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Algeria no longer Spain’s main gas supplier1 minute read

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Algeria has lost a major European market as Spain now buys its gas from the US due to a drop in oil and gas prices from OPEC supply lines. The global pandemic has forced many countries to consider cheaper options, telling negatively on Algeria’s three decade supply lines to Europe.

The US and Russia have brought more LNG to Spain through cargo ships than did Algeria through the Medgaz gas infrastructure or the Maghreb pipeline.

Industry sources explain that several operators prefer to break their commitments and look for lower prices in other markets despite having to pay penalties listed in previously signed contracts.

In the first three months of 2020, Spain received 20,251 Gigawatt hours (DWh) of American LNG compared to 19,748 GWh from Algeria, according to industry reports- a change that might have political implications for relations between Spain and Algeria if it is consolidated over time.

Algeria, a member of the Organization of the Petroleum Exporting Countries (OPEC), depends heavily on oil revenue, with crude oil making up 20% of its GDP and 85% of all exports.

The country, however, is facing fierce competition in the market from major gas producers such as the US, Qatar, and Russia.

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Algeria to invest $3 billion in solar power, free up gas export

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The Coronavirus pandemic is proving to be the motivator for more economic diversification. An example of this, is Algeria’s plan to invest further in renewable energy and generate more electricity. The country intends to invest at least $3 billion dollars in this endeavor.

These new photovoltaic solar plants will generate a combined production capacity of 4000 mega watts (MW). The electricity will be consumed locally and excesses sold. The move will enable more gas to be sold externally.

Recently, Algeria lost its main gas supply destination due to cheaper alternatives with more supplies.

Currently, gas is used in generating about 98% of total electricity production in Algeria. But recent development has been encouraging Algiers to increase its exports of gas and crude oil, which are the main sources of Algeria’s revenue. Solar generated electricity makes up the remaining 2%.

Algeria’s Prime Minister, Abdelaziz Djerrad’s office announced the development on its website following a meeting of the government.

“In addition to meeting national demand for energy and preserving our fossil resources, this project will allow us to position ourselves on the international market,” it said in a statement.

It gave no details on where the electricity might be sold abroad or how much the proposed plants would contribute to domestic supply.

The COVID-19 pandemic and subsequent global movement restriction has influenced the drastic drop in crude oil and gas sales affecting countries like Algeria. The past two weeks has seen a gradual rise in price but Algeria like many other OPEC members have announced plans to seek foreign loans in 2020 for the first time in years to fund what they called “strategic projects”.

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Morocco- Consumer Price Index dips

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The Consumer Price Index (CPI) in Morocco has fallen. In March, the CPI recorded 1.5% dipping to 0.9% in April year-on-year.

Morocco’s Finance Minister, Mohamed Benchaaboun says the country’s economy has been hit hard by the Coronavirus outbreak adding that plans are being set up to relaunch economic activity through promoting state investments, tourism and fostering domestic consumption.

According to the High Commission for Planning of Morocco, on a month-on-month basis, the index rose 0.1%. Food prices rose 2.7% while non-food prices dropped 0.3%. Core inflation, which excludes prices of volatile goods, was 0.1% month-on-month and 0.9% year-on-year.

The reduction in commercial activities has impacted negatively on the economy. Exports dropped during the first four months 61.5% due particularly to a retraction of sales of the car industry, aeronautics, electronics and textile, in a context worsened by the halt of tourism activity and fewer remittances.

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North Africa Business

Egypt to support local businesses with new IMF loan

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Discussions are at an advance stage between Egypt and the International Monetary Fund on securing additional financial help, according to Egypt’s Planning Minister, Hala Saeed. Saeed adds that when granted, the funds will be used to boost the viability of private business and further ensure structural reforms against the economic impact of the Coronavirus pandemic.

The minister made the comment during a video conference with the American Chamber of Commerce in Egypt, adding that the facility would include financing from bilateral and multilateral sources.

Talks are at an advance stage for a one-year IMF programme that will assist with any payment gaps businesses face as a result of the COVID-19 pandemic. Repayment will be spread out over the medium term.

Last week, the IMF had already approved a financing package for Egypt, a $2.77 billion under the Rapid Financing Instrument. That was meant to help Cairo close a gap in its balance of payments caused by the coronavirus outbreak.

Egypt agreed a $12 billion, three-year Extended Fund Facility programme in 2016, with the International Monetary Fund. That package was designed to reduce its fiscal and balance of payment deficits.

The minister explains that Egypt had already been working on structural reforms before the pandemic and had identified six priorities, including digital transformation, industry, agriculture and logistics.

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