by more than $112/116 billion at the end of 2016, external debt is low. Algeria has the potential to emerge from the crisis and has become aware of the urgency of boosting non-hydrocarbon production in the context of an open economy. Any destabilization of Algeria would have geo-strategic repercussions on all the Mediterranean and African space, hence the importance of development based on a win/win partnership.

How is it going with the partnership with the United States and Great Britain?

The objective in the face of the new global geo-strategic changes, and the establishment of America as the first world economic power, energy competitor of Algeria with Oil/Shale Gas. As customer, in 2015, the United States represents $1.977 billion that is to say a decrease of 59.04% compared with 2014 and, as supplier, $2.710 billion, that is a decrease of 5.48% compared with 2014. While in 2012, Algerian exports to the US (source Algerian Customs) were estimated at $10.778 billion and imports of $1.651 billion.

At current prices, the US GDP for a population of 324 million inhabitants in 2015 was $17,698 billion, the United Kingdom of $3,371. The European Union, including Great Britain, with a GDP of $18,812 billion for a population of 510 million inhabitants, remains the world’s largest economic power. The USA and Europe for less than a billion inhabitants add up to more than 40% of the world GDP considered at $73,400 billions in 2015 and $75,700 billions in 2016.

Commercial prospects exist between the USA and Algeria outside hydrocarbons, Algeria being primarily interested in the transfer of technical and managerial know-how with the presence of major American companies having to boost cooperation, especially in the fields of new technologies, industry, services, agriculture and buildings, public works and hydraulics industries, not forgetting training. Recently, except for hydrocarbons where the USA are present, the last contract in date is the one signed in 2013 between the group SONELGAZ and the American group General Electric (GE) for a partnership in an industrial complex manufacturing gas turbines in Algeria, for an investment of $200 million. This company, which will be held in 51% by SONELGAZ and 49% by GE, will produce as from 2017 between six and ten gas turbines a year, that is to say a capacity of 2,000 MW, a part of which could be exported. GE also won a market of supply of gas and steam turbines with a capacity of 8,400 MW for a total of $2.2 billion, intended to equip the six power stations that Algeria plans to build by 2017. But relations go beyond the economic framework.

The US recognizes that Algeria is the dominant military and economic power in the Maghreb region. It represents a key partner to the United States in the fight against terrorism, according to a document compound of 6 chapters of the Security Research Service of the American Congress which essentially deals with the question of government and politics in Algeria. Approaching the relations between Algeria and the United States, the report notes that Algeria is an increasingly important country in the US efforts to fight international terrorism and represents a key partner in the fight against terrorism-related groups. But let us never forget that the USA have a global strategy which does not differ fundamentally from that of Europe (except for certain tactical discrepancies) based on economic interests and insist on the Maghreb integration under segment of the continent Africa, whose economic control through the rivalries of China in particular will be a major issue of the 21st century.

Britain with 64 million inhabitants has a GDP (2014) of €2231.5 billion. It is the 5th world economy with exports of €407.4 billion and imports of €493.8 billion. In 2015, for the Algerian-British trade, we have $903 millions in the import representing 1.75% and $2,883 million in exports, or $3.8 billion, compared to $2.5 billion in 2012. So, let us recognize that the Algerian-British cooperation knew a real development since lord Risby’s appointment, who as Special Envoy of the British Prime Minister for Economic Partnership with Algeria, has explored a number of business opportunities in Algeria. The United Kingdom is present in the traditional hydrocarbon sector, notably through BP, Shell and BG, but also in other fields such as education (Linguaphone), infrastructure (Biwater), pharmaceutical industries (GSK), consumer products (Unilever), financial services (HSBC), and transportation (BA). Not forgetting the recent contracts signed with Hospital Group for the construction of a 500 beds hospital in Tlemcen. Petrofac obtained a $970 million-contract, in an association between Algerian Sonatrach (40%), Spanish Repsol (29,25%), German RWE (19,5%) and Italian Edison (11,25%), for the construction of a gas processing plant in the country’s South.

