Tunisia is the smallest country in North Africa, covering approximately 163,000 square kilometres at the continent’s northern tip. Fertile plains and hills define the north; steppes transition to desert in the south, where Tunisia holds the solar resources that have become central to its energy ambitions.
Tunisia has no significant domestic oil reserves and declining natural gas production, making it structurally dependent on energy imports in a way that has defined, and increasingly constrained, its electricity sector for decades. Understanding that dependence is the starting point for understanding everything else about Tunisia’s energy history.
Pre-Independence Electricity Infrastructure: A Fragmented Colonial Legacy
France established a Protectorate over Tunisia in 1881 through the Treaty of Bardo, making it one of the earlier North African territories to come under formal French control, nearly 30 years before Morocco.
Under the Protectorate, France maintained Tunisia’s nominal sovereign monarchy, while exercising effective administrative and economic control. As with Algeria and Morocco, colonial electricity infrastructure in Tunisia primarily served French settler communities and commercial interests.
Investment in modern services went to European-inhabited neighbourhoods and economic corridors while Tunisian communities received minimal provision.
At the time of independence in 1956, the Tunisian electricity sector was divided among eight separate private companies, a fragmented, concessional model inherited directly from French administration.
Multiple competing concessions made it easier for French capital to maintain control without creating a unified national institution that could be smoothly transferred to post-independence authorities. By 1956, the energy sector provided electricity to only a minority of the Tunisian population.
Tunisia gained independence on 20 March 1956, under President Habib Bourguiba, who governed for over three decades, establishing an authoritarian developmental state that combined political repression with a genuine commitment to social modernisation in the areas of education, health, and, critically, the extension of public services to ordinary Tunisians. Electricity was central to that project.
Founding Institutions and the Electrification Drive
Bourguiba’s approach to the energy sector was rooted in a clear political logic: nationalise strategic industries, use them to deliver services and employment, and distribute socioeconomic benefits widely enough to sustain popular loyalty in the absence of political freedom.
For several decades, the electricity sector was the clearest expression of that bargain. The government moved immediately to consolidate the fragmented colonial inheritance: on 15 August 1958, just two years after independence, it placed a management committee at the head of one of the eight existing private companies as an interim step.
In 1962, the Société Tunisienne de l’Électricité et du Gaz (STEG) was created and granted a monopoly over the production, transmission, distribution, and sale of both electricity and natural gas across the country. Six years after independence, Tunisia’s energy sector had moved from eight competing private companies to a single state institution with a universal service mandate.
When STEG took over, national electrification stood at approximately 21%, and rural electrification at just 6%. The vast majority of Tunisians and almost all of those outside major cities had no electricity.
What followed was one of the most thorough electrification programmes in African history. Over the subsequent five decades, STEG drove national electrification from 21% to 99.8%, and rural electrification from 6% to 99.5%. These numbers were referenced from STEG’s own operational data, corroborated across multiple independent sources including the World Bank, Global Energy Monitor, and the Transnational Institute.
For a state utility in a lower-middle-income country to achieve this outcome without large-scale privatisation, without off-grid alternatives as a primary strategy, and without exceptional oil revenues to finance it was a remarkable record.
STEG’s generation base was built almost entirely around natural gas, which Tunisia had in modest domestic quantities and supplemented with Algerian imports via pipeline. By 2020, natural gas constituted 95% of power generation.
This worked well for decades because gas was domestically available to some extent, it was relatively cheap (partly because STEG received it from Tunisia’s national oil company at below-market prices until 2014), and technically reliable.
From the 1990s, STEG pursued what academic researchers have described as a ‘corporatisation’ approach: moving gradually toward cost-reflective tariffs and commercial discipline, seeking to reduce subsidy dependence before it became fiscally unmanageable.
That discipline produced a financially functioning utility, recognised by international donors for rigorous financial management, through the early 2000s. However, this stride did not survive 2011.
Solar Ambition and the Limits of Innovation
The 1990s brought a first partial opening of the sector. In 1996, STEG’s generation monopoly was partially liberalised, allowing Independent Power Producers for the first time.
In reality, the partial liberalisation produced a single outcome over more than two decades: the Carthage Power Company, which built and operated a 471 MW combined-cycle gas plant before handing it to STEG in May 2022 at the end of its 20-year power purchase agreement.
The 1996 liberalisation was narrow in effect, reflecting both STEG’s institutional resistance to competition and the limited attractiveness of Tunisia’s regulated tariff environment to private generators.
Under President Ben Ali, who had replaced Bourguiba in a bloodless coup in 1987, Tunisia began developing a renewable energy framework. In 2004, an energy efficiency law was passed, followed by a National Fund for Energy Management. The Tunisian Solar Plan of 2009 targeted solar and wind expansion alongside energy efficiency.
