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EBRD finance package to stabilise Tunisia’s electricity provider

TagsEnergy Access, Finance and Investment

The European Bank for Reconstruction and Development (EBRD) is providing $361 million (€300 million) in financing to support the stability of Tunisia’s electricity provider Société Tunisienne de l’Electricité et du Gaz (STEG).

The financing package is meant to support the stability of Tunisia’s energy sector during the COVID-19 pandemic in the medium term. It will allow STEG to implement an ambitious corporate and climate reform roadmap that would anchor the shift towards a more sustainable and efficiently run company.

STEG is Tunisia’s state-owned national electricity and gas utility company. Established in 1962, it produces and distributes electricity and natural gas. Its involvement in the gas value chain is limited to gas distribution and gas-fired generation. STEG is also the sole off-taker of private renewable energy in the country.

According to the International Energy Agency Tunisia mostly relies on gas imports (from Algeria) to meet its primary energy needs – almost 97% of its electricity in 2016 came from gas. The country’s energy policy does emphasise renewable energy and wind power has strongly increased since 2014.

The US International Trade Administration’s country commercial guide on Tunisia points out delays in power plant construction means the country’s power sector does not possess excess generation capacity and is susceptible to brownouts. STEG struggles to meet peak summer electricity demand and cannot keep up with Tunisia’s annual 5% in growth in power consumption.

Only 3% of Tunisia’s electricity is generated from renewables which include hydroelectric, solar and wind energy though, the 2015 energy law does encourage IPPs in the area of renewable energy technology and 17 solar IPPs and 2 wind projects have been awarded since 2017.

Roadmap for reform and energy sustainability will diversify Tunisia’s energy labour force

The EBRD is supporting the decarbonisation of Tunisia’s energy sector through the introduction of robust climate governance measures, policy engagement to support solar and wind programmes and strengthening the financial standing of STEG.

The financing package will be accompanied by a detailed roadmap for reform and energy sustainability that aims to improve the company’s corporate and climate governance, enhancing financial management and promoting inclusion to support equal opportunities and career development for women and young professionals.

The roadmap includes a comprehensive package of technical cooperation and investment grants consisting of $3 million (€2.5 million) from the European Union, $90,000 (€75,000) from the Global Environment Facility, $1,44 million (€1.2 million) from the Swiss State Secretariat for Economic Affairs, $168,615 (€140,000) from the EBRD’s Southern and Eastern Mediterranean (SEMED) Multi-Donor Account and $240,867 (€200,000) from the EBRD Shareholder Special Fund.

The package consists of two facilities. The first is an immediate €100 million emergency stabilisation facility under the EBRD’s Vital Infrastructure Support Programme. The second facility of up to $120,4 million (€200 million) will help refinance STEG’s short and medium-term liabilities.

In addition, the European Union is providing an investment grant of up to $24.1 million (€20 million) to finance the implementation of an enterprise resource planning system, a necessary step towards the modernisation of STEG.

The Global Environment Facility (GEF) is providing a grant of up to $481,830 (€400,000) under the EBRD’s Environmental Technology Transfer programme, which focuses on promoting investments in wastewater treatment and recycling.