World Bank to Invest $430 Million in Tunisia’s Energy Transition
TUNIS, TUNISIA – The World Bank and the Tunisian government today announced a $430 million program, including $30 million in concessional financing, aimed at modernizing Tunisia’s electricity sector and accelerating its shift to renewable energy. The Tunisia Energy Reliability, Efficiency, and Governance Betterment Program (TEREG) seeks to improve electricity access and reliability, bolster the performance of the state-owned utility STEG, and attract private investment.
The program is projected to unlock $2.8 billion in private investment to add 2.8 GW of new solar and wind capacity by 2028,creating over 30,000 jobs,primarily in construction. Currently,renewables account for approximately 3% of Tunisia’s electricity mix (as of 2022),but the World Bank estimates that 2,200 MW of already-launched private projects could raise that share to 17% with successful implementation.
TEREG also targets a 23% reduction in electricity supply costs, increasing STEG’s cost recovery rate from 60% to 80%, and reducing government subsidies by approximately 2.045 billion dinars.
“The TEREG program will help strengthen Tunisia’s position in the field of clean energy, create economic opportunities and ensure long-term energy security,” stated Alexandre Arrobbio, World Bank Head of Operations for Tunisia.
The initiative is the first to benefit from the World bank’s Financial Incentives framework, recognizing its potential to significantly reduce emissions. A key component of the program focuses on addressing the challenges of integrating intermittent renewable sources – solar photovoltaic and wind – through reducing technical losses and improved grid management.
TEREG will also support structuring projects like the ELMED interconnection, a 600 MW submarine cable linking Tunisia and Italy, approved by the World Bank in 2023, designed to enhance energy security and facilitate cross-border low-carbon electricity trade. Tunisia aims to achieve 35% renewable energy in its electricity mix by 2030.
