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Public Tendering 101: Procurement opportunities in Algeria and How to Win Them

Algeria is a large country, both in size and economy. It is Africa’s fourth-largest economy and most competitive market after South Africa, Morocco and Tunisia. Algeria is an energy producing-exporting country. The principal energy sources are crude oil, followed by natural gas. In fact, the energy sector represents a major industrial activity and an economic contributor to the country. With an annual generation of roughly six quadrillion British thermal, Algeria is the leading primary energy producer in Africa. 

However, the country remains a relatively unexplored territory. With a largely state-controlled economy and unstable regulatory framework, foreign companies find it rather challenging to invest and launch projects in the area. Not to mention the political uncertainty that has so far marred the business stage. 

Nevertheless, lately the Algerian authorities have taken up several steps to diversify the economy, thus attracting foreign investments. In fact, until 2019, the participation of a foreign investor in an Algerian company was limited to 49%. Thus forcing Foreign to find local partners for public tenders in Algeria. However, in 2020, the government dispelled the “51/49” restrictive rule that required Algerian majority ownership of all new companies.

Accordingly, significant business opportunities are awaiting foreign exporters in the government controlled sectors. Mentioning especially the oil and gas, power, and telecommunications industries. Headed by the 3 state-owned big companies, Sonatrach, Sonelgaz, and Algérie Télécom.  

Given that it is now easier to do business and tender in Algeria (by courtesy of the elimination of the 49/51 rule), it is only fair to acquaint yourself with the tendering climate of the country.  

Public tender market in Algeria: 

Algerian government institutions, including ministries, agencies, and local governments, buy foreign-made goods and services through competitive or restricted tenders. In fact, the law on public tenders does not require state-owned companies to purchase goods and services through tenders. Although many still do. 

Although the public tenders market was likewise marred with constant changes in regulations, the authorities have recently taken steps to actually improve the transparency of the contracting process. 

Government contracts are awarded through a two-step tender process. Technical bids are first evaluated to ensure compliance with tender requirements and to review competing specifications. Financial proposals are then reviewed. Competitors are sometimes short-listed after the technical offers are opened, and companies are occasionally pre-qualified for large tenders, particularly in oil and gas development.

The tender market for the energy and telecommunications sector is pretty robust. Especially that the three companies, Sonelgaz, Sonatrach, and Algérie Télécom, are constantly launching projects. Therefore, this article will guide you through to these 3 big state-owned corporations and their anticipated projects and tenders.

Sonatrach:

State-owned national oil company Sonatrach is the largest oil and gas company in Algeria and Africa, and twelfth in the world. The company operates in exploration, production, pipeline transportation, transformation and marketing of hydrocarbons and by-products. Sonatrach owns roughly 80 percent of total hydrocarbon production in Algeria, while International Oil Companies (IOCs) account for the remaining 20 percent.

Big names in the Algerian economic reality like Naftal, Tassili Airlines, and Algerian Petroleum Institute are subsidiaries of Sonatrach group. Estimating thus an impressive package of government oil and gas tenders and business opportunities. Mainly since the national oil company reckons that it will work with many smaller companies. Different projects like drilling, gas processing, and digital monitoring would be launched. 

Sonelgaz: 

Sonelgaz is a state-owned corporation in charge of electricity and natural gas distribution in Algeria. The company has always played a major role in the economic and social development of the country. Today, the Sonelgaz Group comprises 16 companies directly managed by the Holding. 18 companies in participation with entities of the Group and 10 companies in participation with third parties. 

With Algeria hoping to add to its power grid, the company is undoubtedly launching several public works tenders and so on. 

Algérie Télécom: 

Algérie Télécom controls the telecommunications sector in Algeria. The state-owned company monopolizes the national IT market and Internet routing services in the country. It is also the only Internet service provider (ISP). In reality, the telecom company, which also controls the submarine cables, has the total right and privilege to establish a monopoly in the telecommunications sector by the Algerian constitution of 2020. Specifically, stated in the constitution alongside natural energy sources, subsoil, mines and quarries, railways, maritime and air transports, the telecommunications sector shall remain a public property. 

