The European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) are to provide sovereign-guaranteed loans of up to Eur46.5 million each to Société Tunisienne de L'électricité et du Gaz (STEG), a state-owned utility company, aimed at promoting investments in the energy sector in the country.
STEG “is the backbone of the Tunisian energy sector, which is in urgent need of investment to improve the security of supply” EBRD said in a statement. The sovereign-guaranteed financing will be used to reinforce and strengthen the electricity transmission network, in order to enhance its efficiency and reliability and prepare the grid for additional generation capacity including renewables, it said.
The investment in the new electricity transmission network “will alleviate Tunisia’s acute energy shortages” it explained, adding that higher efficiency is expected to lead to an increase in energy savings, estimated to be around 170,000MWh, and expected carbon savings of around 85,000 tonnes of CO2 per year.
This loan is EBRD's first in the power & energy sector in Tunisia and is in line with the EBRD’s Green Economy Transition approach (GET), the bank said. Under GET the Bank aims to increase its green financing to around 40% of total EBRD financing by 2020.
“The EIB and EBRD are providing substantial support for this sector by reinforcing our national transmission grid” commented Mohamed Fadhel Abdelkefi, Tunisia's minister of investment, development and international cooperation. “Thanks to the loan we will be able to improve our corporate governance, strengthen our capacity planning and improve risk management.”
The loan will help “improve the reliability of Tunisia’s power system and reduce power losses and carbon emissions” said Alain Pilloux, EBRD’s vice president. "It is our first project in the power sector in the country, and we are here to make sure that it will be completed with the best environmental standards and best international practices” he said.
The EIB has first invested alongside STEG in 1995 and has invested to date Eur1.5 billion in the electricity and gas sectors in Tunisia.
“The sector of energy is a key priority for the EU Bank EIB”, said vice-president Roman Escolano. “Tunisia’s electricity transmission provisions need to be reinforced and extended for today and in anticipation of increased demand” he said, adding that “while virtually all of Tunisia’s residents are connected to the national grid, this project will improve transmission efficiency, cater for the connection of new generating capacity from renewable sources and increase the possibilities for regional interconnections.”