Tunisian Italian cooperation – Connecting electrical networks

Tunisia and Italy have signed a project to connect the electrical networks according to the framework of the interconnection between the energy networks of the Maghreb and Europe.
The realisation of the project, which has been entrusted on the Tunisian part to the Tunisian Electricity and Gas Company (STEG), and on the Italian part to Italy’s electricity transportation company, is estimated at some 4 billion dinars.

It involves the construction of an electric power plant with a capacity of 1200MW, including 400MW, destined to cover Tunisia’s electricity needs, as well as a submarine interconnection between both countries of some 200 km, with a capacity of 1000MW.

The submarine interconnection is part of a Mediterranean project aiming at the creation of an integrated platform for the international exchange of electricity with neighboring southern Mediterranean countries, as well as with European countries via Italy.

Italy is Tunisia’s second trade partner with a volume of exchanges amounting to 10 billion dinars in 2008. Italy is also Tunisia’s 3 rd provider of foreign direct investments (FDI’s) as well as in the number of tourists which visit the country.

The economic/trade relations are intense, Italy ranks as Tunisia’s second trade partner, while Tunisia is one of the top markets for Italian exports in the Mediterranean, second only to Turkey.

Total trade in 2007 reached approximately 5.4 billion euro, with a positive trade balance in Italy’s favour of 463 million euro.

Our main exports are refined petroleum products (13.4% of the total), textiles (10.6%) and various types of machinery (5.5%). Imports from Tunisia are mainly in the sectors of clothing textiles (16.7% of the total), oils and animal and vegetable fats (11.2%) and hydrocarbons (6.9%).

There are approximately 700 sole-ownership or joint Italian businesses operating in Tunisia that employ nearly 50,000 persons, for an investment total of around 103 million euro. Italian investments are mainly in the sectors of chemicals and rubber, electricity and electronics, construction, transport, tourism, mechanics and metallurgy, food and agriculture, and leather and shoes.

Many Italian firms have also been awarded major Tunisian infrastructure contracts. Additional attractive opportunities are also expected for Italian firms following the Tunisian government’s approval of the 11th 5-year development plan (2007-2011) that calls for major investments in public works.

Despite this already solid economic partnership, Italy still feels the need to strengthen its business presence and participation in the infrastructure projects being planned by Tunisia over the coming years in various sectors, such as sea transport and seaport services, energy and tourism.

The energy sector is one of the most important areas of economic collaboration between Italy and Tunisia. Within the framework of plans to integrate the European and Maghreb electrical power systems a joint Italo-Tunisian project is being studied that envisions the construction of a combined-cycle electrical power plant at El Houaria and an underwater electrical power cable connection with Italy. The Italian firm Terna is working with the Tunisian firm STEG on designing a project for the  construction and management of that power plant. Other initiatives for potential collaboration in the field of energy could include the creation of other electrical power plants (Gannouche, Korba, Bir Mcherga, Ajloula).

The Italian firm ENI is particularly important in the hydrocarbons sector and manages the Transmed gas pipeline collecting Algeria with Sicily through Tunisia, which is currently being enlarged by the SNAM. The capacity of this pipeline is slated for boostong by the end of 2008 to an annual total of approximately 34 billion cubic metres.

Italy is also likely to find some appealing building prospects in the foreseen integration of the Euro-Mediterranean  agriculture/food processing sector, with the possibility of making Italy one of the privileged access routes for high-quality Tunisian products directed into Europe. Indeed, Italy is favoured by its geographical proximity and the high quality of its food processing and packaging industries.

There are also good prospects for collaboration in the context of organic agriculture, for which Tunisia is the only country in the Middle East and North African region to have approved a specific development strategy and ad hoc regulations.

Finally, there are major prospects for the development of the tourism sector, where Italy is already substantially active. In January 2006 a bilateral cooperation agreement was signed with the objective of creating a legal and regulatory context allowing for increased public and private cooperation between the two countries and increases in the already significant flow of tourists between Italy and Tunisia.