This was followed by PROSOL, a joint programme between UNEP, STEG, Tunisia’s National Agency for Energy Management (ANME), and the Italian Ministry of the Environment. PROSOL subsidised loans for private households to purchase solar water heaters, achieving significant domestic solar thermal deployment and earning widespread recognition as a replicable model.
A successor programme, PROSOL Elec from 2010, extended support to rooftop solar PV, allowing households to sell surplus generation back to STEG through the grid.
PROSOL’s reputation, however, was only partially earned because beneath the headlines, structural barriers were accumulating. STEG resisted paying feed-in prices equal to retail prices for surplus PV supplied to the grid, arguing that the arrangement did not cover infrastructure costs.
Grid capacity constraints led STEG to limit how much surplus solar the network could absorb. Administrative bottlenecks at ANME caused massive delays in paying subsidies to PV installers, forcing smaller operators into bankruptcy.
The larger operators shifted to more profitable non-subsidised projects elsewhere. PROSOL demonstrated both the potential of household solar and how institutional barriers such as utility resistance, administrative inadequacy and poorly designed compensation structures would constrain Tunisia’s renewable transition for years to come.
The lesson embedded in PROSOL’s history is that good policy design and successful implementation are different achievements, and the gap between them can be wide even in a country with Tunisia’s administrative tradition.
Revolution, Financial Crisis, and the Compound Shock
The Jasmine Revolution of January 2011, which ousted Ben Ali and ignited the Arab Spring across the region, had direct and lasting consequences for STEG.
They arrived through three distinct channels, each reinforcing the others. The first was political: post-revolutionary governments were unwilling to impose price increases on a population that had just overthrown a government partly over economic grievances. They also abandoned the gradual cost-reflective tariff reform STEG had pursued through the 2000s. Although attempts were made towards small tariff increases, meaningful tariff reform remained politically toxic throughout the decade that followed, widening the gap between STEG’s cost of supply and the prices it charged consumers.
The second channel was institutional disruption within STEG itself. Post-revolutionary governments hired large numbers of new employees at STEG in response to political pressure and demands for public employment.
Non-payment of electricity bills rose sharply, from both private customers and public institutions. Physical attacks on STEG infrastructure increased. The utility that international donors had long regarded as a well-managed state company was absorbing simultaneous pressure on costs, revenues, and staffing, with no political cover to impose the discipline needed to address any of them.
The third channel was external: the Russia-Ukraine war. After 2014, under pressure from international donors, STEG was obliged to purchase energy at international market prices rather than receiving subsidised domestic gas from Tunisia’s state oil company.
As the Tunisian dinar declined in value, energy purchased in dollars and euros became progressively more expensive in local terms. When Russia invaded Ukraine in 2022, global gas prices spiked, and Tunisia’s energy subsidy bill doubled as a share of GDP, from an average of approximately 2.1% between 2011 and 2021, to 5.3% in 2022.
A company that had once contributed revenues to the state treasury was now the recipient of emergency budget transfers amounting to TND 4 billion (approximately $1.3 billion) in 2023 alone, equivalent to 2.5% of Tunisia’s entire GDP.
By June 2026, STEG’s total accumulated debt had reached 7.36 billion dinars, against 6.06 billion dinars in uncollected receivables from customers who owed STEG money it could not collect. It is apparent that the crisis is fundamentally one of governance, not financing, in that more loans without structural reform would only reproduce the crisis.
Recent Transition and Current State
Tunisia’s electricity system at the end of 2024 had a total installed capacity of approximately 6.9 GW. Fossil fuels accounted for approximately 97% of actual electricity generation. STEG controlled approximately 92% of installed generating capacity and generated approximately 84% of the country’s electricity.
STEG’s achievement of national electrification of 99.8%, with rural electrification at 99.5%, remained intact despite everything else. The contradiction, however, is stark: a near-universally electrified country whose electricity system is financially insolvent.
Against that backdrop, three recent developments offer grounds for optimism and hope for Tunisia. In December 2025, Dubai-based developer AMEA Power commissioned a 120 MW solar project in the Kairouan governorate, the country’s first to inject renewable electricity directly into STEG’s 225 kV high-voltage transmission grid.
Built under Tunisia’s concession regime for private large-scale energy, the project operates under a 20-year power purchase agreement with STEG signed in 2021. It is expected to generate approximately 222 GWh annually, powering around 43,000 homes.
In March 2026, the government issued a tender for a 300 MW solar park with a 150 MW/540 MWh battery energy storage system. That same month, licences were granted for four utility-scale projects totalling 500 MW under a 1.7 GW renewable energy tender. These are meaningful milestones.
