Tunisia: AfDB grants €49.4 million loan to enhance natural gas supply to disadvantaged regions

Tunis, Tunisia (Capital Markets in Africa) — The Board of Directors of the African Development Bank (AfDB) Group approved on Wednesday, April 1, 2015 in Abidjan, a €49.4-million loan to the Tunisian Electricity and Gas Corporation, la Société tunisienne d’électricité et du gaz (STEG).

The project for the development of natural gas transportation and distribution to the western part of the country is aimed at improving the supply of cheaper and less-polluting energy to the western region. This will help improve the living conditions of people in the area.

It involves constructing 260 kilometres of gas transportation networks and 404 kilometres of distribution networks in order to connect 19 local communities in the region to STEG’s natural gas supply system.

Presenting the project to the Board, Alex Rugamba, Director of AfDB’s Energy, Environment and Climate Change Department, emphasized that “the populations of the region will finally have access to natural gas which was only available to the coastal communities. Access to uninterrupted supply of this clean and affordable energy will help reduce the existing disparities between the west region and the other regions of the country by facilitating industrial development and job creation. The main project beneficiaries are small and medium-sized industries, small businesses and about 13,500 households in the project area,” he added.

The total cost of this project stands at €56.5 million, financed primarily by the AfDB. STEG will provide a balance of €7.1 million. The project will be implemented over a period of five years and should be completed in 2019. It is part of a programme aimed at safeguarding the supply of gas in the country through a gas pipeline that will run through the western region; partly financed by Saudi-Kuwaiti development funds. The intervention of the African Development Bank made it possible to integrate the distribution component and ensure the supply of gas to households and enterprises.

The development of this network is consistent with the country’s 2009-2016 Natural Gas Transportation and Distribution Master Plan, which involves the construction of a gas pipeline in the western region and the distribution of gas in 100 additional towns and villages. It is also in keeping with AfDB’s 2014-2015 Interim Country Strategy Paper for Tunisia. This project also complements the Nawara Project, approved in July 2014 and financed by AfDB’s private sector window with a view to developing the gas fields of Southern Tunisia.