INTRA AFRICA DESALINATION ROUND TABLE DURBAN Seawater desalination in Algeria.

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1 INTRA AFRICA DESALINATION ROUND TABLE DURBAN 2017 Seawater desalination in Algeria.

2 Summary Water issues in Algeria; General Information on Water resources in Algeria; Desalination program in Algeria; The Algerian Energy Company (AEC) ; Partnership project & development process (PPP basis) Assessment and presentation of Seawater desalination plants; The water policy in Algeria. Vision and perspectives

3 Water issues in Algeria The rarity of water in Algeria is mainly due to: The vagaries of rainfall, Socio-economic development, Limited range of dams and groundwater The concentration of the population in the north of the country (80%), Growing water scarcity as well as an important socio-economic development, required the adaptation of a medium and long term refined strategy for the management of this resource in Algeria.

4 Population distribution in Algeria

5 General Information on Water in Alegria - 1 There are 03 Major types of water resources: Dams, water drilling and the seawater desalination; Also, Algeria has 72 dams of which 02 hydraulic converted;

6 General Information on Water in Alegria - 2 Distribution networks of over 115,000 km; Distribution of more than 3.6 billion m3 of water / year: Origin of Distributed water Dessalement 14% Forages 51% Barrages 35%

7 Desalination program in Algeria - 1 In order to remedy the Water stress endured by Algeria during the 90 s and to preserve at the same time the underground water which were strongly solicited, The Algerian Government had embarked on a major and large-scale program of investment in seawater desalination of whose the main objectives are: Satisfying the growing demand of the population in Drinking Water as well as the water needs for irrigation and industry; Securing the coastal towns' need of water where 80% of the population is concentrated; Integrate the contribution of new desalination technologies for optimal quality and quantity of desalinated water and controlled production costs; The commissioning of 12 stations by 2019, of which 11 are already in operation, and 01 under development with national facilities, totaling more than 2.1 million m3 of daily drinking water production.

8 Desalination program in Algeria - 2 In order to deal with this important investment program of seawater desalination initiated by the Government, several technical-economic studies entrusted to specialized international cabinets had been launched in order to determine: Site selection; Impact on the environment; Technology to adopt; The estimated overall investment; The cost of production and the forecast price of the m 3,

9 Desalination program in Algeria - 3 DESALINATION PER REGION Western Region: 06 plants with an overall capacity of 1,186,880 m3/d, Kahrama, Oran, 86,880 m3 / day Beni Saf, Ain Temouchent 200,000 m3 / d Souk Tlata, Tlemcen 200,000 m3 / d Honaine, Tlemcen 200,000 m3 / d Magtaa, Oran, 500,000 m3 / d Central Region: 05 plants with an overall capacity of 720,000 m3 / d. Hamma, Algiers, 200,000 m3 / d Fouka, 120,000 m3 / d Cap Djinet, 100,000 m3 / day Ténès, 200,000 m3 / 56% 34% Eastern Region: 02 plants with an overall capacity of 200,000 m3 / d Skikda with a capacity of m3 / day El Tarf with a capacity of m3 / day 10% RÉGION OUEST RÉGION CENTRE RÉGION EST

10 Répartition Géographique des Projets

11 Algerian Energy Company (AEC) Algerian Energy Company is a public joint-stock, created in 2001, held by SONATRACH and SONELGAZ. AEC is mainly responsible of the promotion of large scale projects in partnership with international companies in the areas of: Seawater desalination Power generation

12 Role of AEC as Project sponsor" Development of specifications for tenders Reception and assessment of technical and commercial bids Launch the project after selecting the successful tenderer Role of AEC as a Public Partner" Partner and Shareholder up to 49 %, Co-developer with the foreign partner according to the International Standards; Support the project companies and the foreign partner with local administrations; AEC is among the first public companies to have established foreign and local funding in project financing process.

13 Partnership project & development process - 1 I. Launchings of tenders which are processed in two phases for the selection of a partner with experience in the design, construction, operation and maintenance of a desalination plant; II. III. Public Private Partnership (PPP) between the Private Investor and AEC for the execution of the project according to the DBOO "Design, Build, Own & Operate" and Project Financing basis; Signing of the joint venture and creation of the project company (SPV), in the form of a joint-stock company under Algerian law, the capital of which is held by the Investors (51% International Investor- 49% AEC), This distribution exists in 8 projects / 11); However, two projects do not know the distribution of 51% - 49%, namely Kahrama held 95% by AEC and Magtaa held 53% by the Algerian party (AEC 43% - ADE10% ).

