As OPEC member countries are trying to ward off the economic impact of the falling oil prices, Algeria's state energy company Sonatrach has taken a bold step by demanding its service providers cut their prices by up to 15 percent.
The economy of Algeria was shaken a bit with the collapse of crude price, because the state revenues relies 60 percent on crude sales. This buffers the economy by paying for subsidies which douses social unrest and aids in running a welfare system.
To save cash, expenditures have been curtailed, in terms of infrastructure and other ongoing projects which have been put on hold. A freeze has been placed on state job hiring, companies providing services in the hydrocarbon sector and partners in the oil and gas services have been direct to cut cost by up to 10%.
To further counter the price drop, the country is looking at ways to improve the country's huge import bill which will enable the protection of its foreign reserves.
Algeria, however is unlikely to feel deep economic collapse, with as much as $200 billion in foreign reserve and little debt.
Ibraheem B. Kolawole BEng MSc
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