The European Investment Bank (EIB), the European Union's financing institution, is advancing a loan for ECU 45 million(1) towards expanding the power transmission and supply network in Tunisia.

The finance contract was signed in Brussels, on the occasion of the first Association Council with Tunisia, by Mr Saïd Ben Mustapha, Minister for Foreign Affairs, Mr Tahar Sioud, Tunisia's Ambassador to the European Union (EU), and Ms Ariane Obolensky, EIB Vice-President. Chaired by Austria, this is the first Association Council held with a country signatory to the new free-trade Agreements with the EU (post-Barcelona agreements). Tunisia is the first non-member Mediterranean country where the agreement has come into force.

Société Tunisienne de l'Electricité et du Gaz (STEG), set up in 1962 for the purpose of power generation, transmission and supply, is the beneficiary of the EIB loan, which will be deployed to finance works relating to a number of sub-projects throughout Tunisia.

The various project components, to be undertaken over the period 1998-2001, will serve to meet the growing demand for electricity in Tunisia, improve the reliability of power supplies and reduce losses in the system. Tunisia's power grid is interconnected with the North African transmission system, linking Morocco, Algeria and Tunisia. This network is due shortly to be connected to Spain, through the Morocco-Spain link-up. On a regional level, the EIB has so far channelled a total of ECU 245 million to this grid.

This loan is the fifth to be provided in Tunisia under the Euro-Mediterranean Partnership, bringing the total to ECU 215 million.

The EIB is playing a pivotal role in implementing the EU's Euro-Mediterranean Partnership and the associated priority objectives. A new mandate has been handed down under this heading, for the period 1997-2000, to make available financing of up to ECU 2 310 million for investment in the 12 non-member Mediterranean Countries which have signed Co-operation or Association Agreements with the European Union.The EIB has already lent some ECU 750 million in Tunisia over the past 19 years in support of projects in industry, agricultural processing, transport and environmental protection. Of this total, ECU 55.5 million drawn from EU budgetary resources has been advanced in the form of loans on special conditions and risk capital operations designed to underpin development of small and medium-sized enterprises and economic liberalisation in the Mediterranean Countries. Of particular note are the ECU 15 million designed to build up the equity of enterprises undergoing privatisation to guarantee them a more solid capital base and a further ECU 15 million to help in strengthening the equity of enterprises in the process of restructuring and upgrading.

(1) The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 30 June 1998, when ECU 1 =0.66 GBP, 1.26780 TND.