Tunisia–EU: Elmed’s 1.42 billion deal – energy and investment to bring the two sides closer together

The economic aspect of the project goes beyond simply laying the cable. The interconnector will enable Tunisia to export renewable electricity to the European market and to import energy from Italia when domestic production is insufficient. This two-way flow is therefore essential for security of supply on both sides, whilst the industrial benefits will also depend on investment in production, maintenance and technical expertise.

“Elmed is a strategic infrastructure because it will ensure greater energy security for Tunisia and for Europe. We are in this together,” said Prunas, highlighting the opportunities for technology transfer and training.

For the international interconnector to realise its full potential, action must be taken on domestic infrastructure. This is the objective of Elmed II, the component aimed at strengthening the Tunisian grid and integrating new capacity from renewable sources.

The programme includes a 400-kilovolt overhead line, approximately 85 kilometres long, between Grombalia and Kondar, in the governorates of Nabeul and Sousse . In addition to this, there will be the Ezzahra–Grombalia and Seltene–Grombalia links, totalling approximately 20 kilometres. The works will also extend to the governorates of Ben Arous and Zaghouan.

For this component, on 15 January 2026, a BERS loan of 43 million euros, approximately 145 million dinars, was signed and granted to Steg with a guarantee from the Tunisian government. Repayment is scheduled over 18 years, including a five-year grace period. On 2 November, the draft bill for the approval of the guarantee agreement was referred to the parliamentary Committee on Finance and the Budget with a request for urgent consideration.

The expansion of the grid bridges the gap between export prospects and the needs of the domestic market: transporting electricity generated in the central and southern regions to the north and Cap Bon means creating the infrastructural conditions for new power stations and for greater integration of renewable energy sources.

The progress of Elmed is accompanied by an increase in public funding allocated to the Tunisian Ministry of Industry, Mines and Energy. According to figures presented on 3 November by Minister Salah Zouari, the draft budget for 2027 allocates 7.89 billion dinars – approximately 2.35 billion euros – to this sector, compared with 5.33 billion in 2026: an increase of 48.2 per cent.

The Energy programme accounts for the largest share, with 7.2 billion dinars, compared with 5.12 billion the previous year. The Mining programme has risen to 508.2 million, mainly due to the allocation of 500 million to finance chemical fertilisers for agricultural use through the Tunisian Chemical Group. By contrast, funding for the Industry programme has fallen to 169.3 million dinars, down from 188.9 million in 2026.

However, the increase in overall appropriations should not be confused with an equivalent rise in infrastructure investment. Payment appropriations for the ministry’s investment expenditure remain at around 6.9 million dinars. 45 million dinars have been earmarked for the Energy Transition Fund, as part of a total allocation of 129.4 million for the Treasury’s special funds.

This distinction is important for understanding Tunisia’s financial commitment: the resources allocated to the ministerial mission cover a range of objectives, whilst the modernisation of the electricity system relies on dedicated funding and support from international institutions. Underlying these efforts are the targets of reducing energy intensity by 3 per cent annually and achieving a 35 per cent share of electricity from renewables by 2030.

The energy project forms part of an already established economic relationship. According to the figures cited by Gueguen at the Forum, the European Union accounts for 55 per cent of Tunisia’s total trade. China, identified as the leading supplier, accounts for 7.5 per cent of total trade.

The French ambassador highlighted the contribution of Tunisia’s trade surplus with the EU to growth, employment and foreign exchange reserves. In its trade with Paris alone, Tunisia’s trade surplus reached 1.8 billion euros in 2025, whilst French direct investment contributed to the creation of over 4,300 jobs.

It is against this backdrop that the proposal to strengthen integrated industrial supply chains, energy supplies and access to critical raw materials is set. The crises of recent years — from the pandemic to the war in Ukraine, and tensions over maritime routes — have brought the cost of external dependencies and logistical disruptions back into sharp focus. Proximity to the Mediterranean is thus proposed as a factor upon which to build more stable productive relationships.

According to Perrone, European strategic autonomy and Tunisian economic sovereignty are not conflicting objectives. Instead, they can lead to investment, technology transfer and the development of value chains, provided that cooperation goes beyond ‘mere crisis management’.

Presented by the European Commission in October 2025 and subsequently launched in Barcelona with partners from the region, the Mediterranean Pact was first set out in operational terms in the April 2026 action plan: 21 initiatives focusing on human development, training and mobility, sustainable and interconnected economies, and security and crisis management.

For Italia, Elmed also forms part of the cooperation and co-development strategy set out in the Mattei Plan. Prunas referred to the precedent set by the Transmed gas pipeline, which has linked the two shores for around four decades, and to an approach based on a mutual interest in the prosperity of the partners.

The outstanding issue now concerns Tunisia’s role in shaping the programmes. The Forum’s president, Tayeb Zahhar, has called for the country to move beyond its role as a mere recipient of European policies and to play a part in identifying priorities.

For Elmed, this approach will be put to the test: the completion of the interconnection must be accompanied by an adequate domestic network, new production capacity and local expertise. It is on these aspects, as well as on the progress of the construction sites, that the partnership’s ability to transform geographical proximity into economic integration will be measured.

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