WASHINGTON, June 24, 2019 – The World Bank’s Board of Executive Directors approved a new US$151 million project today in support of Tunisia’s goal of diversifying its energy sources away from imported hydrocarbons and providing cleaner and less expensive electricity to Tunisian people and businesses. The new project will fund efforts by Tunisia’s national electricity and gas company (Société Tunisienne de l’Electricite et du Gaz – STEG) to strengthen the country’s electricity transmission system, integrate domestically produced renewable energy, and improve the commercial performance of the utility.
The Energy Sector Improvement Project aims to help address some of the key challenges facing Tunisia’s electricity sector, most notably the dependence on imported gas for electricity production and the financial issues affecting STEG. The reinforcement and expansion of the national transmission network will enable STEG to integrate new renewable energy, in large part to be produced by the private sector, and therefore respond to Tunisia’s quest for greener energy. With the support of the project, STEG will make efforts to improve its commercial performance, on a par with well-performing utilities globally. By reducing the reliance on imported fossil fuel, the project will contribute to enhancing energy security in the country, bring the electricity sector on a more sustainable financial footing and facilitate private investment in renewables.
"Overreliance on imported fossil fuels threatens Tunisia’s energy security and might negatively affect the macroeconomic situation," said Tony Verheijen, World Bank Tunisia Country Manager. "This new project is a significant investment in support of transforming the energy sector into a more environmentally friendly, energetically efficient and economically sustainable one."
Direct project beneficiaries will include all existing and prospective electricity customers in the country, who will benefit from a more sustainable and cost-efficient electricity supply and better electricity services. Large economic and social benefits will accrue to the Tunisian society as a whole and will span across generations, as the cost of producing electricity decreases and inefficiencies in the electricity sector are reduced, contributing to fiscal consolidation at the national level. The integration of renewable energy capacity will reduce the carbon footprint of electricity generation with environmental benefits for both Tunisia and the world.
The Energy Sector Improvement Project is part of the Bank’s wider engagement, where policy dialogue, technical assistance, advisory services and lending are arranged in complementarity with one another to address some of the critical development challenges facing Tunisia.