The European Investment Bank (EIB) - the European Union's financing institution - is making available a loan of EUR 150 million (1) to finance the priority component (2002-2004) of the programme for upgrading Tunisia's electricity transmission network and improving its management.

The funds are being lent to the Société Tunisienne de l'Électricité et du Gaz (STEG) for capital expenditure on more than 70 sub-projects spread across Tunisia, with careful attention to environmental protection. The main elements of the project being financed are: high-voltage overhead lines and underground cables; conventional and metal-clad high-voltage substations; power transformers; and a telecommunications system for network control and transmission.

This EIB loan is the first under STEG's 10th Five-Year National Development Plan (2002-2006), to be officially unveiled by Tunisia on 2 July. It testifies to the EIB's continuing support for development of public infrastructure essential for the growth of private-sector economic activity and investment. It follows 3 earlier loans to STEG totalling EUR 105 million, signed during the period 1995-2000. STEG, which this year celebrates the 40th anniversary of its establishment in 1962, is responsible for the production, transmission and distribution of electricity and gas in Tunisia.

The various project components, construction of which is to be spread over the period 2002-2004, will help meet Tunisia's growing electricity demand while considerably improving reliability for users and reducing system losses. Tunisia's power grid is plugged into the North African electricity transmission network spanning Morocco, Algeria and Tunisia. This in turn is linked to the European Union via a power interconnection with Spain, for which the EIB provided a loan of EUR 80 million.

Since 1978, the EIB has lent more than EUR 1.5 billion in Tunisia, mainly for infrastructural, environmental and industrial-development schemes, either by way of direct financing or through global loans granted to Tunisia's banking sector in support of SME investment.

Created in 1958 by the Treaty of Rome, the EIB finances investment projects furthering the European Union's objectives. It also contributes to implementation of the EU's cooperation policies with non-Member countries. In the Mediterranean area, the EIB operates within the framework of the Euro-Mediterranean Partnership, which complements the various Member States' bilateral cooperation policies. Under the second financing Mandate corresponding to this Partnership and covering the period 2000-2007, the EIB will lend EUR 6.425 billion to finance projects in the 12 Mediterranean countries that have signed cooperation or association agreements with the EU. The EIB focuses particularly on supporting these countries' efforts to open up their economies and help businesses prepare for market liberalisation ahead of the progressive creation of a free-trade area with the EU.

In the wake of the Barcelona European Council (15 and16 March 2002), the EIB will intensify its cooperation with the Mediterranean Partner Countries by setting up an "Enhanced Euro-Mediterranean Investment Facility" underpinned by operational offices in the region. This Facility, to be launched in autumn 2002, will be endowed with increased financial resources, enabling the EIB to gradually scale up its annual lending activity in the region from EUR 1.5 billion to EUR 2 billion.

Qualitatively, the Facility will place the emphasis on social-sector projects, and particularly on health, education and environmental protection, in the belief that this will make for social stability and encourage productive investment. The new Facility will likewise accord priority to financing private-sector projects, with the twofold aim of advancing liberalisation of the Euro-Mediterranean Partnership Countries' economies and expanding their potential in the run-up to completion of the EU-EMPC Customs Union in 2010. In this connection, the EIB's objective is to step up the proportion of financing it devotes to private-sector projects to 33%.


(1) Conversion rates: EUR 1 = TND 1.35680 at 21/06/2002