Contracts for European Investment Bank (EIB) loans totalling EUR 154 million for energy production and environmental protection in Tunisia were signed today by H.E. Mr Mohamed Nouiri Jouini, Minister of Development and International Cooperation and Mr Philippe de Fontaine Vive, EIB Vice-President with responsibility for the Facility for Euro-Mediterranean Investment and Partnership (FEMIP), during his visit to the country.

Mr de Fontaine Vive stated: The EIB attaches great importance to projects financed in this way for a number of reasons. These loans for natural gas-based energy production and the environment will help to improve the quality of life of local people and enhance the country's attractiveness as a location for investment in industrial activities and services, particularly in the tourism sector. These FEMIP loans concern the following projects:

EUR 114 million will go to Société Tunisienne de l'Électricité et du Gaz (STEG) for the construction of a natural gas-fired, combined-cycle power plant in Ghannouch (Gabès region). The project is part of the Tunisian Government's priority programme to increase and upgrade STEG's generating capacity in order to meet the country's constantly growing demand for electricity, while at the same time optimising the efficiency of its facilities.

Scheduled to begin commercial operation in 2009, the 400 MWe plant will be equipped with single-shaft combined-cycle gas turbines, an energy-efficient technology with limited environmental impact. It is designed to run on natural gas.

This fifth EIB loan for the electricity sector in Tunisia since 1995 brings the total amount advanced to EUR 310 million.

EUR 40 million is to be lent to Office National d'Assainissement (ONAS) to finance investment in wastewater collection networks and treatment plants in various cities in Tunisia in accordance with its 2006-2010 investment programme. The schemes supported by this loan are located in the following cities: Tunis, Hammamet, Kerkennah, Mahdia, Gabès, Médenine, Tataouine and Gafsa.

The project will help to improve the quality of the service and living conditions for the inhabitants of Greater Tunis and a number of inland cities. It will also provide access to the sewerage system for a population of some 280 000, including 40 000 residents of the suburban areas of Greater Tunis who were not previously served.

This loan attracts an interest rate subsidy financed from European Union budgetary resources, earmarked for environmental projects.

With loans totalling EUR 8 to 10 billion at the end of 2006, FEMIP marks an important step forward in financial and economic cooperation between the Union and the Mediterranean partner countries. Its main priority is to promote the development of the private sector (in particular SMEs and FDI) and support projects that help to create a favourable climate for private investment (economic infrastructure, programmes in the health and education sectors). Its ultimate goal is to assist the Mediterranean partner countries in meeting the challenge of economic and social modernisation and to strengthen regional integration, with a view to the Euro-Mediterranean free trade area due to be established in 2010.

In addition to the loans and grants provided for technical assistance, FEMIP encourages the rapid expansion of the private sector by taking equity or quasi-equity participations in private companies in order to help the Mediterranean partner countries accelerate their economic and social modernisation, in particular through reinforced regional integration. These FEMIP activities are financed from the European Community budget (EUR 200 million over the period 2001-2006) and the FEMIP Trust Fund, which was established in December 2004 (EUR 33.5 million).

With an office in Tunis since 2004 and investments of approximately EUR 2 billion in Tunisia since 1995, FEMIP has been involved in financing capital projects that will have a major impact on the country's economic development.