As for Algeria, nominal Gross Domestic Product (GDP) is expected to reach $166 billion in 2016 against $172.3 billion in 2015, according to IMF forecasts, for a population exceeding 40 million. Concerning the trade balance between Algeria and the rest of the world, in 2015, hydrocarbons represented the main part of our exports abroad with 94, 54% of the overall volume of exports, and a 40.76% decrease in 2014. Exports of “non-hydrocarbons”, which remain always marginal, with only 5.46% of the overall volume of all exports, equivalent to $2.06 billion, experienced a 20.1% drop in 2014. The groups of exported products outside hydrocarbons consist essentially of semi-finished products that represent a part of 4.48% of the overall volume of exports, equivalent to $1.69 billion, food products with 0.62%, that is $234 millions, crude products with 0.28%, that is in absolute value $106 million, and finally industrial capital goods and non food consumer goods with respectively 0.05% and 0.03%. In 2015, according to statistics, Spain was the main customer of Algeria, with $6.56 billion, followed by Italy ($6.16 billion), France ($ 4.92 billion), Great Britain ($2.88 billion), the Netherlands ($2.28 billion) and Turkey ($2.07 billion). Among the main suppliers of Algeria, China ranks first for the third consecutive year with ($8.22 billion), followed by France ($5.42 billion), Italy ($4.82 billion), Spain ($3.93 billion), Germany ($ 3.38 billion) and the United States ($ 2.71 billion). According to the official statistics, these figures also reveal that 63.49% of Algeria’s imports come from the OECD countries which are also the destination of the 82.64% of Algerian exports. Member countries of the European Union are the main business partners of Algeria which imports over 49.21% of its products and exports over 68.28% of the goods that it produces, dominated by hydrocarbons. The trade with the Maghreb countries (UMA) remain very marginal, having known a 40% decline in 2015, moving from $2.28 billion up to $3.8 billion in 2014, and trade with Arab countries decreased by 2.68%, with $ 2.54 billion against $2.61 billion. As for trade with Africa, it is marginal.and relatively modest, reaching $2 billion in 2010, Including $1.260 billion Algerian exports and $771 million of imports, but these increased strongly between 2012 and 2014.

In terms of the economic model, according to our sources, the authorities did not listen to you when you sounded the alarm right from the start. Are you listened to today?  We had echo that you had undergone pressures about the work you do and the analysis you developed, isn’t it too late to rectify the current economic situation?

No, it is not too late, Algeria having significant potentialities to emerge from the crisis subject to renewed governance and the primacy of the economy, of knowledge, far from the rentier vision which can only lead the country to collective suicide. Besides, I would like to underline that I have never undergone of pressures, being independent expert. A technical model has no significance if it is not carried by economic social forces and policies responsible for its implementation. Let’s get away from the doom and gloom, everything that has been achieved between 2000/2016 is not totally negative. Many achievements were made after the bloody decade of 1989/1999, but also many errors that must be corrected imperatively. At the end of 2013, still as an independent expert, I had directed for the government, with more than 20 experts, an important file followed by many recommendations, between 2014/2016, by insisting on the urgency to review the current social-economic policy. If we had had good governance, more rigor in management, better allocation of resources favoring the economy and knowledge, pillars of development, far from the outdated material vision of the 1970s, taking into account the non-maturation of projects with various reassessments and the additional costs that were sometimes between 25-30% for certain projects (spend lavishly), according to the World Bank report, Algeria could have saved more than 130 billion dollars between 2000/2016, an amount that exceeds current foreign exchange reserves, while creating growth dynamic. When the Government invokes tourism, industry, agriculture, services such as sector dynamic between 2016/2020 to achieve a growth rate of 7%, we need to have a precise vision project by project and to figure within the framework of internationalized sectors according to the standards cost-quality in touch with the new world transformations and not to speak about sector on the whole. Like the free trade agreements with Europe since September 01, 2005 must be taken into account with a gradual tariff reduction of zero by 2020, not to mention the constraints of the WTO in the case of accession. Will we have competitive companies in this short time? The import substitution policy to lighten the import invoice must be based on careful analysis of the import, product by product, starting from large masses. Algeria, if it wants to become an emerging country, and it has the capabilities, does not need a non-industrial strategy, a vision of the years 1970/1980, but of a corporate strategy within the framework of internationalized channels. A growth rate in real terms of 9/10% between 2016/2020 is necessary to boost non-hydrocarbon exports and reduce social tensions. All the more Algeria should face fiscal tensions by 2016/2020 with the decline in hydrocarbon prices being utopian to predict a course upper to $75/90 between 2017/2020, OPEC representative 33% of world production marketed with a declining impact. To govern means to make plans, it will be necessary, according to the quantified and dated results, to put in place strategies of adaptation, in economic, social and political, assuming a broad national front, taking into account different sensitivities, local and international changes, being at the dawn of the fourth world economic revolution with profound geo-strategic upheavals. I am convinced that Algeria suffers from a crisis of governance and not from a financial crisis, the situation being different from that of 1990. But in the absence of reforms, this governance crisis risks turning into a financial crisis, because Algeria will depend for a long time on the hydrocarbons revenues. It should be reminded that, according to the official data produced by the Council of Ministers in 2015 following the report by the Minister of Energy, Algeria’s gas reserves are 2,700 billion cubic meters and 10 billion barrels of oil, going to, in view of the exports and of the current consumption, in the exhaustion on the horizon 2030. We are currently focusing on the oil price by forgetting the price of gas, representing 33% of SONATRACH’s revenues, whose long-term contracts expire by 2018/2019 with a very strong competition, before attending a revision of prices downward. It is a strategic error to reason on a linear consumption model focused on traditional fossil energies. The world is preparing for an energy transition between 2020/2030, as has happened from coal to hydrocarbons, hence the urgency of a new economic policy 2016/2025. Faced with a situation both geo-strategic and socio-economic worrying for the future of Algeria, beyond the State, all the players in society must be mobilized if Algeria wants to return to sustainable growth outside hydrocarbons within the framework of international values.

