Training programs and modern communications boost state-run firms rejuvenated by market forces
INFRASTRUCTURE

REFORMS have rejuvenated infrastructure development company SNTP, bringing in staff training programs and Western management methods

Following independence, Algeria devoted great chunks of the revenues it received from newly-exploited oil and gas reserves to build up basic infrastructure. Whole areas of the country were devoid of proper roads, not to mention airports and other facilities. The government set up a raft of state-run companies to make up the deficit. Some became specialists in distinct sectors, such as building dock facilities or roads, while others concentrated their activities in particular regions.

In the 1990s, several of these companies found themselves in the doldrums, thanks to insufficient investment, obsolete equipment and outdated management practices. In some cases, insecurity exacerbated their problems. They were therefore encouraged towards reform. The whole infrastructure sector has since become far more open to competition and market forces. Inevitably, there have been winners and losers.
An interesting example is the National Public Works Company (SNTP). Despite its name, it is currently only the 10th most important Algerian company in the sector. But its CEO, Abdelmadjid Lallali, is confident that it will reach the number three slot by the end of this year. This is not just wishful thinking. SNTP’s turnover increased by 35 percent in 2001, and he is convinced that it will better that performance this year. Moreover, while the company was running at a loss not so long ago, these days it is registering a respectable profit.

SNTP’s work has mainly been in the field of highway-building and airport construction. The latter endeavor includes the international airports at Bejaia and Jijel. The company has particularly concentrated on the south of the country, where many of the biggest infrastructure challenges lie.
“We are handling practically everything in terms of resurfacing and upgrading the road system in the Bejaia administrative district, as well as all the highway construction in the Ouargla district in the south,” says Mr. Lallali. “We are also working with Sonatrach at Oued Demous, where we are building highways and drilling platforms for them.”

Mr. Lallali is an enthusiast for Western management methods and for bringing his staff into the modern world. SNTP currently employs about 550 people and many are being taught new skills, not least computer literacy.
“Currently, 15 of our executives are taking courses in general and operational management,” he explains. “We do have problems of internal communication, which need to be remedied. Installing internet connectivity within the company will be a first step, and this training program will help ensure the internal flow of information.”
Modern communications should also make it easier to forge new links with U.S. corporations. “We know that there is plenty of excellent equipment in the U.S.,” says Mr. Lallali, “but unfortunately, little of it is familiar here – apart from heavy machinery maker Caterpillar, which is appreciated for its reliability.”
Until now, Algeria has tended to look to Europe to supply the equipment and expertise for its infrastructure needs, partly because of geographical proximity, but also by reflex. Mr. Lallali believes that could, and maybe should, change.

“One imagines that distance raises transport costs,” he argues, “but I personally had the experience in another company where a European product was twice the price of its equivalent in Boston. So the notion of distance is something very relative. We want to be known by Americans, just as we want to know them.”
SNTP is investigating the possibilities of joint ventures with overseas corporations, but, says Mr. Lallali: “We present ourselves to them more in the guise of sub-contractors, rather than as equal partners, given our capacity. This mainly means working with them on their tenders for sections of highways.”

He believes that there are definite openings for U.S. firms, especially in the construction of Algeria’s planned East-West highway. “Through working with Americans, we will be able to achieve technology transfer,” he says. “Even more importantly, we will obtain a transfer of management skills through simple human contact.”
Road building and maintenance are particular specialities of one of the most financially successful public sector companies working in the field of infrastructure improvement, the Algiers Company for Public Works, EPTP-Alger, which is celebrating its 25th anniversary this year. The company is especially active in six administrative districts: Algiers, Bechar, Djelfa, Medea, Tiaret and Tizi-Ouzou.

According to EPTP-Alger's CEO, Mr. Aït-Ouazzou, the works connected with an important dam project at Tizi-Ouzou illustrate the complex challenges of working in a country as large and as geographically diverse as Algeria. “In this case, we are talking about a mountain road,” he says. “But in Algeria, we have all sorts of landscapes, from mountains to plains and deserts.”
The prominence given to infrastructure development in the government’s program of economic renewal means that companies like EPTP-Alger are certainly not going to be idle for the foreseeable future. But Mr. Aït-Ouazzou shares the view of many other people working in the sector that Algeria cannot respond adequately to its evident needs all by itself.

“With regard to stretches of highway that have been started recently, the companies that exist will find it difficult to use up the funds that have been allocated,” he says. “Moreover, companies haven’t been investing in equipment for a long time, so we’re not really prepared to handle the situation.”
Nor can the companies simply turn to the state for help, as was often the case in the past. “On the contrary, we now pay taxes and we pay our employees, while at the same time carrying out work that is of enormous public usefulness, given Algeria’s size,” Mr. Aït-Ouazzou says.

Some projects that EPTP-Alger has been involved with have benefited from funding from the World Bank, the African Development Bank and the Arab Fund for Economic and Social Development. And in the future, strategic partnerships with companies overseas are likely to play a more significant role in joint ventures of one kind or another.

“We have already received several approaches over the Internet,” Mr. Aït-Ouazzou reveals, “notably from Turkey and Italy. Unfortunately, as yet no U.S. company has shown interest in the area of public works.”
He is confident that the situation will change, once Americans realize the opportunities that exist. “We are ready to welcome a serious partner, who has considerable material and financial resources at his disposal, and who specializes in public works,” he says.

Mr. Aït-Ouazzou sees roads as the most important basic tool for a country’s development, especially in Algeria where the railway network is sparse. “There are well over 600 miles of road remaining to be built, but with our means, I doubt whether we could exceed about 20 a year,” he says. “We need massive resources if we are going to complete such a project in a reasonable period of time.”
Some parts of the country still need opening up, and new mountain passes are required. But even when roads are finished, the work won’t stop, as road maintenance will be an ongoing concern.