Oil: Algeria Seeks Diversification With Multibillion Dollar Port

The government of Algeria has approved the construction of a new deep-sea port 80 kilometers (50 miles) west of the capital Algiers to be financed with loans from China and the African Development Bank. The government of Algeria is to press ahead with the development of a new $3.5bn port and industrial zones at El Hamdania. A move which is targeted at diversifying the country’s economy away from oil.

The decline in the price of oil has created a lot of difficulties for many oil exporting countries, and has negatively influenced their balances of payment and budgets. Oil and gas account for over 90 percent of Algeria’s export revenues and the low oil price has hit state finances hard. This has led the government to put more focus on measures to diversify the country’s economic base. The project hopes to emulate the success story of the Moroccan Tanger Med port, which will be the busiest port in the Mediterranean by 2018.

Plans for El Hamdania Port consist of a 23-berth facility with a 20-meter (66-foot) alongside draft and an eventual capacity of up to 27 million-tonnes-per-annum. Two industrial zones covering 2,000 hectares (4,942 acres) are to be built next to the new port, coupled with a local power station.

South Korea-based Yuhill-Yooshin and Algeria’s Laboratoire des études maritimes (LEM) completed a detailed plan at the end of last year and the project has now secured $900m worth of funding from the African Development Bank (AfDB). At the time, the bank the loan was to support the country’s industrial and energy competitiveness and “to offset the drop in its revenue due to the sharp fall in oil prices, allowing the project to proceed. The AfDB loan will be repaid 20 years, with five years’ grace.

Located 70km west of the capital Algiers, El Hamdania Port will be developed in phases with an eventual annual handling capacity of 6.3m TEU per year, spread over 23 berths. TEU measures a ship’s cargo carrying capacity, and the measurement is equivalent to 20 feet in length and 8 feet in height. This would rank it second in Africa, after Tanger Med’s 9m TEU per year. The port is to be developed by China Harbour Engineering Company and China State Construction Engineering Corporation, which will take a joint 49% stake in the operating company, with the Algerian Port Authority taking 51%.

Apart from Europe, the port will seek to attract transhipment business serving West Africa. In addition, the highway between the port and the southern border of Algeria is to be upgraded, enabling containers to be taken more quickly between El Hamdania and many parts of landlocked West Africa than they can be transported by sea. Apparently, this is a move aimed at competing with major West African ports which currently serve those landlocked countries.

Construction is due to begin in March this year with the first berths scheduled for completion by the year 2021.

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