How can we not remind that countries that have successfully performed reforms, in particular emerging countries, leaned on a mobilization of the opinion. The need to reform is imperative in Algeria. Despite unprecedented monetary spending, economic outcomes are mixed and can lead to political social crises if we continue to spend lavishly, urging the inevitability of the structural changes to be made. Strong growth can return in Algeria. But it presupposes the combination of different factors: a dynamic active population, a knowledge, the sense of adventure and technological innovations constantly updated, the fight against all forms of harmful monopoly, an effective competition, a renewed financial system capable of attracting capital and a foreign opening. These reforms fundamentally pass through a living democracy, a stability of legal rules and equity, and policies will speak of social justice. The general conduct of these reforms cannot be delegated to any particular minister or placed in the hands of any particular administration. It can only be carried out if, at the highest level of the State, a strong political will (which only the President of the Republic and the Prime Minister carry) leads it and convinces the Algerians of its importance, hence, with the era of internet, a permanent transparent active communication. Then, each minister will have to receive a personal “road-map” supplementing his mission letter and taking up all the decisions that are within his competence. Given the importance of the measures to be launched and the urgency of the situation, the government will have to choose the mode of implementation best suited to each decision: the acceleration of existing projects and initiatives, the passing of a law accompanied, as soon as it is presented to Parliament, by the implementing decrees necessary for its implementation, and for urgent matters, only decisions by order can be used.

Coordinated actions synchronized over time will require the courage to reform quickly and massively, not of cyclical measures, but profound structural reforms at all levels with a strategic vision for the medium and long term, to rehabilitate strategic planning and management. Algeria can do so within a reasonable time. It has the means. For this, it must relearn to consider its future with confidence, securing to protect, preferring risk to annuity, unleashing initiative, competition and innovation, because the main challenge of the 21st century for Algeria will be the mastery of time. The world does not await us, and every nation that does not advance, necessarily moves back. Delaying reforms can only lead to slow disintegration, impoverishment, loss of confidence in the future because with the exhaustion of the hydrocarbons’ annuity, Algeria will no longer ways to prepare these reforms and will live in the grip of fear, seeing everywhere threats where others see opportunities. This growth requires the commitment of all, not just the State, by organizing solidarity to reconcile economic efficiency and equity through citizen participation and ongoing productive dialogue. The Algerian power has long lived on the illusion of eternal annuity. The majority of Algerians whose income is based on more than 70 %of the hydrocarbon annuity must know that the future of employment and their purchasing power is no longer in the public service and that of companies is no longer in recurring subsidies. The majority of the action is in the hands of the Algerians, who will have to want change and share a desire for the future, learn more, adapt, work more and better, create, share, and dare. The character of power must also change, assuming a progressive overhaul of the State through genuine decentralization around major regional economic poles, implying that it passes from the administering State to the regulating State, reconciling the social costs and the private costs, being the heart of the collective consciousness, by a healthier management of its different structures.

