By Hamid Ould Ahmed

Sept 6 (Reuters) - Algeria is to require any foreign companyseeking a share of its $286 billion infrastructure budget toform a joint venture with an Algerian firm to qualify for statecontracts.

The measure, included in a law published on Monday, is thelatest sign of Algeria's shift towards greater economicnationalism, which has already seen government pressure appliedto some foreign investors.

Construction and engineering firms including SNC-Lavalin,Alstom, Siemens and Orascom Construction Industries have wonbillions of dollars worth of state contracts in Algeria.

The new rules do not apply to existing contracts, but couldcreate complications for firms when they tender for newbusiness.

"The list of conditions in international tenders mustinclude a requirement for foreign bidders that they investwithin the framework of a partnership ... with anAlgerian-registered company which is majority-owned by residentcitizens," says the text of the law.


The rule was part of a supplementary budget law published onMonday in the government's official journal.

Algeria has already announced a separate series of rulesgiving preferential treatment to domestic firms over foreignrivals when bidding for state contracts.

The government has said it will spend $286 billion onmodernising the economy over the next five years, with projectslikely to include new roads, dams, water desalination plants andconstruction of housing.

Algerian President Abdelaziz Bouteflika has said foreigncontractors still have a role to play, but new rules are neededto give local firms a bigger stake in the economy and helpreduce unemployment.

Some analysts have pointed to a row between Algeria andEgypt's Orascom Telecom as a sign of the hardening attitudetowards foreign investors.

The firm is negotiating the sale of its lucrative localmobile operator to the Algerian government after it was hit byback-tax demands, blocked from transferring money abroad andprevented from selling the business to a South African firm. (Writing by Christian Lowe; editing by Andrew Roche)