The telecom sector is active and has announced many tenders this year. Algérie Télécom tenders are at the top of the list, with many projects launched throughout the country. 

How to win tender opportunities in Algeria

With large and hyperactive industries like energy, the competition for contracts is certainly hectic. Therefore, when you are a small or medium-sized business (SME), you need to make sure that you stand out from the crowd. The best way to do this is by girding up your loins. In other words, spare no effort for your preparation plan. Follow these steps and find our pro tip.  

 

  1. Do your homework, know your market

Like we mentioned above, the tender industry in Algeria is quite complicated. The Algerian government has since changed the decrees governing the public procurement. Latest of which was the 2015 code, which came into force mainly to ensure the transparency of the procurement process. 

Moreover, public sector markets are subject to several constraints that are imposed on all agents taking part in the public tender process.

These constraints are motivated by the principles of protection of the general interests of the public in service and guarantee the efficiency of the public tender process and the valid use of funds or public monies. This process is based on the combination of three principles:

  • free access to the public tender process.
  • Equal treatment of applicants.
  • Transparency of procedures.

Hence, before embarking on the tough journey for winning contracts and business opportunities in Algeria, you’ll have to gain sufficient knowledge on the regulatory framework of the tender process. Understand your rights and duties, besides the recommended papers and steps. 

  1. Explore your opportunities:   

Now that you’re well versed in the regulations of the procurement process, you need to define the market you want to win. In other words, keep an eye on the economic and business climate in Algeria. 

Algeria is, in fact, the leading primary energy producer in Africa. The energy sector represents a major industrial activity and an economic contributor to the country. Headed by the State-owned national oil company Sonatrach, the energy sector is certainly an attraction. Sonatrach tenders are numerous and worth betting for. 

There’s also the gas company Sonelgaz which is in charge of electricity and gas distribution in the country. And Algérie Télécom, the only internet service provider in Algeria. These big corporations play a major role in Algeria and Africa, and you do not want to miss the chance to win a contract for any of them. 

Bottom line, do your research. A knowledge of the major industries and companies in Algeria will help you choose where you want to invest your resources and energy.  

 

  1. Determine your potentials: 

Let’s suppose you did your research and you’re aware of the ins and outs of the Algerian market. You’ve also found a tender opportunity you want to take part in. At this point when you’re done surveying your opportunities, take a look at your business. Namely, compare the data you acquired about the tender market in Algeria with your business potentials. To do this, we suggest you ask yourself some questions. 

Do I have a realistic chance of winning the contract? Does the tender align with my business strategy? Do I have industry relevant accreditations and qualifications? Questions like these can lead you to the right path. 

While a business journey map may tell you the capacities and potential of your business, you can also consult past tender archives. Read through the tender archives relevant to your field. Search for and examine recent projects, how they went, what were the requirements, criteria, and technical specifications. Then see if your business is qualified enough for the process. 

 

Pro tip: Make use of Algerian tender platforms

While you have to spare no effort in your query for business opportunities in Algeria, you’ll also have to be smart. You wouldn’t, for instance, go the extra mile looking for tender notices in newspapers. Taking the traditional road is exhausting and would cost you lots of precious time. 

Instead, consult web tender portals. And Algeria has plenty of those. For the energy sector tenders, you can check Baosem or Bomop. And for every sector of activity and industry, consult DZtenders.com. These websites will help you find tender opportunities all throughout Algeria. 

Conclusion: 

Winning government contracts is indeed the most lucrative source of income for entrepreneurs. And while Algeria provides many tender opportunities and is attracting foreign investments, you do not want to miss out on acquiring tenders in this large and blooming market. This article is therefore your guide to winning tenders in Algeria.  

 

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