Medvedev seeks to sway energy, telecom deals in Algeria

6th October 2010, Comments 0 comments

President Dmitry Medvedev headed a top level Russian business delegation to Algeria Wednesday, seeking to use his clout to push through delicate energy and telecoms deals with a traditional Moscow ally.

Medvedev held talks with Algerian counterpart Abdelaziz Bouteflika after he was welcomed with full honours from the North African state, whose friendship dates back to Soviet era when Moscow was its main arms supplier.

Algeria greeted Medvedev with a 21-gun salute -- the highest honour reserved for a foreign dignitary.

While no new arms deals are expected on this trip, Medvedev has the task of raising hugely sensitive business deals by Russian companies to buy telecoms and energy assets in Algeria.

Russian-Norwegian telecoms firm Vimpelcom on Monday signed a multi-billion dollar merger deal with Egyptian billionaire Naguib Sawiris, the owner of Orascom, to create the world's fifth largest mobile operator.

However the fate of Algerian mobile operator Djezzy -- one of Orascom's greatest assets -- has been the subject of frenzied speculation since the deal was announced because of the Algerian government's desire to nationalise the firm over a tax dispute.

Vimpelcom's chief executive said the company could consider a compromise and sell Djezzy to the Algerian government after it acquires a majority in Orascom.

"If the government insists, we will naturally be ready to consider selling the asset to the government," said Vimpelcom chief executive Alexander Izosimov on the sidelines of the state visit.

"We would with pleasure retain this company as part of our assets and manage these assets because no doubt this market has potential.

"It is hard to make these predictions. For us it is important that relations with the company and the government normalise, to understand what path is chosen."

Under the multi-billion dollar merger deal, Vimpelcom will acquire all of Italian mobile operator Wind and a majority in Orascom Telecom from Sawiris' holding firm, which will in return receive a cash payment and substantial stake in the enlarged company.

However analysts have said that the situation with Djezzy represents a major potential problem for the deal.

An equally significant issue is a plan by Russian-British oil venture TNK-BP to acquire the assets of its part owner BP in Algeria.

"We would like the fate (of the Algerian assets) to be decided positively," TNK-BP acting chief executive, Russian billionaire banking tycoon Mikhail Fridman, told reporters in Algeria.

BP is considering selling a range of assets to finance its losses after the Gulf of Mexico oil spill. Reports have said the board of TNK-BP last week approved a bid to buy BP assets in Vietnam and Venezuela.

BP's investments in Algeria include a 33.14 percent share in two projects in the giant In Salah oil field, according to the Kommersant daily.

TNK-BP is owned 50 percent by the embattled oil giant and 50 percent by a group of Russian billionaires including Fridman known collectively as Alfa Access-Renova (AAR).

The two presidents were also due to discuss arms cooperation although no new deals were expected to be signed this time, Kremlin foreign policy advisor Sergei Prikhodko said.

Military ties have in recent years been clouded by Algeria's complaints over the Russian-made arms' poor quality, a claim Prikhodko said was largely "justified."

During a trip by Medvedev's predecessor at the Kremlin, Vladimir Putin, to Algiers in 2006 Russia wrote off Algeria's Soviet-era debt in exchange for arms purchases.

From Algeria Medvedev will head to Cyprus for a two-day visit, a first by any Russian president.

© 2010 AFP

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