Tunisia will soon be able to reduce the cost of electricity production, provide clean and renewable energy to its 12 million inhabitants, reduce greenhouse gas emissions by nearly 100,000 tonnes per year and accelerate its ecological transition.
These advances can be achieved thanks to a historic solar project, financed by the private sector and implemented by the company AMEA Power, based in the United Arab Emirates, with financing from IFC and the African Development Bank (AfDB).
It is the first privately financed large-scale solar project in Tunisia and one of the largest public-private infrastructure partnerships in over a decade in the country.
Under the agreement, IFC will provide its long-time partner AMEA Power with up to $26 million in debt financing, including $13 million in concessional financing as the implementing entity of the Fund for Clean Technologies (CTF), a program of the Climate Investment Fund (CIF).
The AfDB, for its part, will provide up to $26 million in debt financing, including $13 million from the Africa Sustainable Energy Fund.
These funds will support the development, financing, construction, operation and maintenance of a 100 MWac / 120MWp solar power plant, worth $86 million, in the Kairouan governorate, Tunisia.
Blended finance is an approach to using small amounts of concessional financing to mitigate the risks associated with investment projects in emerging markets and developing economies, to make a project commercially viable, and to attract private capital for high-impact investments.
Tunisia is one of the countries in the region most exposed to the effects of climate change due to its dependence on climate-dependent agriculture and high urbanization prone to flooding. Tunisia’s over-reliance on hydrocarbon imports to meet growing electricity demand has also threatened the country’s energy security and left the sector vulnerable to price and exchange rate fluctuations.
The Kairouan solar project aims to mobilize private financing to reduce Tunisia’s dependence on imported electricity produced from fuels and gas, to strengthen the competitiveness of the electricity sector and to contribute to the restoration of macro-fiscal stability in the country.
“The government expresses its firm commitment to completing the 120MWp Kairouan solar project, which represents an important step in the country’s energy transition,” declared Tunisian Prime Minister Ahmed Hachani.
“We are delighted to have concluded the financing of this 120MWp solar power plant in Tunisia, our first project in the country. This is an important milestone for AMEA Power and for Tunisia, as it is the largest fully developed solar project in the country to date. Despite all the challenges the market is facing since the COVID-19 pandemic, we are proud to deliver this project and honor our commitment to supporting Tunisia’s transition to clean energy. We are grateful for the strong support from our financial partners and the Tunisian government, which helped make this project a reality,” said Hussain Al Nowais, Chairman of AMEA Power.
“We are delighted to mark this milestone, the signing of project agreements, the first disbursement, and therefore the start of construction of the first independent solar power producer (IPP) project in Tunisia. This achievement demonstrates the AfDB’s commitment to promoting sustainable energy solutions in Africa,” said Kevin Kariuki, Vice President in charge of Electricity, Energy, Climate and Green Growth – Group of the African Development Bank.
“Furthermore, the successful collaboration between the Tunisian government, AMEA Power, the African Development Bank, SEFA and IFC perfectly illustrates our collective commitment to supporting Tunisia in achieving its goal of producing 35% clean energy by 2030 »
“This project represents a positive step forward towards Tunisia’s green transition. South-South investments, such as this one, highlight the critical role that private sector partners can play in the energy transition. This project is part of our strategy to promote South-South investments, particularly from Gulf Cooperation Council countries to emerging markets,” said Hela Cheikhrouhou, IFC Regional Vice President for the Middle East. Central Asia, Turkey, Afghanistan and Pakistan.
“This ambitious renewable energy project will not only bring clean and more affordable energy to the Tunisian population, but it will also enable Tunisia to achieve its energy goals and attract more private investment in future green projects, said Sérgio Pimenta, IFC vice president for Africa. Through this project, we are proud to strengthen our partnership with AMEA Power to help it develop its activities in North Africa and contribute to the fight against the effects of climate change in the region. »
This project is part of a pioneering renewable energy program developed by the Tunisian government in 2018. Alongside international partners, IFC supported the government through services dedicated to the start-up phase of the program, helping to lay the foundations of the current project.
IFC has long supported AMEA Power in its expansion in Africa and the Middle East, including Jordan, Egypt and Burkina Faso. In November 2022, IFC provided $770 million in financing to the company, alongside international partners, to support the development of two solar and wind projects in Egypt, which will provide more than one gigawatt of combined capacity of renewable energy at the lowest price in Africa.
This project in Tunisia is part of IFC’s strategy to facilitate access to clean energy and support cross-border investments from Gulf Cooperation Council (GCC) countries to emerging markets.
To date, IFC’s cross-border investments with GCC-based companies total $6 billion on its own account and $4.77 billion from funds raised from other investors. These investments enabled the financing of 170 projects.