Tunisia: World Bank finances green energy transformation plan

The World Bank has voiced confidence in Tunisia’s renewable energy sector, as the international organisation has announced that it will be funding part of the country’s green energy sector transformation, according to the World Bank website on November 11th.

The Tunisian government and the World Bank have reached a deal that aims to financially support the Tunisia Energy Reliability, Efficiency, and Governance Improvement Program (TEREG), which is an agenda to modernise the country’s energy sector. Over the five-year agreement, the Tunisian authorities will receive $430 million in loans, with $30 million in concessional financing.

The $30 million aims to enhance Tunisia’s ability to provide its citizens an affordable, sustainable and reliable electricity supply. The concessional financing is also aimed at ensuring that the efforts to achieve these goals are deployed by boosting the performance of the national electricity company (STEG) and increasing governance in the sector.

The international financial institution says that the Tunisian government has updated its energy transition strategy to closely match the TEREG and its objectives.

STEG has long been known for its institutional inefficiencies and reported staggering customer debt. TEREG aims to augment the operational and financial performance of the national company, while also setting out to decrease electricity supply costs by 23 % and cutting TND 2.045 billion ($700million) in subsidies from the national budget.

TEREG is also meant to aid Tunisia in reaching its objectives for the future. The North African country aims to raise $2.8 billion in private investment, increase the capacity from solar and wind energy by 2.8 gigawatts, and create more than 30,000 jobs via the renewable projects’ construction phase.

One of the energy program’s objectives is to also attract private investments, which is a recent turn in Tunisia’s energy policy. The government’s willingness to let go of its monopoly on the energy sector is a new step. According to Transnational Institute, the government’s shift to liberalisation could lead the country into green colonialism with foreign investors occupying land and extracting resources from local populations for private profit.

In the Maghreb, the renewable energy transition has been slow in most countries, apart from Morocco, which is constructing green energy projects that even reportedly aims to supply half of Europe’s energy needs. Morocco’s energy transition was partially pushed by the government’s goal to be self-sufficient in energy.

Similarly, TEREG aims to help Tunisia with its energy security to avoid being reliant on fuel exports to meet its energy needs. With Tunisia’s closed-currency and reported limited reserves of international currencies, energy imports are essential but they also represent a large expense for the state’s finances. Renewable energies could also help alleviate this issue and provide control over the energy supply.

World Bank, Mosaique.FM, The New Arab, APA News, Maghrebi.org