Algeria Sonelgaz looks to foreign loans after oil price drop

Algeria's state power firm Sonelgaz will consider foreign loans for first time in decades to help secure its investment program.

  
ALGIERS, Feb 16 (Reuters) - Algeria's state power firm Sonelgaz will consider foreign loans for the first time in decades to help secure its investment programme and offset the impact from the plunge in world oil prices, the company's top executive said.

Algeria, where oil and gas production account for 60 percent of the state budget, saw energy earnings fall around 50 percent last year, forcing the government to slash spending, raise some subsidised fuel prices and freeze major projects.

Sonelgaz CEO Nouredine Bouterfa said the company urgently needed to plug a financing gap of just more than one trillion dinars or around $9.5 billion to implement its investment programme until 2018, the APS state news agency reported.

"Our problem in the short term is to find a solution to a gap of 1.1 trillion dinars. This is an urgent issue and ... this is why we plan to go to the international market," Nouredine Bouterfa told reporters at a conference on Monday, APS reported.

Sonelgaz is the sole electricity producer and distributor in Algeria. This year it increased the subsidised price on some gas and electricity supplies to trim spending.

Algeria's government cut spending by 9 percent in this year's budget after a smaller cut in public expenditure a year earlier due to lower energy revenues.

The state still has more than $130 billion in foreign reserves and little foreign debt, but it relies heavily on its oil and gas revenues for a huge welfare programme for everything from housing to subsidised electricity, food and fuel that have helped ease social tensions in the past.

(Reporting By Lamine Chikhi, editing by David Evans) ((lamine.chikhi@thomsonreuters.com;))

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