Summary:

On 23 March 2023, the Tunisian Electricity and Gas Company (STEG) signed a joint loan agreement for 324 million dinars with six banks. The loan was signed at the BH Bank headquarters and also included representatives from the National Bank of Qatar (QNB), the Tunisian Banking Company (STB), the National Agricultural Bank (BNA), the Tunisian Bank (BT), and the Tunisian Bank of Kuwait (BTK).

The nationalized entity, which provides energy to the entire country, has struggled with profitability and losses, particularly since the 2011 revolution. Despite efforts to address profitability under a 2013 agreement with the International Monetary Fund (IMF), STEG has continued to struggle with dependency on state financing to operate. Tunisia’s powerful labor unions have periodically ramped up pressure to ensure that government financing continues to flow to STEG even as reforms have lagged behind.

Earlier in March 2023, STEG signed a separate 400 million dinar loan agreement with the Islamic Trade Finance Corporation (ITFC) intended to help finance natural gas imports.

Outlook:  

STEG continues to depend upon state intervention to manage prices and fund ongoing operations. Like many nationalized entities in Tunisia, STEG has suffered increasing global prices, while lacking the ability to pass those costs onto consumers.

While these recent loans will extend operability, and may intend to lay the groundwork for the green energy transition, STEG will continue to face financial challenges without fundamental reforms like those called for across Tunisia’s public sector by the IMF. 

Our team will continue to monitor developments with key service providers like STEG which, if disrupted, can easily lead to frustration and even unrest.

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