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GLOBAL WATER INTELLIGENCE MAGAZINE

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"Tunisia joins the charge for private finance in water with a brace of projects"
 
This year could mark the turning point for one of the few regional markets yet to embrace water PPPs. With the weak state of utility finances holding back development in the past, what are the country’s prospects for success this time?
 
Tunisia is set to dip a toe into the water PPP  market   this  year  after  starting work on what it hopes will be the country’s first privately financed  treatment projects.
This month,  state-owned phosphate production company Groupe Chimique Tunisien   (GCT)  launched   a  request   for qualifications for a 25,000m3/d reverse osmosis desalination plant for its Gabès facility in southern Tunisia.
The  €70  million  project  will be  pro- cured   under    a   20-year   design-finance- build-operate-transfer (DFBOT) contract. The project is set to be the first PPP in the water  sector,  but  will be  followed  in  the autumn by the  60,000m3/d El Hessiane wastewater treatment plant being procured by wastewater utility Office National de l’Assainissement (ONAS).
Atef Majdoub, director of Tunisia’s PPP unit  (IGPPP),  told GWI that  both  projects had   been   learning   experiences,   adding: “We have spent  a lot of time working with all stakeholders  – GCT, ONAS, the Minis- try of Finance – to convince them to get on board. That’s why it’s taken so long.”
The  Gabès   project  will  be  procured under  the 2008  Concessions  Law through a take-or-pay contract  with  GCT. El Hes- siane, on the other hand,  will be procured under  the more  recent  2015 PPP law, with the developer earning  revenues  from fixed fees as well as performance-based fees linked  to the plant’s maintenance and  the quality of the treated effluent produced.
Majdoub  told  GWI  that  the  adoption last April of Law No. 22/2019 on the mobi- lisation of investment and the improvement of  the  business   climate  (usually  referred to as  “Loi Transversale”),  which modifies 24 laws including  the PPP  Law, had been a turning point.  “The 2015 PPP  Law had been  ambiguous about  the  issue  of O&M and we’d hit a rut,” he said. “That was recti- fied by the Loi Transversale,  so we decided to work with the 2015 PPP Law. That’s why there is a slight delay with El Hessiane.”
The  RFQ  for  Gabès  states  that  pub- lic investment  vehicle  Caisse  des  Dépôts et des Consignations (CDC) has already announced its interest  in  financing  up  to 20%  of the  project.  Majdoub  said it  was important to mention this at an early stage to give investors  confidence.  “It’s a way to express  state  support,”  he  added.  He  also said he hoped that with CDC participation, investors  would  not insist  on  a sovereign guarantee.  “The state guarantee  is limited […]  Ideally, we won’t need  to give [it],” he said.
Lotfi El Ajeri, a lawyer based in Tunis, told GWI that the issue of a guarantee  will come  down  to  negotiations.   “ONAS  and GCT  are  in  critical  financial   situations, but  they are  public  institutions so it’ll  be something to negotiate  with the  Tunisian state,” he said. He added that CDC, which has access to a sizeable amount  of capital, was recently reformed to be able to invest in PPP-type  projects, and  that  it may also be in a position to offer guarantees.
Looking to the future, three more potential desalination  BOTs are in the pipeline in Tunisia: two for bulk water producer    and    national    utility    Sonede (a   200,000m3/d   plant   in   Mahdia   and a 50,000m3/d   facility  in  Zarzis)   and   a 200,000m3/d plant  for GCT in  Skhira  to supply the mining  complex of Gafsa.  
Lotfi El Ajeri
 

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