Africa Growing Together Fund provides EUR 21 million loan for Project to Develop and Equip the Power Transmission Grid (PAERTE) (Linked to Umbrella Record ID#36104)

Project narrative

On May 22, 2014, the African Development Bank (AfDB) and the People's Bank of China (PBOC) signed an agreement for the Africa Growing Together Fund (AGTF) (see Umbrella Record ID#36104). The purpose of this $2 billion loan facility was to finance large development projects in Africa between 2014 and 2024. The AGTF is sponsored by the PBOC and the administered by AfDB. Then, on December 17, 2019, AGTF signed an EUR 21 million loan agreement (ID#5050200000951) with the Government of Tunisia for the Project to Develop and Equip the Power Transmission Grid (PAERTE). On the same day, the African Development Fund (ADF) of the African Development Bank (AfDB) issued a EUR 76 million loan (ID#2000200004557) to the Government of Tunisia for the same project. The borrowing terms of the AGTF loan are as follows: an 25-year maturity, a 8-year grace period, an interest rate of 6-month EURIBOR plus a 0.8% margin, a 0.25% commitment fee, and a 0.25% upfront (management) fee. The first ADF and AGTF loan disbursements took place on July 28, 2020. As of March 2022, the AGTF loan had achieved a 0.5% disbursement rate. The total cost of the project is EUR 289 million. Apart from the AGTF and ADF loans, the Islamic Development Bank provided an EUR 84 million loan and the Tunisian Government agreed to provide EUR 108 million of counterpart financing. The purpose of the project is to strengthen Tunisia’s transmission network. Its goal is to improve electricity supply quality throughout the country, particularly in the Bizerte, Ben Arous, Sousse, Sfax, and Gabes governorates. More specifically, the project involves the (i) construction of four (04) new 225/33 kV substations (Ezzahra , Fouchana, Chott Meriem and Sidi Salah) , and one (01) new 225/150 kV substation (El Jem); (ii) reinforcement of two (02) existing 90/33 kV substations (Lac Ouest and Bizerte); (iii) maintenance of three (03) existing stations: the 225kV of Naassène, the 225/150 kV of Sidi Mansour, and the 225 kV of Bouchemma; (iv) acquisition of three (03) mobile units 225-150 / 33 kV ; (v) procurement and installation of a (01) 200 MVA autotransformer , thirteen (13) unit power transformers of 40 MVA and thirteen (13) neutral point coils of 160 kVA each ; (vi) transfer of a 100 MVA autotransformer from 4 the Bouficha substation to the Sidi Mansour substation (maintenance); and (vii) completion of 31.5 km of HV underground links (90 kV, 150 kV and 225 kV); (viii) installation of a remote-control system. The project also aims to strengthen the electricity grid for the integration of renewable energies expected from solar and wind power plants that are being developed. The duration of the project's physical execution is 48 months from 2020 to 2023. PAERTE covers both the northern and southern regions of Tunisia. More specifically, ADF- and AGTF-financed facilities are located in the municipalities and delegations of Bouchemma (Gabès governorate), Bizerte, Chott Mariem (Sousse governorate), Sidi Mansour (Sfax governorate), Sidi Saleh (Sfax governorate), Ezzahra (Ben Arous governorate), Fouchana (Ben Arous governorate), Naassen (Ben Arous governorate) and El Jem (Mahdia). Over 400,000 people live in these areas, half of whom are women. Owing to its direct impact on electricity distribution networks, transmission network stability and service quality improvement, the project aims to generally benefit all STEG household and industrial subscribers. Specifically, the project will seek to benefit residential customers in areas experiencing high voltage drops, new housing estates that will be connected to the electricity grid, economic actors, tourism infrastructure and future independent producers of electricity, including from renewable sources (solar and wind), that will have a reliable outlet for the power generated from their plants. During the construction phase, an estimated 1,200 temporary jobs are expected to be created. Unskilled labour will be primarily recruited locally. Tunisian companies with proven energy sector experience are expected to benefit from several direct or sub-contracted contracts during construction of the project's electricity infrastructure. They are also expected to benefit from maintenance contracts for same infrastructure during the operational phase. In addition, the project is expected to contribute to the deployment of the renewable energy development program in Tunisia, whose objectives include strengthening the development of a green energy industrial sector (manufacture of solar and wind power plant equipment).