Development Prospects for Electricity and Gas Sector in Algeria and Industrialization

2016 -2025

Rabah TOUILEB Director General of Strategy and Prospective - sonelgaz Algeria

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Summary

1. Sonelgaz and Subsidiaries1.1 Introducing Sonelgaz1.2 Main Fields of Activities of Sonelgaz Group Companies / Subsidiaries by Activities and

Equity Participations

2. Evolution of electric and gas systems Period 1962 -2015

3. Needs for Additional Capacities - Period : 2016-2025Evolution of National conventional Energy capacities between 2016 and 2025

4. Industrial Development/Partnership sector Energy and Industry4.1 Preamble4.2 Industrial Development Strategy4.3 Industrial Development Support Tools4.4 Structuring Technological Projects

5. Project under realization6. Finalized Partnership

5. Conclusion

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1. Sonelgaz and Subsidiaries

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1.1 Introducing Sonelgaz

Sonelgaz, is the historical operator in the field of : Generation, transmission and distribution of electricity Transmission and distribution of gas by pipelines,

has been restructured from a vertically integrated company to aholding driving an industrial group consisting of several companiesand various trades. These companies undertake all operational activities.

The holding ensures steering through the definition andimplementation of the development strategy of its affiliates andtheir related activities.

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1.2 Main Fields of Activities of Sonelgaz Group Companies Subsidiaries by Activities and Equity Participations

Electricity and Gas works Research,EngineeringConstruction & Services

Generation, transmission & distribution of Power

Transportation & distribution of Gas by pipeline

Manufacture of Equipment

09 Participations39 SubsidiariesEnergy Industries 13 Subsidiaries

Industrial Activities 07 Subsidiaries

Works & Services 15 Subsidiaries

Institutional Security 04 Subsidiaries 09 Companies

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2. Evolution of electric and gas systems Period 1962 – 2015

7

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

1962 1969 1979 1989 1999 2009 2013 2014 2015

Evolution of installed capacity by technology (1962 – 2015 (MW)‐

TV TG CC Diesel Hydr. Hybride Eolien PV

Installed capacity by technology [Period 1962-2015 - MW]

8

0

20 000

40 000

60 000

80 000

100 000

120 000

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

180 000

1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

High voltage (miles) Medium voltage (miles) Low voltage (miles)

High voltage1 997

Medium voltage 8 981

Low Tension 5 105(miles)

1969

2015

High voltage 16 943

Medium voltage 85 450

Low Tension 103 000(miles)

1999

High voltage 7 727

Medium voltage52 708

Low Tension 62 722(miles)

Evolution  of the lengthof the electricity transmission network by voltage level(1962‐2015)

km miles

2015

1979

High voltage3 516

Medium voltage15 016

Low Tension9 247(miles)

1989

High voltage6 345

Medium voltage 33 509

Low Tension 34 988(miles)

Evolution of the length of the electricity transmission network by voltage level [1962-2015 - mile and km]

9

0

10 000

20 000

30 000

40 000

50 000

60 000

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

High pressure (miles) Medium pressure (miles) Low pressure (miles)

High pressure 365

Medium pressure147

Low pressure 850

(miles)

1969

2015

High pressure11 165

Medium pressure51 152

Low pressure0

(miles)

1999

High pressure 2 672

Medium pressure 9 161

Low pressure 392

(miles)

Evolution  of the lengthof  Gas transmission Network by pressure level(1962‐2015)

km miles

2015

High pressure 1 587

Medium pressure1 995

Low pressure 913

(miles)

1979

High pressure 2 249

Medium pressure 4 923

Low pressure 739

(miles)

1989

Evolution of the length of Gas transmission network by pressure level [ 1962-2015 – mile and km ]

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Evolution of Electricity and Gas customers [ Periode 1962-2015]

0

1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

6 000 000

7 000 000

8 000 000

9 000 000

1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

Nombre de clients Electricité Nombre de clients Gaz

Electricité :  708 064 Gaz : 199 003

1962

2015

Electricité :  8 452 653Gaz           :   4 584 168

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Electrification rate [Period 1962-2015 (%)]

30

40

50

60

70

80

90

100

1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

1978(59%)

1998(86,2%)1988

(83,5%)

2008(98%)

2015(99,1%)

Evolution  du taux d'électrification sur la période (1962 ‐ 2015)   ‐ (%)

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Gaz Penetration rate [Period 1962-2015 (%)]

20,0

25,0

30,0

35,0

40,0

45,0

50,0

55,0

60,0

1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014

1978(24,5%)

1998(30,3%)

1988(27,3%)

2015(54,2%)

2008(42,2%)

1962(28,2%)

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3. Needs for Additional Capacities - Period : 2016-2025

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Evolution of the National conventional Energy Capacities between 2016 and 2025 1/2

N° Description 2015 2025

1 Installed Capacity (MW) 17 240 34 125

2 Electricity Network (Transmission & Distribution) (in Miles) 205 394 323 540

3 Electricity Substations [400, 220 & 60 kV] (in Unit) 398 795

4 Gas Network (Transportation & Distribution) (in Miles) 56 510 118 922

5 Number of Customers Electrical Power (in millions) 8,4 12

6 Number of Customers Gas (in millions) 4,5 8,0

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The Development of Electrical Power distribution Networkfor the period 2015-2025, will require : 115 062 Miles in lines; 67 850 substations, and; 2 728 110 connections.

