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Will Algeria Save its Tender Market from the Repercussions of Global Geopolitical Crises?

The Corona pandemic, which plunged the entire globe into a pit of health and economic crises, wouldn’t subside without changing the organizational structure of many sectors. Even in 2022, as the world heaved a sigh of relief, many problems loomed over us. No sooner had we escaped the pandemic than the news of a Russian-Ukrainian war intensified. The Russian-Ukrainian conflict that began on February 24 has led to geopolitical tensions, hence to fluctuations in the energy markets. The global market is now struggling with supply scarcity and high oil and raw material prices.

If there is one lesson one should learn from this, it is that there must be room for exceptional and uncontrollable circumstances. Algeria has understood this. It has realized the dangers of geopolitical conflicts and their impact on its economy. Which explains the measures it has taken to limit their repercussions.

To adapt to the unstable situation of international commodity prices that go into the realization of equipment and development projects, the Algerian Prime Minister issued an instruction that would put an end to the inconvenience suffered by the construction, public works, water and transport sectors. All because of the lack of supply and thus the economic imbalance of public markets.

As a result of this unpredictable situation, mainly caused, as mentioned above, by Covid-19 and international geopolitical tensions: 

  • Significant additional costs on supplies.
  • Activity interrupted in many worksites due to the inability of institutions to bear the additional costs.

It has therefore become necessary to observe the exceptional and uncontrollable conditions during the execution of public tenders. To minimize their impact on contracting partners and projects.

In an instruction addressed to the contracting departments in charge of public procurement and to the control bodies, the Algerian government introduced the following measures:

Concerning public contracts in execution :

Adjustment of execution deadlines: The deadlines may be suspended or extended, provided that the partner proves his inability to meet the execution deadlines. Or that the execution of certain services within the deadlines would cause exaggerated additional costs.

Dispensation of delay penalties: The dispensation of delay penalties is materialized by issuing interest injunctions, which include the stopping and resumption of the work, in order to deal with these delays. The contracting partner must attach an administrative certificate specifying the contingencies to the file.

Compensation or termination: the contractor may request compensation when exceptional circumstances arise and threaten him with a heavy loss, provided that his request is supported by the ‌documents, proving that the increase was exceptional and unexpected. He may also request contractual termination of the transaction.

Expeditious treatment in the payment process of the relevant government contract invoices: The contracting departments shall speed up the procedures for payment of public expenses resulting from implementing said public operations, regardless of the deadlines provided for in Article 122 of Presidential Decree No. 5: 246.1 of September 16, 2015.

Measures for upcoming procurements:  

Regarding future projects and public procurements, contracting departments must create and include the following elements when issuing a contract:

  • The price revision clause must specify the modalities of the calculation of the revision and the specific period of price revision. All according to the expected price fluctuation rate for the relevant economic activity.
  • The stipulation of the clause relating to the execution deadline exempts the contractor from penalties for delay. Besides extending the time limits, if the circumstances are beyond his responsibility. 

Ultimately, the aforementioned measures the Algerian government issued are crucial to avoid the problems that deteriorated the Algeria tenders 2020-2021.

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