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Tunisia Infrastructure Diagnostic Public Disclosure Authorized December 2019 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Final version © 2019 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for non-commercial purposes as long as full attribution to this work is given. Please cite the work as follows: 2019. Tunisia Infrastructure Diagnostic. World Bank, Washington D. C. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522- 2625; e-mail: [email protected] i Acknowledgments The World Bank Group would like to thank the Tunisian Government for its cooperation in the preparation of this report. The Ministry of Economy and Finance, line ministries responsible for infrastructure and the main state-owned enterprises for infrastructure analyzed in this report provided valuable information and feedback. The Tunisia Infrastructure Diagnostic was prepared by the World Bank under the supervision of Marie- Francoise Marie-Nelly, Jesko Hentschel (Country Directors) and Carmen Nonay (Practice Manager). The final report was prepared by Rajesh Advani (Senior Infrastructure Specialist) with support from Michel Wormser (Consultant). The team would like to thank Tony Verheijen (Country Manager), Xavier Reille (Country Manager, IFC), and Jaafar Friaa (Program Leader) for their support and guidance. The team is grateful for comments received from the following peer reviewers: Clive Harris, Victoria Delmon and Claudia Vasquez. The background work for the report was prepared by a team consisting of Daniel Camos (Senior Infrastructure Economist) Dambudzo Muzenda (Water and Sanitation Specialist), Antonio Estache (Consultant), and Mohamad Mahgoub (Consultant). The team is indebted to the following individuals for input and discussion: IBRD: Arnaud Dornel (Lead Financial Sector Specialist), Abdoulaye Keita (Senior Procurement Specialist), Abdoulaye Sy (Senior Economist), Afef Haddad (Country Program Coordinator), Arthur Foch (Senior ICT Policy Specialist), Benjamin Fouchard (Senior Urban Transport Specialist), Carolina Dominguez Torres (Senior Water and Sanitation Specialist), Carlo Rossotto (Lead ICT Policy Specialist), Claudine Kader (Program Assistant), Emmanuel Pinto Moreira (Lead Economist), Francois Onimus (Senior Water Resources Management Specialist), Gabriel Sensenbrenner (Program Leader), Marc Navalet (Senior Transport Specialist), Jean-Martin Brault (Senior Water and Sanitation Specialist), Lydia Habhab (Research Analyst), Moez Cherif (Lead Energy Specialist), Ousmane Kolie (Senior Financial Management Specialist,), Simon O’Meally (Senior Public Sector Management Specialist), Tu Chi Nguyen (Energy Specialist), Xavier Muron (Senior Infrastructure Specialist) and Xuanhe Wang (Consultant) IFC: Isabel Marques de Sa (Chief Investment Officer), Ahmed Hassanein (Senior Investment Officer), Aurelien Boyer (Senior Investment Officer), Julie Carles (Principal Investment Officer), and Malak Draz (Investment Officer); This analysis builds on a number of background papers prepared as part of the Maghreb Infrastructure Diagnostic by Abdoul Barry, Ahmed Basti, Arnaud Dornel, Patrick Blanchard, Jean-Louis Martin, Ezzedine Chebbi, Hedi Larbi, Kamel Rekik, Karim Chabir, Khaled Amri, Michel Bellier, Raoudha Gafrej, and Tito Yepes. The financial support of the Public-Private Infrastructure Advisory Facility (PPIAF) is gratefully acknowledged. ii Abbreviations and Acronyms ANME Agence Nationale pour la Maitrise de l’Énergie AROTTs Autorités régionales organisatrices des transports terrestres BOT Build-operate-transfer CAPEX Capital expenditure(s) CRDA Commissariat régional de développement agricole CNAPP Comité National d’Approbation des Projets Publics DBO Design-build-operate EPC Engineering, procurement, and construction ESCO Energy service company GDA Groupement de développement agricole GDP Gross domestic product HICOP Haute Instance de la Commande Publique ICT Information and communication technology IGPPP Instance Générale des Partenariats Public Privé INT Instance Nationale des Telecommunications IPP Independent power producer km Kilometer kWh Kilowatt-hour LNG Liquefied natural gas LPG Liquefied petroleum gas m 3 Cubic meter MEMER Ministère de l’Énergie, des Mines et des Énergies Renouvelables MENA Middle East and North Africa MHz Megahertz MTCEN Ministère des technologies de la communication et de numérique MW Megawatt OACA Office de l’Aviation Civile et des Aéroports ODA Official development assistance OECD Organisation for Economic Co-operation and Development OMMP Office de la Marine Marchande et des Ports ONAS Office National de l’Assainissement OPEX Operating expenditure(s) PER Public expenditure review PPP Public-private partnership PV Photovoltaic SNCFT Société Nationale des Chemins de Fer Tunisiens SOE State-owned enterprise iii SONEDE Société Nationale d’Exploitation et de Distribution des Eaux SRT Société Régionale de Transport STA Société Tunisie Autoroutes STAM Société Tunisienne d’Acconage et de Manutention STEG Société Tunisienne de l’Électricité et du Gaz Transtu Société des transports de Tunis TD Tunisian dinar VAT Value added tax WASH Water supply, sanitation, and hygiene iv Contents Executive Summary ................................................................................................................................. 1 Chapter 1. Tunisia’s infrastructure performance ................................................................................... 7 1.1 Infrastructure Overview .......................................................................................................... 7 1.2 Performance of infrastructure SOEs ....................................................................................... 9 1.3 Subsidies in infrastructure sub-sectors .................................................................................. 15 1.4 External financing and tariffs ................................................................................................ 17 1.5 SOE governance .................................................................................................................... 20 1.6 Planning, regulation & procurement ..................................................................................... 21 1.7 Private sector participation in infrastructure ......................................................................... 24 1.8 Conclusion ............................................................................................................................ 26 Chapter 2. Infrastructure sub-sector performance .............................................................................. 27 2.1 Transport ..................................................................................................................................... 27 2.2 Energy ......................................................................................................................................... 30 2.3 Water and sanitation ................................................................................................................... 34 2.4 Information and Communications Technology .......................................................................... 39 2.5 Conclusion .................................................................................................................................. 40 Chapter 3. Tunisia’s infrastructure investment & spending needs ...................................................... 41 3.1 Historical trends in infrastructure spending ................................................................................ 41 3.3 Infrastructure spending scenarios ............................................................................................... 44 3.5 Signs of the increase in demand ................................................................................................. 46 3.6 Macro-economic and fiscal constraints ....................................................................................... 47 3.7 Conclusion .................................................................................................................................. 48 Chapter 4. Recommendations .............................................................................................................. 49 Appendix A. Key Sector Indicators ........................................................................................................ 61 Appendix B. Sub-sector investment