To be part of global growth, Algeria must first establish a true knowledge economy, developing the knowledge of all, from computer science to teamwork, Arabic, French, Chinese, English, from primary to higher education, from nursery to research. It must then facilitate competition, the creation and growth of enterprises, by introducing modern means of financing, reducing the cost of labor and simplifying the rules of employment. It must encourage the development of new areas, including: digital, health, biotechnology, environmental industries, services to the person with the aging of the population. At the same time, it is necessary to create the conditions for a social, geographical and competitive mobility and to allow everyone to work better and more, to change jobs more safely. In order to carry out these reforms, the State and local authorities must be reformed to a very large extent. It will be necessary to reduce their share in the common wealth, to concentrate their resources on the social groups that really need it, to give way to differentiation and experimentation, to systematically evaluate all decisions, a priori and a posteriori. Algeria has to adapt to the fourth economic revolution with important geostrategic implications that are expected between 2020/2030/2040, far from the material era of the 1970s. New information and communication technologies (NICTs), a set of technologies used to process, modify and exchange information, more specifically digitized data that combine innovations in storage and rapid processing of information as well as its transport through digital technology and new means of telecommunication, have implications for political governance, the management of companies and administrations, and an impact also on our new way of life referring to the knowledge and the permanent innovation. Policies, entrepreneurs, citizens, we are all living today in an electronic, pluralistic and immediate communication society that forces us to make decisions in real time. Time control being the main challenge of this 21stcentury, engaging national security, and any maladjustment to these changes would further isolate the country. Every nation can not distribute more than what it produces annually, if it wishes to avoid social drift. The main obstacle to development in Algeria stems from the entropy that must be surpassed imperatively, referring not only to economic factors but also social and political factors, including the profound moralization of leaders and society.

Where goes Algeria, in your opinion? Is not Algeria in danger of depleting its foreign exchange reserves by 2019/2020 and what are the proposals you have put forward to the Algerian government?

Algeria has a respite of only three years to change course and avoid strong social tensions in 2018/2020. So what to do to keep at an acceptable level the foreign exchange reserves that hold the value of the Dinar, because to 10/20 billion exchange reserves, would the official valuation of the dinar be more than 200 dinars for a dollar?

The first solution is a new central and local governance, a moralization of political, social and economic life, the fight against corruption and tax evasion for a shared sacrifice, and genuine decentralization around regional centers energizing the enterprise and the knowledge economy.

The second solution is the rehabilitation of work, source of the wealth of any nation, avoiding this income distribution without productive counterparts, avoiding these fictitious jobs for an ephemeral social peace that veils the official unemployment rate.

The third solution is the improvement of the business climate, the bureaucratization of society, the reform of the financial system, socio-educational, and the thorny problem of landed property.

The fourth solution is that any project must be thought of in terms of cost/quality/competition, so according to international standards by a fight against the extra costs which have taken exorbitant proportions, sometimes 20/30%, and thus to have a strategic vision within internationalized sectors.

The fifth solution is the development for structuring projects, in particular in the infrastructure of the Build, Operate and Transfer (B.O.T), which would alleviate short-term tensions in the State’s currencies budget, but be aware that in the long term, there will be transfers of profits. Remind that the B.O.T. technique relies mainly on the “Project financing/Project finance” model, which is essentially a financing technique where lenders agree to finance a project based solely on its profitability and its own value. In practice, repayment of the loan mainly depends on the cash flow generated by the project itself, so that the project’s ability to generate income that will be used to repay the loan is the cornerstone of the Project financing.

The sixth solution is the relaxing of the 49/51% rule (mixed assessment to date) for non-strategic segments, which need to define precisely what is strategic and what is not, where Algeria bears all the extra costs without the foreign partner often sharing the risks, replaced by a blocking minority.

The seventh solution is a higher export of hydrocarbons, the price of which depends on factors entirely outside Algeria and there, pay attention to false calculations, such as those carried out by Venezuela which is on the brink of bankruptcy. SONATRACH’s revenues at a price of $60 per barrel, the majority of gas contracts whose price is indexed to it in the long term expiring between 2018/2019 are valued at $34 billion, deducting expenses of 20%, resulting in a net profit of $27 billion in addition to current foreign exchange reserves.  At $50, the net profit is $21 billion, and at $40, the profit is $15/16 billion. Between 2016/2020, it is utopia to count on non-hydrocarbon exports (the maturation and the profitability of any project implemented in 2016 would require at least in Algeria 4/5 years in view of the bureaucratic constraints).

