Sustaining Supply of Gas for Electricity Generation in Tunisia

Tunisia’s power sector is well developed, with nearly the entire population, urban and rural, having access to the national electricity grid (respectively 99.8% and 99.6%). One of the country’s main challenge is to enhance its energy mix. Only 3% of Tunisia’s electricity is generated from renewables, including hydroelectric, solar, and wind energy (MEMTE, 2020). Approximately 97% of Tunisia’s electricity is generated from fossil fuels, mainly natural gas. In 2019, nearly 60% of Tunisia’s natural gas needs were met through imports (mainly from Algeria), while the remaining was sourced from national and foreign companies’ concessions. 

The Tunisian Company of Electricity and Gas (STEG), as a public company, has the mandate to provide the national market with electric energy and gas and meet its customers' needs (residential, industrial, tertiary...). The company is responsible for electricity service throughout the value chain, transmission and distribution of natural gas, and, since 2015, for gas imports from Algeria. The company controls 91.5% of the country’s installed power production capacity and produces 81% of the electricity, catering to almost 4 million customers in electricity and 850,000 customers in natural gas (World Bank, 2019). 

Once a net exporter of oil and gas, the country has become heavily dependent on external supply to meet its energy needs, especially for electricity generation. The volume of imported hydrocarbons has constantly been increasing to meet an electricity demand increasing annually of around 5% over the last decade (STEG 2019). 

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The COVID-19 pandemic has placed an additional burden on the company’s liquidity and undermined the country's sustainable supply of energy. A slowdown in economic activities has led to a decrease in demand for electricity and gas, particularly from commercial and industrial customers, which accounts for 60-65% of customers. Besides, movement restrictions have hampered the company’s capacity to collect receivables from its customers. Finally, the Government announced a temporary suspension of bill payment obligation for households for two months (March and April).

All these factors combined have contributed to a significant drop in revenue while STEG was obligated to pay suppliers and contractors to maintain uninterrupted supply.

Since 2018, ITFC has provided STEG with short term financing, worth an overall US$ 704 million. ITFC facility aims at ensuring electricity supply continuity by helping STEG address short-term liquidity shortfall and secure the supply of natural gas. In 2020, the Corporation extended around US$ 278 million to STEG for the purchase of 1,254,858,520 cm3 of LNG. In 2020, STEG could rely less on natural gas imports, with approximately a 34% reduction compared to the previous year and higher percentages of national natural gas.

The disbursements in 2020 increased by 25% compared to 2019, despite natural gas demand being adversely impacted by the Pandemic. This just reflects ITFC position as a reliable financial partner in times of need.