VZCZCXRO1675
RR RUEHTRO
DE RUEHAS #0537/01 1331052
ZNR UUUUU ZZH
R 121052Z MAY 08
FM AMEMBASSY ALGIERS
TO RUEHC/SECSTATE WASHDC 5769
INFO RUEHFR/AMEMBASSY PARIS 2716
RUEHRB/AMEMBASSY RABAT 2343
RUEHTU/AMEMBASSY TUNIS 7198
RUEHTRO/AMEMBASSY TRIPOLI
RUEHNK/AMEMBASSY NOUAKCHOTT 6371
RUEHNM/AMEMBASSY NIAMEY 1599
RUEHBP/AMEMBASSY BAMAKO 0552
RUEHCL/AMCONSUL CASABLANCA 3408
RUEHEG/AMEMBASSY CAIRO 1034
RUEHMD/AMEMBASSY MADRID 8925
RUEHRC/USDA FAS WASHDC 0236
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMFISS/HQ USEUCOM VAIHINGEN GE

UNCLAS SECTION 01 OF 02 ALGIERS 000537 
 
SIPDIS 
 
RABAT PASS TO USDA MFAY 
CAIRO PASS TO TREAS ASEVERENS 
 
E.O. 12958: N/A 
TAGS: ECON EAGR EPET ETRD AG
 
SUBJECT:  ALGERIA ECONOMIC HIGHLIGHTS APRIL 2008 
 
¶1.  The following is a summary of some economic developments in 
Algeria for April 2008: 
 
-- NEW SUBSIDIES TO STABILIZE FOOD PRICES 
-- NEW PHARMACEUTICAL PLANT OPENS IN ALGERIA 
-- FOREIGN INSURERS ENTER THE ALGERIAN MARKET 
-- SONATRACH COMMERCIALIZES GAS SALES TO EUROPE 
 
 
PRICE CHECK: ALGERIA EXPANDS SUBSIDIES 
-------------------------------------- 
 
¶2.  In the wake of skyrocketing world prices for agricultural 
commodities, the Algerian government took several steps to stabilize 
consumer prices of staple products.  According to the April 8 
edition of L'Expression, Minister of Commerce Hachemi Djaaboub 
recommended that vegetable oil and dry legumes, such as beans, 
should be added to the list of food products subject to consumer 
price controls.  And the Algerian wheat council (OAIC) announced 
publicly that it would offer "internationally competitive" prices to 
Algerian farmers for their wheat.  OAIC would then sell that wheat 
to millers at prices designed to maintain the government price caps 
on products at several stages in the supply chain, including the 
consumer price of flour and bread.  The Minister of Agriculture, 
Said Barkat, was quoted on April 11 in multiple domestic and 
international papers as saying that Algeria has built up sufficient 
wheat stocks, through domestic production and importation, to 
obviate the need for further imports in the coming months. 
 
¶3.  The Commerce Minister also announced on April 7 at the People's 
National Assembly that the Algerian government has authorized USD 
2.5 billion to pay for food subsidies in 2008.  Minister Djaaboub 
said publicly that price increases on products like wheat, vegetable 
oil, sugar and flour are due to sky rocketing world prices and are 
not caused by speculation in the domestic market.  In 2007, Algeria, 
a net importer of food products, spent USD 4.5 billion on food 
imports, according to published interviews with a director general 
at the Commerce Ministry.  Government subsidies for 2007 included 
USD 334 million for milk, USD 800 million for flour, and USD 1.4 
billion for semolina.  The Algerian government often releases 
supplemental budget allocations as needed throughout the calendar 
year for food purchases or subsidies.  Thus, the USD 2.5 billion 
authorization announced by Minister Djaaboub is based on current 
market estimates, and the total expenditure for 2008 would most 
likely be increased later in the year if world prices climb beyond 
government projections. 
 
 
SAUDIS BUILD PHARMACEUTICAL PLANT 
--------------------------------- 
 
¶4.  The Saudi-financed El Kendi pharmaceutical company opened a new 
plant in Sidi Abdellah in Western Algeria on April 12.  According to 
the company's Website, the USD 30 million facility has a current 
production capacity of 156 million drug units per year.  But the 
newspaper La Tribune reported on April 13 that the factory will 
eventually produce nearly 290 million units of generics per year, 
which, according to the paper, represents 65 percent of the Algerian 
market.  The paper quoted El Kendi's Director General, Dr. Essam 
Farouk, as saying that this will be the first pharmaceutical plant 
in Algeria to receive accreditation from the U.S. Federal Drug 
Administration (FDA).  The company's Website states that El Kendi's 
factory plans have already been approved by the FDA, and that the 
agency is reviewing individual production lines.  El Kendi, a unit 
of Saudi Tabuk Pharmaceuticals, announced that it will produce a 
full range of products, including liquids, creams, gels and dry 
drugs, such as compressed tablets, capsules and pouches. Production 
of injection-based products is planned for 2009. Farouk was also 
quoted as saying that, in addition to domestic sales, El Kendi will 
export approximately 30 percent of its products initially to 
countries in the Middle East, Africa and Asia, and eventually to 
Europe and the United States, where Tabuk already operates. 
 
 
ALGERIA OPENS TO FOREIGN INSURERS 
--------------------------------- 
 
ALGIERS 00000537  002 OF 002 
 
 
 
¶5.  On April 8, the Algerian National Insurance Company SAA signed a 
cooperation agreement with the French insurer Macif. According to 
various press reports, the agreement includes the creation of a 
subsidiary for life insurance, some vehicle coverage, and traveler's 
insurance. The agreement came after an announcement that the 
government finalized implementing regulations following the 2005 
liberalization of the insurance industry.  In addition to allowing 
foreign firms access to the Algerian market, the insurance law 
allows Algerian banks to offer insurance, and encourages the 
marketing of life insurance, long considered taboo in Algerian 
Muslim culture.  The government has been trying to expand the use of 
private insurance for property, vehicles and life after an 
earthquake in 2003 resulted in over 2,000 deaths, 100,000 homes 
destroyed or damaged, and over 200,000 displaced persons in a suburb 
of Algiers. 
 
SONATRACH GOES COMMERCIAL 
------------------------- 
 
¶6.  On April 7, national hydrocarbons company Sonatrach made its 
first commercialized sale of gas to Europe with the delivery of 
30,000 cubic meters of liquid natural gas (LNG) to the 
regasification terminal at Barcelona.  Sonatrach's subsidiary, 
Sonatrach Commercialized Gas (SGC), entered the European market 
through the sale of gas to its first client, Hidrocantabrico Energia 
of Spain.  Sontatrach said in a press statement that its strategy to 
create subsidiaries in the European downstream gas market allows the 
company to exploit a higher value for its gas, capture additional 
profits along the supply chain, and above all, develop an expertise 
in direct sales to end-users in destination markets.  Sonatrach also 
announced four new gas discoveries on April 13 located in the South 
of Algeria, two on its own, and two with its joint venture with the 
French company Medex.  This marks five new discoveries thus far in 
¶2008. 
 
FORD