Algeria: The end of the 51/49 rule, the beginning of a new era for foreign investments in renewables?

• Africa

• Energy and infrastructure - Clean energy

11-06-2020

The adoption of the Law 20-07 on 04 June 2020 marks the beginning of a new Algerian investment strategy unlocking and encouraging foreign investment with a set of long-awaited measures. Combined with the recently announced 4 GW solar projects, this change could have a very positive impact on renewables in Algeria, which require important foreign investments, in equity and debt.

Most importantly, the Algerian Government waived the 49-51 rule governing foreign investment until 9 June for non-strategic sectors. Foreign investments in Algerian companies are free and will no longer be capped at 49% for non-strategic sectors.

Another positive measure is the abolition of the state pre-emption right on corporate participations’ transfers by or to foreign investors. The state control is henceforth kept to a minimum and a simple authorization is now required.

A capital question is yet to be answered to comfort the renewables foreign investors. Considered as a strategic activity, energy sector “upstream” and operation of electricity networks remains subject to the 49-51 rule. The wording of this provision opens the door wide for interpretations because renewables are not explicitly listed as a strategic activity.

It is to be expected that the application of this text may prove to be unsatisfactory for parties interested in Algeria renewable market. Hopefully, the application texts will clarify this point and confirm once and for all if the liberation of foreign investments is applied for renewable energy sector or not.

If you would like to discuss Algeria’s renewable energy programme and any opportunities in the market please contact the team below.