14 Partnership project & development process - 2 V. Implementation of project funding by:: Forgien Partner/AEC : capital contribution [ 20% to 30% ] Project Financing The lender to the extent of [70% to 80%] The Project Financing relies on the ability of a project to generate predictable and regular cash flows, confirmed by a financial model audited by the lender in order to : i. Cover the project OPEX over the entire operating life (25 to 30 years) ii. Cover the debt service, iii. Provide equity compensation for investors in the project. IV. Signature of the Contractual Package and Realization by the SPV of a desalination plant: A. Construction of the Plant by "Constructor - EPC Contract"; B. Operation of the Plant by "Operator - O&M Contract".

15 The projects steps 1 st Step Identification of the projet (Site, need, capacity) 2 nd Step Call for Investors 3 rd Step 1 st Phase : Technical offer. 4 th Step 2 nd Phase : Commercial Offer 5 th Step Signature of the joint venture 6 th Step Création of the SPV 7 th Step Signature of Contractual Package including funding package 8 th Etape Drawing of the Loan and NTP

16 Partnership project & development process - 3 Projects Funding: AEC is among the first Public companies to have set up foreign and local financing, structured in Project Financing. Project Financing as a funding method was adopted by FAC in 10 projects / 11 Of the 10 projects in Project Financing mode, 9 projects / 10 were financed with the concourse of the local banks and 1 project financed with the concourse of the Overseas Private Investment Corporation) which is an American financial institution specializing in financing projects Investment in the United States and abroad. The only project that was not funded in project financing mode was Kahrama, which was financed in equity by 95% AEC and 5% by the partner.

17 Partnership project & development process - 4 Process Technology: The technology used in 10 projects / 11 is Reverse Osmosis, with the exception of Kahrama MSF The reverse osmosis technology was favored in other projects compared to MSF distillation because: Desalination by the MSF process is more expensive in terms of energy, ie 3.5 kg of fuel oil / m3 in the case of a double-purpose plant (water and electricity) versus 1 kg of oil / m3 in Osmosis Inverse with energy recovery. The installation of the desalination plant in MSF requires a larger area compared to the RO. With the MSF technique, desalination is entirely dependent on the production of electricity.

18 Partnership project & development process - 5 Main caracteristics of Project financing in Algeria: SONATRACH & ADE as Off taker face to the banks because of their Solvability. Special Interest rate offered in reason to the global benefit of the Projetcts. «Take or Pay» Contract to ensure a predictable and regular cash flows,

19 Major Actors in desalination Program

20 Assessment and presentation of Seawater desalination plants; Since 2006 (year of commissioning of the first plant), the national program for seawater desalination has radically changed the universe of Algerians regarding the availability of drinking water. Thus, the desalination program contributed, with the inputs of the new hydraulic dams, to reducing the specter of the water shortage and to forget the taste of brackish water in several towns in western Algeria. Currently, with an average daily (real) production of about 1.3 million m 3 /d, Desalination in Algeria is able to meet almost 1/5 of the drinking water needs of the population. Actual production is expected to be increased to around 2 million m3 / d after the lifting of certain technical constraints encountered in some projects.

21 National Program for the desalination of sea water in Algeria Project Capacity Commissioning Partenairs Banc (m3/jour) Kahrama Since 2006 J.Burrow Ltd : 05% SH/SG Hamma Since2008 GE Ionics Etats-Unis : 70% OPIC Skikda Since 2009 Geida (Befesa/Sadyt) Espagne : 51% BNA Beni Saf Since 2010 Cobra/Espagne : 51% BEA Souk Tlata Since 2011 TDIC (Hyflux/Malakoff) Singapour : 51% BNA Fouka Since 2011 AWI (Snc Lavalin/Acciona) : 51% CPA Mostaganem Since 2011 Inima / Aqualia Espagne : 51% BEA Honaîne Since 2012 Geida (Befesa/Sadyt Espagne : 51% CPA Cap Djinet Since 2014 Inima / Aqualia Espagne : 51% BNA Ténès Since2015 Befesa Espagne : 51% CPA Magtaa November 2015 Hyflux Singapour : 47%, ADE 10% BNA

22 Vision and perspective Secure the water needs of the population remains a priority. The development of the operation activity; The objective to achieve is to reach the capacity of more than 2300 MLD to the Horizon 2018 with the commissioning of the two remaining projects.

23 A few photos

24 Hamma Plant

25 Hamma Plant

26 Ténès Plant

27 Magtaa plant

28 Kahrama plant

29 TA N K Y O U F O R Y O U R AT T E N T I O N