January 8, 2013 / 5:20 PM / in 5 years

Algeria set to cancel windfall tax with new energy law

Jan 8 (Reuters) - Algeria is considering a new energy law that would cancel a windfall tax on foreign energy firms, according to a draft seen by Reuters, in an attempt to boost foreign investment and help meet growing social demands.

The windfall tax that many potential investors see as a deterrent would be replaced by a “complementary tax on results”.

“This tax will replace the windfall tax,” the draft says.

It did not provide further details. The new law, currently under debate in Algeria’s parliament, is very likely to be passed because President Abdelaziz Bouteflika has an overwhelming majority in the parliament.

The law would need to be published in the official gazette to enter into force.

Algeria, a top energy supplier for Europe, is the only country in the region that has not been caught up in “Arab Spring” uprisings, although social pressure is growing for improved provision of education and housing and for more jobs.

Algeria’s last three rounds of bidding for oil and gas permits met lacklustre interest from foreign firms, raising questions about whether it has enough new projects coming on stream to maintain output levels and meet growing demand.

In a 2008 round, just four blocks were awarded, while in 2009 only three were picked up, and last year it awarded two permits.

Algeria’s oil and gas sales account for about 97 percent of total exports.

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