The eighth solution is a necessary arbitrage between satisfaction of the internal market and exports posing the problem of widespread subsidies, a source of waste and social injustice, whereas these must be targeted. Algeria is likely to be a net importer of oil to horizon 2025/2030 that needs to invest on gas and especially its transformation, in a win/win partnership. This is because the majority of medium-term contracts expire between 2018/2069, needing to align with the free market, known as market spot, being impossible to compete with Russia (famous Siberian-China gas pipeline) and Iran on the Asian market, no longer having to rely on exports to the USA which themselves export to Europe, the natural market of Algeria being the European market, hence the urgency of the energy transition and a new consumption model based on an energy mix, including renewable energies, taking into account strong international competition.

The ninth solution, which I have advocated to the government for two years, is long-term targeted external debt, but only for segments with competitive advantages of 30/50 billion dollars between 2017/2020, in order to maintain the level of reserves. The World Bank’s forecast of $ 60 billion, according to my information in Washington, from the 2014/2016 data of the Bank of Algeria to the horizon 2018, are realistic.

The tenth solution, the safest, is to have a strategic vision, the tactics to paraphrase military experts to fit into a strategic objective function, which is sorely lacking at present, as the President of the Republic has instructed, is to move towards deep structural reforms without which a diversified economy can not emerge.

In many of your writings since 2009, you have alerted the government to the impacts of lower hydrocarbon prices. You have not been listened to. Can you remind us of your proposals for an energy transition?

We must move from speech to action. There should no longer be any illusion about a barrel’s price higher than 70/80 dollars between 2017/2020. Indeed, taking into account the evolution of rising costs, new global energy changes and competition from new producers, exports and strong domestic consumption induced by new investments in doubling the capacity of power plants that will operate from gas turbines, favored by low prices, Algeria will import oil in 10 years and conventional gas in 15 years. Hence the importance, from now on, of foreseeing the energy transition that I will summarize in seven guiding axes:

The first is to improve energy efficiency because how can be programmed two (02) million dwellings according to the old building standards requiring high energy consumption, while modern techniques save 40 to 50% of consumption?

The second axis is to rethink the policy of subsidies that must be targeted for energy products, File that I directed with the American consultancy Ernst Young and with the managers of Ministry of Energy and Sonatrach of that I personally presented to the Economic Committee of the NPA (National People’s Assembly) in 2008, referring to a new price policy (price of gas sale on the domestic market about one tenth of the international price causing a waste of resources that are temporarily frozen for social reasons). With this in mind, the Algerian government must consider the creation of a National Compensation Chamber, that any subsidy must be endorsed by Parliament for greater transparency, Chamber intended to realize an equalization system, segmenting the activities in order to encourage sectors structuring and taking into account the income by social strata, implying a new wage policy.

The fourth axis, Algeria has decided to invest upstream for new discoveries. But for the profitability of these deposits, everything will depend on the price vector at the international level and the cost, discovering thousands of unprofitable deposits, posing the problem of the profitability of the $ 100 billion announced by the Department.

The fifth axis is the development of renewable energies combining the thermal and the photovoltaic, whose global cost of production has decreased by more than 50% and will be more in the future. With more than 3,000 hours of sunshine a year, Algeria has everything to develop the use of solar energy, or almost. The sun alone is not enough. We need technology and equipment to turn this heaven’s gift into electrical energy. Large-scale production would substantially reduce costs while at the same time promoting a multitude of SME-SMEs, strengthening the industrial fabric from clean energy (ecological industries). The promotion of renewable energies requires substantial financial resources for investment and research-development. The Renewable Energy Technology Fund decided by the Council of Ministers from 0.5% to 1% of the hydrocarbon annuity should be increased to a minimum of 3% in order to allow support between the guaranteed rate allowing the profitability of the investment. Through to the hydrocarbon revenues feeding this Fund, Algeria can avoid making to bear these investments on the low-income consumer, in the same way as Germany where the difference between the guaranteed price and the market price is transferred to the consumers’ invoices via surtax, following its decision to leave nuclear power by 2022. Algeria has received in mid-July 2011 the hybrid power plant in Hassi R’mel, with an overall capacity of 150 MW, including 30 MW from the combination of gas and solar. This experience is interesting. The combination of 20% conventional gas and 80% solar seems to me to be an essential focus for reducing costs and mastering the technology. To this end, the CREG (the regulatory agency) announced the publication of decrees intended to accompany the implementation of the Algerian program for the development of renewable energies. Incentives measures are provided by a proactive policy through the granting of subsidies to cover the additional costs incurred on the national electricity system and the setting up of a National Energy Control Fund (FNME) to ensure the financing of such projects and the granting of unpaid loans and guarantees for borrowing from banks and financial institutions. The Algerian program consists of installing a power of renewable origin of nearly 22 000 MW of which 12 000 MW will be dedicated to cover the electricity national demand and 10 000 MW for export. By 2030, Algeria’s objective would be to produce 30 to 40% of its electricity needs from renewable energy sources. The amount of public investment devoted by Algeria to the implementation of its program of development of renewable energies, by the 2030 deadline, is contradictory: announced once to $100 billion according to the Ministry of Energy, and another time to $60 billion. Indeed, the Algerian government had announced $100 billion in Council of ministers in 2009 and $60 billion by the end of 2015. In September 2016, he announced that, due to the financial crisis, the program would become a national and international public private partnership without announcing the exact amount. The call for tenders for the construction of a capacity of 4 000 megawatts of renewable energy from public-private partnerships will be launched at the beginning of 2017, announced recently by the Algerian Energy Minister Nouredine Boutarfa  at the opening of the energy conference in the framework of the African Investment and Business Forum held in Algiers. The problem is this: will Algeria have absorption capacity, technological control to avoid the additional costs, control of the world market, and will it not be preferable to carry out these projects in the framework of a national, international partnership, and why not in the framework of the integration of North Africa, bridge between Europe and Africa, natural market of the Maghreb and Europe, a continent with multiple challenges that, by 2030/2040, will drive the growth of the world economy?

