Abdelhaq Bourouai is the Chief Executive Officer of the Algiers port company, EPAL. He has just signed the new Djazair Port World into being. This is a joint venture with the world’s third leading operator, the Emirates company, Dubai World Port. Djazair PW will have, as a concession, the Algiers container terminal for thirty years. The same operation is planned for Djendjen. EPAL’s CEO explains the goal of this unprecedented partnership in Algeria.

Interview conducted by El Kadi Ihsane

Abdelhaq Bourouai: “These are private companies that are careful not to lose any money to lost time. They are more aggressive when it comes to seeing to it that things get done. The same thing is going to happen at the Algiers terminal.”  

Les Afriques: What made you opt for a partnership even though EPAL is bringing in a lot of money and the container business is quite profitable?

Abdelhaq Bourouai: There is oil beneath our feet and we have the know-how to extract it. No one is asking why Sonatrach is partnering with foreign companies. We could have bought the gin poles and modernised the equipment all on our own at the Port of Algiers. But we don’t have the organisation in place that we would need. We wouldn’t have known how to maintain and renew them. In fact, we’re not even in a network. The global economy is divided into networks. Dubai Port World brings us its own network – one belonging to the world’s third largest container operator. Do you not find it strange that a Marseille-Algiers shipment costs 40% more than one from Marseille to Tunis? Carriers are factoring in the Port of Algiers’ poor performance.

“If we did nothing, Algeria would have depended on the Tangiers-Med port for all its shipping needs.”

The average processing speed there is 10 containers per hour. With DPW, it will rise to between 20 and 25 containers per hour. Shipping costs will decrease. The entire economy will benefit from this. And then there is a second joint venture to use the Djendjen terminal; a deepwater port that awaits development. If we did nothing, Algeria would have been dependent on the Tangiers-Med port for all its shipping needs.

LA: Do you mean that Algeria’s ports are unable to accommodate the new generation of containers?

AB: I am going to tell you what I mean. The Port of Algiers can’t even accommodate a basic 1200 TEU (twenty-foot equivalent unit). There is a draught problem and also an issue with the linear length of the quay. This new joint venture will have 18 hectares of surface area as opposed to the current 12 hectares. Tomorrow’s “happening” port is Djendjen. Without Djendjen, we couldn’t get large 15,000 TEU ships to come and that means that the Port of Algiers has no future. It handles 50% of the traffic and DPW paid 16 million euros to gain access there. Our partner has committed to increasing the in-flow to 760,000 in seven years. It used to represent two-thirds of the 600,000 boxes process in 2008. It is important to note that, in its new business plan, the Djendjen terminal will process 1.5 million TEUs over a period of 10 years. Currently, that figure is below 100,000.

LA: How is your partnership with DPW organised and how will it set up business?

AB: On February 15, we therefore created the Djazair Port World – making a 50-50 capital investment of 20 million euros. It has a thirty-year concession on the container terminal. Its management has been entrusted to Dubai Port in based on two modalities. The first is a performance contract paid for seven years by the dealer company. The second, beyond that, provides for unremunerated management in the care of Dubai Port and an “Algerianisation” of the framework. As a historic dealer, we don’t have to pay an entrance fee but, with our partners, we share 96.2 million euros in investment expenses anticipated particularly for construction, the purchasing of equipment and the implementation of a computerised management system. The purchase of 4 gin poles, which will change work organisation at the port, is not scheduled to occur until the second year of operation. The business plan forecasts a profitability level of 20% in ten years time. Djazair PW will take control of the terminal on March 17. A month later, the joint venture between DPW and the Djendjen company, created based on the same business model, will be launched. Both dealers will pay the State a fee per square meter and a variable fee based on our sales figures.

LA: Are you not afraid that you might meet your investment objectives but still be unable to reduce the processing time for the containers due to an administrative environment that fails to keep up with the system?

AB: That is a possibility, but I remain confident. For example, I see what’s happening at Bejaia Port where a management contract was signed three years ago with a company from Singapore. It got everyone, both customs and other administrations, moving. There, containers are processed and discharged in three days. It’s a different management style. These are private companies that are careful not to lose any money to lost time. They are more aggressive when it comes to seeing to it that things get done. The same thing is going to happen at the Algiers terminal.

LA: Algerian port labour unions fought against your partnership with DPW. One of their criticisms concerns the social aspects of the deal. Will there be lay-offs?

AB: None. I fear it will be quite the contrary. EPAL will have to provide Djazair with 660 workers as earlier as next year. We’re not sure we have all the job profiles they’ll need. In fact, the terminal is going to have to recruit. That being said, in the course of the next 30 years, our staff will decrease with the increase in volume. In 1982, when EPAL first started business, we had a staff of 7,000 processing around 4 million tonnes of merchandise per year. In 2008, we processed over 6 million tonnes with a staff of only 3,500. But no one was laid off. Employees who voluntarily leave aren’t always replaced. Staff reduction is a natural part of the equipment and organisation modernisation process. Today we are behind in terms of what a modern terminal ought to have. Dubai Port World will take care of the upgrades. Our port workers are going to become more competent.

LA: What will EPAL do with the rest of the Algiers port industry?

AB: We are going to try to take advantage of the container terminal’s move towards greater autonomy to implement the reforms needed. There are some fields that we must make subsidiaries. Towing, for example, has little to do with handling. We have to separate EPAL’s trade function from its mission as a powerful public entity. We are awaiting the creation of a regulatory body to arbitrate the activities of competition arising in the ports. The government is working on it.

LA: You negotiated directly with DPW . Don’t you think it would have been better to have made a call for tenders to find a partner in Djendjen or Algiers?

AB: In this instance, I don’t think so. You know, calls for tender aren’t always successful. Sometimes you don’t know what you’ll stumble upon. In our approach, we had the advantage of established trust between the Algerian and Emirate governments as well as their desire to see this through. Dubai Port World was absent in the Mediterranean and we needed a major partner to open doors for us in the global market. I really think this is a win-win situation.