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Loucif + Co
+ 213 5 52 58 28 93
19, Rue des Pins, 16035, Hydra, Algiers
French, English

Algeria moves towards solar energy

Article by Rym Loucif, Partner at Loucif + Co, Algeria

 

One month after the Council of Ministers’ meeting of 21 November 2021 where the President of the Republic gave clear instructions to his Government to accelerate the energy transition, the Ministry of Energy Transition and Renewable Energy launched on 23 December 2021 a solar tender No. 01/MTEER/2021 covering 1,000 MW.

Solar 1,000 MW is the first call for tenders for the realisation of solar photovoltaic power plants with a total capacity of 1,000 MW, marking the beginning of Algeria’s energy transition.

Several recent decisions have been taken to prepare the launch of the tender:

– On 22 November 2021, Smail Mougari has been appointed as the general manager of the Algerian Renewable Energy Company (SHAEMS), a joint venture between state-owned Sonatrach and Sonelgaz to participate and facilitate the renewable energy projects.

– On 23 November 2021, 11 sites with a total capacity of 4,250 hectares were selected in the wilayas of El-Bayadh, Ouargla, El Oued, El M’Ghair, Ghardaïa and Béchar. These sites will be made available by SHAEMS.

The full text of the call for tenders in French, English and Arabic can be found here

LEGAL FRAMEWORK FOR TENDERING

The call for tenders is launched pursuant to Decree No. 17-98 of 26 February 2017 defining the tender procedure for the production of renewable energy.

Such Decree was recently amended by Decree No. 21-158 of 24 April 2021, which transferred to the Minister of Energy Transition and Renewable Energies the prerogatives previously vested in the Ministry of Energy regarding the launch and processing of the call for tenders for the construction of electricity production facilities from renewable energy sources.

CHARACTERISTICS OF THE CALL FOR TENDERS

– Construction of solar photovoltaic power plants with a total capacity of 1,000 MW divided into lots ranging from 50 MW to 300 MW each, according to a schedule specified in the tender documents.

– The solar photovoltaic power plants for each of the lots will be developed by the project company awarded the relevant lot.

– SHAEMS will partner with the selected developers by acquiring a stake of up to 25% of the share capital of the selected project companies.

Note: The foreign investor will be able to have a majority stake in the project company due to the recent abrogation of the 49/51% rule concerning the renewable energy power generation sector.

POWER PURCHASE AGREEMENT (PPA)

The electricity produced will be sold through a 25-year Power Purchase Agreement (PPA).

CONDITIONS OF PARTICIPATION

The main requirements for participation in the tender include:

– The obligation to raise the necessary financing for the project; here again, recent legislation has authorised the recourse to external financing for foreign or mixed investments.

– The obligation to respect a minimum local content requirement per type of local product and service as mentioned in the tender documents.

– Developer will be allowed to tender for one or more lots for a maximum cumulative capacity of 300 MW.

WITHDRAWAL OF THE SPECIFICATIONS

Interested investors are invited to apply to SHAEMS to withdraw the tender documents after paying a non-refundable fee of USD 1,000.

SUBMISSION OF TENDERS

Bids for the Solar 1,000 MW Project must include a technical bid and a financial bid submitted together.

The validity period of the tenders is 180 days from the date of submission of the tenders.

The financial offer should contain the economic model proposed by the bidder used to calculate the price per KWh of each plant.

Clarification meetings will be held prior to the tender submission date to provide bidders with all the necessary clarifications for the preparation of their tenders.

SUBMISSION AND OPENING OF TENDERS

The deadline to submit project proposals is 30 April 2022 at 10:00 a.m. (local time).

The opening of the technical bids will take place on 30 April 2022 from 10:00 a.m. (local time).

BANK GUARANTEES

– Bid bond (for each lot) issued by a bank located in Algeria:

Foreign investors Algerian investors Mixed
investors
500,000 USD 70,000,000 DZD In proportion to the shareholding of each investor

 

The bid bond is releasable upon the successful bidder’s submission of the Investment Guarantee Bond.

– Investment Guarantee Bond :

The amount of the investment guarantee bond is set at 10% of the total investment costs.

This bond is provided by the successful bidder for each plant at financial close, and will be released upon commissioning of the plant.

EVALUATION OF TENDERS

– Technical and financial offers will be evaluated according to the evaluation procedure described in the tender documents.

– The successful bidders after the evaluation of the technical bids will be invited to the bid opening session for the financial bids.

– Following the verification and evaluation of the financial offers, the successful bidders will be awarded the contracts for each lot.

– Following the subsequent evaluation of the financial bids, the successful bidder will receive a written notification of acceptance of its bid, containing the price per kWh from the economic evaluation model of the investor tender.

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