The sixth axis, Algeria plans to build its first nuclear power plant in 2025 for peaceful purposes to meet a demand for galloping electricity where, according to the Minister of Energy and Mines, on May 19, 2013, the recently created Institute of Nuclear Engineering, must train the engineers and the technicians in partnership who will be responsible for operating the plant. Algeria’s proven uranium reserves are close to 29 000 tons, enough to operate two nuclear power plants with a capacity of 1,000 megawatts each for a period of 60 years, according to data from the Ministry of Energy. The human resource being the key, as the production of all forms of energy and to avoid the massive brain drain that Algeria is experiencing, the services item with the exit of currencies having increased from $2 billion in 2002 to $10/12 billion between 2010/2015, a large part of which destined for the hydrocarbon sector, SONATRACH emptied of its substance, it is necessary to resolve the recurring problem of nuclear researchers (this applies to all researchers) who for years have been asking for clarification of their status, the revaluation of their remuneration and above all an environment conducive to the removal of the bureaucratic obstacles that hamper research.

The seventh axis, the option of oil/shale gas (3rd world reservoir according to international studies) introduced in the new hydrocarbon law of 2013, which I have the honor to lead on behalf of the government and delivered in January 2015. In Algeria, while avoiding clear positions for or against, a broad national debate is necessary, as the risks of groundwater pollution in the South can not be minimized. Algeria being a semi-arid country, the problem of water is a strategic stake at the Mediterranean and African level and arbitration for the consumption of fresh water must be carried out (since new water-saving technologies have not yet been developed despite recycling, what will be the cost, depending on the purchase, the know-how), one billion cubic meters of gas requiring 1 million cubic meters of fresh water to be taken into account in costs (in addition to the purchase of patents), and several hundred average wells have to be drilled for one billion cubic meters of gas, not to mention the short life span of these deposits and the necessary agreement with riparian countries sharing these aquifers. The sixth axis, which falls within the framework of the resolutions of COP21 and COP22, is the climate action that can not be conceived within the framework of a nation, will involve a broad consultation with, in particular, the countries of the Maghreb and Africa. In general, for the Maghreb, including Algeria, water resources are vulnerable to climatic variations. Water and its management are problems conditioning its future, the maximum volume of water mobilizable being deficit by 2020 according to Femise (Euro-Mediterranean network on the MENA region). In the Maghreb region, the negative effects will affect the production of vegetables whose yields decrease by 10 to 30% and a drop in wheat to nearly 40. Thus, climate change could lead to a real migratory crisis. The Blue Gold will be the challenge of the 21st century which, unresolved, could cause planetary wars.

In summary, the transition can be defined as the passage from a human civilization built on an essentially fossil, polluting, abundant and inexpensive energy, towards a civilization where the energy is renewable, rare, expensive and less polluting, with the objective of eventually replacing stock energies (oil, coal, gas, uranium) with flux energies (wind, solar). The energy transition refers to other technical subjects, posing the societal problem.

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