STEG – ELMED power interconnector – Submarine cable

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Project Description

Provision of a sovereign guaranteed senior loan of up to € 45 million to Societe Tunisienne de l’Electricite et du Gaz (“STEG” or the “Company”) to finance a 200-km 600 MW High-Voltage Direct Current (HVDC) submarine transmission cable connecting Tunisia and Italy. The project includes converter stations and related infrastructure in each country financed by other lenders (“ELMED”).

ELMED will be operated and jointly owned by STEG and the Italian transmission system operator (TSO) Terna S.p.A.  A grant of EUR 307.6m from EU’s Connecting Europe Facility (“CEF”) will contribute to the project.  In addition to the CEF grant, ELMED will be co-financed by EIB, KfW and the World Bank.



Project Objectives

ELMED will improve the integration, resilience and stability of electricity systems in Tunisia and Italy and further between North Africa and Europe in the future. ELMED will contribute to the grid stability and dispatching optimisation required for a better renewable energy integration and climate strategy delivery in the two markets that have ambitious renewable energy objectives.




Transition Impact


ETI score: 79



Score to be confirmed at Final Review stage.

The Project will contribute to the “Resilient” and “Green” transition qualities.

It was included in the list of Projects of Common Interest in 2017 by the European Commission due to its strategic importance for the security and energy sustainability of the two countries and for the creation of a Mediterranean electricity network that connects North Africa with Europe, with a view to full market integration. The Project will include a comprehensive policy dialogue package aimed at delivering structural change and contributing to the Tunisia’s energy transition. 

The Project will be in line with the Bank’s Green Economy Transition (GET) approach.





Client Information


SOCIETE TUNISIENNE DE L’ELECTRICITE ET DU GAZ



STEG is Tunisia’s 100% state-owned vertically integrated national electricity and gas utility company, and is under the supervisory of the Ministry of Industry, Mines and Energy. It was founded in 1962 (Decree-law N 62-8 dated 3 April1962), when the Tunisian Government decided to nationalise the generation, transmission, distribution, import and export of electricity and gas, entrusting these activities to STEG.





EBRD Finance Summary






EUR 45,000,000.00



A sovereign-guaranteed loan of up to EUR 45 million to STEG to be provided alongside sovereign loans from EIB, KfW and the World Bank, and a grant from the EU’s CEF.





Total Project Cost





EUR 839,600,000.00






Additionality

The additionality derives from the financing structure and instruments provided. EBRD offers financing that is not available in the market from commercial sources on reasonable terms and conditions for such a strategic public project.




Environmental and Social Summary

The project is Categorised A (ESP 2019).  The environmental and social due diligence identified that no National Environmental Impact Assessment was required either in Italy and Tunisia, and thus no relevant regulatory expertise procedure or review process by the specialised ministries and relevant governmental departments was triggered.  However, the Company has completed an Environmental and Social Impact Assessment (“ESIA”) on the submarine cable and landfall infrastructure components in Tunisia, along with other supporting documents such as an Environmental and Social Management Plan, a Framework Biodiversity Management Plan, etc.  The review of existing ESIA report identified a few gaps against EBRD Performance Requirements (“PR”). These include the need for further stakeholder identification and engagement (partly impeded by Covid restrictions during the preparation of the ESIA study), the need to conduct further biodiversity studies and a navigational risk assessment, along with the need to conduct additional socio-economic impact assessment. A detailed gap analysis of the supplementary documentation, especially in the Italian side of the future submarine cable infrastructure, carried out by an independent consultant, is being finalised. Potential risks include marine and terrestrial biodiversity impacts, impacts on livelihoods, restrictions of access, etc. Community safety and security, and employment expectations will be thoroughly addressed. All the risks identified (or to be identified) are (will be) addressed through specific plans whose implementation is required by the Environmental and Social Action Plan (“ESAP”). It should be noted that there is no project company established for the marine cable construction and/or operation and thus compliance with EBRD PR will be responsibility of STEG as borrower. The Project implementation will be regulated by the implementation agreement between STEG and Terna (the sponsor of the project infrastructure development in the Italian territory). The additional biodiversity survey, aimed at augmenting the existing impact assessment and updating the Biodiversity Management Plan, is ongoing. It is also understood that the Italian sponsor of the Project is in the process of finalising the appropriate assessment for the Project as the landfall is located within a Natura 2000 site. While impacts on the Italian side of the Project are being assessed and required actions and recommendations have been communicated to the Italian sponsor of the Project, the Bank only has contractual obligation with STEG as borrower. The current ESAP contains actions aimed at enhancing the Company’s capacity to implement and comply with the EBRD’s environmental and social requirements; developing and implementing supply chain audit procedures and contractor management procedures; developing Construction Management Plan; conducting pre-construction field biodiversity surveys and requesting contractors to develop navigational risk management plans; developing a detailed Resettlement Action Plan based on the updated Resettlement Framework, etc. The implementation of EBRD’s requirements will be monitored on a 6-monthly basis during the construction and on annual basis during the operation of the Project. The Bank will also provide technical cooperation assistance to the Company to improve their capacity to manage specific impacts and risks of the Project.

The PSD (Project Summary Document) will be updated with the findings of the ongoing supplementary surveys.




Technical Cooperation and Grant Financing

A pre-signing Technical Cooperation (TC) has been provided by EBRD’s Shareholder Special Fund to finance the environmental and social gap analysis of this Project and supplementary surveys.

A grant of up to EUR 5 million from EU Neighbourhood Investment Platform (NIP) is also envisaged to support the overall project implementation, as well as the comprehensive policy dialogue package designed for Tunisia’s energy transition.




Company Contact Information

Raoudha Haouala
rhaouala@steg.com.tn
+216 71 341 363
www.steg.com.tn
38 rue Kamel Ataturk
1080 Tunis
Tunisia






PSD last updated




05 Oct 2023
























Understanding Transition


Further information regarding the EBRD’s approach to measuring transition impact is available here.


Business opportunities


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Email: projectenquiries@ebrd.com


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General enquiries


Specific enquiries can be made using the EBRD Enquiries form.


Environmental and Social Policy (ESP)


The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.


More information on the EBRD’s practices in this regard is set out in the ESP.


Integrity and Compliance


The EBRD’s Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.


OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank’s countries of operation. The information provided must be made in good faith.


Access to Information Policy (AIP)


The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.


Specific requests for information can be made using the EBRD Enquiries form.


Independent Project Accountability Mechanism (IPAM)


If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).


IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.


Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.


 





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