Renault has confirmed that it will form a joint-venture with the Algerian government in order to kick-start the local automotive industry. Â The French automaker will own a 49 percent stake in the new company.
The yet-unnamed joint-venture is planning on investing €1.2 billion (over $1.5 billion) to build a factory in Oued Tlelat, a small city in the north of the country. Â During its first year of operation, the plant will be able to churn out 25,000 cars and vans a year but the number will gradually reach 75,000 annual units before the end of the decade.
A vast majority of the vehicles built in Oued Tlelat will stay within the Algerian borders to help meet the needs of the ever-growing local market. Â Once supply catches up with demand, the plant might build cars for other countries in Africa.
The agreement with the Algerian state makes Renault the first automaker to set up a factory in the Maghrebian nation, but it also gives the company a three-year monopoly on the local market. Â
"The contract has a clause that says no other publicly-owned company will be able to ink a similar deal with an another automaker for the next three years," explained Chérif Rahmani, a minister in the Algerian government.Â
Renault hopes that the controversial clause will give it a head start over rival Volkswagen, who considered creating a joint-venture with the Algerian government several months ago.