One significant intervention is the World Bank’s TEREG programme, approved in November 2025. TEREG aims to mobilise $2.8 billion in private investment to add 2.8 GW of new solar and wind capacity by 2028, improve STEG’s cost recovery from 60% to 80%, reduce subsidies by TND 2.045 billion from the state budget, cut electricity supply costs by 23%, and create over 30,000 jobs.
If delivered as designed, TEREG would represent a structural turning point, especially as it relates to the financial relationship between STEG, the state, and the electricity consumer. For Tunisia, the underlying resource potential is extraordinary (an estimated 320 GW of renewable capacity). However, potential and delivery are two different things.
Reflections and Lessons
- Tunisia’s most important energy lesson is that STEG’s extraordinary success in delivering near-universal electrification was built on a model (subsidised tariffs, monopoly operation, state-funded expansion) that worked for access at scale but did not build the financial sustainability needed for the next stage. The same institution that took Tunisia from 21% to 99.8% electrification is now structurally insolvent.
- The PROSOL programme also shows the gap between policy design and implementation capacity. Good ideas, inadequately supported by institutional bandwidth, misaligned financial incentives, and a utility whose institutional culture resisted change, do not produce the outcomes their designers intended.
- PROSOL worked well enough to earn global attention; it did not work well enough to become the foundation of a national renewable transition. The lesson for anyone designing similar household solar programmes elsewhere on the continent is that the incentive structure for the utility, the compensation model for the installer, and the administrative capacity to process claims are as important as the technology and the subsidy.
- Post-2011 Tunisia illustrates what happens when political transitions interrupt cost-recovery discipline in utility companies. The decision not to raise tariffs after the revolution was rational in the short term but fiscally catastrophic over the medium term. Political economy is not a soft variable in energy sector reform; it is often the hardest constraint of all.
- Closing these gaps requires solving STEG’s financial crisis, building a regulatory environment that consistently attracts and retains private capital, and constructing transmission infrastructure to carry southern solar to northern demand. Each of these is a governance problem as much as a financing problem. The TEREG programme attempts to address all three simultaneously; whether the institutional conditions for its delivery actually exist is the question Tunisia’s next chapter will answer.
References
African Development Bank Group (2025) ‘African Development Bank welcomes the commissioning of 120 MWp Kairouan Solar Photovoltaic Project’, AllAfrica, 22 December. Available at: https://allafrica.com/stories/202512220042.html (Accessed: July 2026).
Al Jazeera (2026) ‘Tunisia’s body politic is in crisis’, 29 July. Available at: https://www.aljazeera.com/opinions/2026/7/29/tunisias-body-politic-is-in-crisis (Accessed: July 2026).
Arab Reform Initiative (2023) ‘Tunisia’s energy sector: a just transition analysis’, 24 May. Available at: https://www.arab-reform.net/publication/tunisias-energy-sector-a-just-transition-analysis/ (Accessed: July 2026).
Bennasr, A. and Verdeil, É. (2014) ‘An “Arab Spring” for corporatization? Tunisia’s national electricity company (STEG)’. HAL Open Science / ResearchGate. Available at: https://shs.hal.science/halshs-00976779v1/document (Accessed: July 2026).
Ecofin Agency (2025) ‘Tunisia’s heavy gas imports stall solar energy growth’, 23 July. Available at: https://www.ecofinagency.com/news-services/2307-47816-tunisia-s-heavy-gas-imports-stall-solar-energy-growth (Accessed: July 2026).
Enerdata (2026) ‘Tunisia advances renewable energy goals with solar power projects’, 21 April. Available at: https://www.enerdata.net/publications/daily-energy-news/tunisia-advances-renewable-energy-goals-solar-power-projects.html (Accessed: July 2026).
Global Energy Monitor (2026) ‘Power sector transition in Tunisia’, updated July. Available at: https://www.gem.wiki/Power_Sector_Transition_in_Tunisia (Accessed: July 2026).
Grokipedia (2026) ‘Tunisian Company of Electricity and Gas’. Available at: https://grokipedia.com/page/tunisian_company_of_electricity_and_gas (Accessed: July 2026).
Mitigation Action Facility (2024) ‘Tunisia powers up: PROSOL ELEC Economique takes off to boost renewable energy’, 4 November. Available at: https://mitigation-action.org/news/tunisia-powers-up-prosol-elec-economique-takes-off-to-boost-renewable-energy/ (Accessed: July 2026).
This article is part of an independent historical research and writing series examining the development of electricity and power systems across African countries. It is compiled for educational purposes, to help readers understand where these energy sectors began, how they evolved, and what lessons might be drawn for the future. The content draws on publicly available sources, including institutional records, peer-reviewed academic literature, government documents, multilateral institution reports, and news reporting, and is current as of mid-2026. This article does not constitute professional, legal, financial, or investment advice. Readers are encouraged to verify figures independently and to consult primary sources and qualified professionals for any decision-making purposes.