The Development of Gas Distribution Network for the period2014-2024, will require : 53 608 Miles of pipeline, and; 3 194 680 connections.

Evolution of the National conventional Energy Capacities between 2016 and 2025 (2/2)

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Development of Renewable Energy capacities over the period 2016-2025

MW

Realization in Partnership between Sonelgaz - Sonatrach - foreign partner

2016-2020 2021-2025 2016-2025

PV 400 3600 4000

Wind 100 1400 1500TOTAL 500 5500 5500

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4. Industrial Development in realization in Partnership between the sectors of the energy- Industry and foreign partner 1/5

4.1 Preamble:The strategy adopted by companies in the energy sector (includingSonelgaz) in partnership with the industry sector, is about implementinga series of industrial projects through partnership built upon enhancinglocal values as well as comparative benefits owned by our country.

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4.2 Industrial Development StrategyThe development strategy consists of : Favoring national integration in terms of capabilities for studies, services,works and manufacture as well as execution of projects; Undertaking all initiatives aiming at develop national capabilities for studies,services, works and manufacture relevant to execution, operation andmaintenance of structures; Developing the national and/or international partnership to favour theemergence of a national industrial network.

4. Industrial Development in realization in Partnership between the sectors of the energy- Industry and foreign partner 2/5

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4.3 Industrial Development Support Tools

Strategic Studies (technological choices relevant to national context, ..) ; Projects Design and Execution; Renewable Energies : Management and Studies for integration in the

electricity Network; Manufacture of Equipment (most appropriate drivers to the value chain) R&D to support projects.

4. Industrial Development in realization in Partnership between the sectors of the energy- Industry and foreign partner 3/5

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Manufacture of heat recovery steam generators and heat exchangers through national and international partnership;

Manufacture of high voltage transformers through international partnership ;

Manufacture of photovoltaic modules through international partnership ; Manufacture of MV cells, MV/LV - MV/MV substations, and

monitoring/controlling systems through international partnership; Manufacture of HV insulators through international partnership.

4.4 Structuring Technological Projects

4. Industrial Development in realization in Partnership between the sectors of the energy- Industry and foreign partner 4/5

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4.4 Structuring Technological Projects (2/2)

Regarding other equipment, it will be : Preferred the creation of businesses through a national and

international partnership Favored the emergence of local industries of equipment manufacture by

national companies, with or without, foreign partners.A special attention will be given to the maintenance of installations

through localizing the manufacture of spare parts of different type, sizeand technology.

4. Industrial Development in realization in Partnership between the sectors of the energy- Industry and foreign partner 5/5

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5. Project under realization : the GEAT Complex

Realization of the industrial complex for the manufacture of gas turbines, steam turbines,generators and associated control systems for combined cycle power plants.The project aims the manufacture of complex technology equipment in Algeria, inpartnership with General Electric-Company USA.

Project Display :

Plant n°1: Manufacture of 100 to 300 MW gas turbines; Plant n°2 : Manufacture of 50 to 160 MW steam turbines; Plant n°3: Manufacture of generators, which will be coupled to the turbines to

convert mechanical energy into electrical energy; Plant n°4 : Control systems manufacturing to equip turbines manufactured in plants

n°1 and n° 2.

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Project Main Data Name of the corporation: GENERAL ELECTRIC ALGERIA TURBINES "GEAT" Annual production level: 06 to 08 gas turbines « GT"; 03 to 04 steam turbines «ST»; 09 to 12 Generators «Gen» ; Control systems "CS" associated; Auxiliaries of GT & ST.

Investment amount: US $ 205 million; Working capital US $ 88 million; Contribution from shareholders 168 million US $; Debt: $ 125 million US (investment + working capital); Purchase guaranteed by subsidiaries of Sonelgaz four (04) GT, two (02) ST, six (06) generators and associated control systems for a period of ten (10) years; Jobs : 400 employees ; Distribution of share capital between shareholders Sonelgaz 51% - 49% GE

5. Project under realization : the GEAT Complex

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6. Finalized Partnership

Creation in partnership with Hyundai/Daewoo of an Engineering,Procurement and Construction Company (HYENCO) able toundertake projects :

Conventional Power Plant, Steam Turbines, GasTurbines and Combined Cycle CSP, Wind and PV Plants Others EPC’s

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7. Conclusion

The development strategy consists of : Favoring national integration in terms of capabilities for studies, services, works andmanufacture as well as execution of projects; Undertaking all initiatives aiming at develop national capabilities for studies, services, worksand manufacture relevant to execution, operation and maintenance of structures; Developing with the industrial sector, the national and/or international partnership to favourthe emergence of a national industrial network.

Pursuing its mission as the driver for development in the electricity and gas sector, thestrategy implemented by Sonelgaz through its subsidiaries, not only allows the availability ofenergy products under the best conditions of quality and service on the entire territory, butalso ensures the optimization of energy costs and guarantees the national supply. Moreover,it develops supportive industries that create wealth and jobs.

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Thank you for your attention

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