The World Bank and the Tunisian government have signed a financing agreement to advance Tunisia’s efforts in modernizing its energy sector. The Tunisia Energy Reliability, Efficiency, and Governance Improvement Program (TEREG) will provide US$430 million over five years, including US$30 million in concessional funding. The initiative is designed to support reliable and affordable electricity by promoting renewable energy, improving the national utility STEG’s performance, and enhancing sector governance.
The program aligns with Tunisia’s updated Energy Transition Strategy. It aims to strengthen STEG’s operational and financial health, attract private investment, and lower carbon emissions from power generation while maintaining consistent electricity access for households and businesses. TEREG also supports reforms to boost renewable energy use, increase efficiency, and modernize the electricity sector.
“By fostering renewable energy development, TEREG will strengthen Tunisia’s position in clean energy, creating economic opportunities and ensuring long-term energy security,” said Alexandre Arrobbio, World Bank Country Manager for Tunisia. “This project reflects our strong partnership with Tunisia and supports its sustainable development goals. It builds on our long-standing engagement in Tunisia’s energy sector and complements ongoing initiatives like the Tunisia-Italy Electricity Integration Project (ELMED), the Energy Sector Improvement Project, and advisory services from the International Finance Corporation and the Multilateral Investment Guarantee Agency, aligning with Tunisia’s Country Partnership Framework and its commitments under the Paris Agreement.”
According to projections for TEREG, the program will help mobilize $2.8 billion in private investment for 2.8 gigawatts of new solar and wind capacity by 2028. Over 30,000 jobs are expected to be created during construction phases of these projects. The initiative is also anticipated to reduce electricity supply costs by 23 percent, improve STEG's cost recovery rate from 60 percent to 80 percent, and decrease state subsidies by TND 2.045 billion.
“This is the first project to benefit from the World Bank’s Framework for Financial Incentives, receiving rewards for its size and long-term benefits in recognition of its impact on reducing greenhouse gas emissions,” said Amira Klibi, Senior Energy Specialist at the World Bank and Task Team Leader for the project. “The program’s reforms—such as reducing technical and commercial losses and increasing the share of renewables—are expected to deliver lasting improvements in the operational and financial performance of the sector, making electricity more affordable and reliable for households and businesses across Tunisia.”