As a strained budgetary situation has been a challenge to public investment, efforts have been made to encourage the private sector to take on a larger share of necessary works. To attract the interest of foreign and domestic investors, Tunisian authorities have strengthened the regulation overseeing public-private partnership (PPP) agreements and launched an ambitious project portfolio.
The PPP Law was adopted in November 2015 after passing a parliamentary vote. One key element of the legislation is that it did away with the previous system in which PPPs and concessions were mostly managed by different sector-specific policies and regulatory decrees. By establishing general rules for these types of agreements, the authorities have worked to increase transparency and promote competition between investors for infrastructure projects in line with international best practices, according to an evaluation of the law by the OECD. The regulation also included performance benchmarks to measure the impact of a specific PPP project on the country’s economy, ranging from the volume of local employment to the use of domestically manufactured inputs.
Calling on Investment
In September 2018 Tunisia hosted the International Forum on Public Private Partnerships. The investment meeting allowed the government to publicise its PPP portfolio, which involves a total investment of TD13bn ($4.5bn) across 33 projects. Tunisia’s PPP programme includes a diverse assortment of works in transport and logistics, infrastructure, energy and water access, and science and technology. Raising the level of investment in these targeted sectors is expected to drive overall economic growth.
Several of the proposed projects could have a long-lasting effect on the development of the country’s hinterland, such as transport works to revamp the railway line between Sfax and Kasserine for TD550m ($191m), TD635m ($220.6m) to broaden the national road connecting the two cities, and the establishment of a brand new railway to link Gabès and Medenine, which would involve an investment of between TD240m ($83.4m) and TD600m ($208.4m), according to preliminary government projections.
Other projects aim to secure proper access to energy and sanitation facilities, which can require significant volumes of investment. One key project set to be built with the PPP model is a 450-MW combined-cycle power plant in Skhira, expected to cost up to TD1.1bn ($382.1m) and be commissioned by 2023. Desalination plants planned for Gabès and Ksour Essef, budgeted at TD227.5m ($79m) and TD400m ($138.9m), respectively, are also expected to significantly add to Tunisia’s water infrastructure. “PPPs are a good way for the government to make up for its reduced ability to invest with a larger volume of private commitment,” Mongi Safra, director at KPMG Tunisia, told OBG.
Despite the developmental and financial benefits that can result from proper implementation of Tunisia’s PPP programme, some projects have been challenged by labour unions regarding the government transferring management of certain key infrastructure to the private sector. This has led to the cancellation or delay of a few projects after their initial approval. With presidential and legislative elections scheduled for late 2019, the government is likely to be more susceptible to the influence of labour unions and social protests, which could further delay the enactment of PPP objectives in the short term.
“The government does not want to go into more debt to build infrastructure, thus they want to use PPPs. This also involves debt, but it is more distributed over time,” Gérald Audaz, section chief for economic development at the EU Delegation in Tunisia, told OBG. Given the long-term impact that these projects can have on the country’s economic development, better communication with domestic stakeholders about the benefits of utilising the PPP model could do much to help make the programme a reality in the coming years.