Khellil involved in financial scandal with Canadian SNC Lavallin

A number of legal irregularities have been registered in the deal concerning the construction of an electricity plant in the province of Tipasa, 80 Kms west of Algiers, causing the public treasury a loss estimated at USD 670 million.

• The economic brigade of the district of Algiers has launched an inquiry in 2009 and completed it in 2011 before forwarding the dossier to the public prosecutor of Algiers.

• Judicial sources close to the case have revealed that the giant project didn’t abide by the legal procedures that govern this type of contracts. Among them, a number of advantages given by the Algerian party to the Canadian company SNC Lavalin.

• Another incentive consists in the use of sea water to cool the turbines and the acquisition of a land to erect the plan for free, which is a clear infringement of the rules according to the notary who was under investigation.

• SNC Lavalin has also acquired the majority of the project’s shares including the transportation, pipes connection and the use of gas in the exploitation of the plant for free

• The company has also included a clause in the contract stating that SNC Lavallin will get the exclusivity in buying the produced electricity to the Algerian energy company “ Sonelgaz” for a period of 20 years.

• The project benefited from a series of other incentives as part of the deal sealed with the National Agency for the Promotion of Investments including tax exonerations in connection with the production processes, publicity and acquisition of equipment used for the completion of the project.

• In addition, it has benefited from tax exonerations for a five year period during the exploitation of the plant and other taxes related to benefits, it said.

• On account of the delay registered by SNC Lavallin concerning the completion of the project slated for September 2008, this company had to pay for the extra charges, but the Algerian company Sonelgaz stood for the payment of more then USD 160 million.

• The managers of the company have asserted that they were forced to obey to instructions given by the former mines and energy minister Chakib Khellil.

• To recall, the Algerian authorities sealed a deal with the Canadian company SNC Lavallin for financing the building of an electricity plant in the region of Tipasa with the capacity of 1227 Megawatt.

• The project is estimated at USD 670 million.