VZCZCXRO5128
PP RUEHTRO
DE RUEHTU #0896/01 1871413
ZNR UUUUU ZZH
P 061413Z JUL 07 ZDK
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 3459
INFO RUEHAD/AMEMBASSY ABU DHABI PRIORITY 0900
RUEHAS/AMEMBASSY ALGIERS PRIORITY 7496
RUEHDO/AMEMBASSY DOHA PRIORITY 0419
RUEHLO/AMEMBASSY LONDON PRIORITY 1311
RUEHNK/AMEMBASSY NOUAKCHOTT PRIORITY 0888
RUEHFR/AMEMBASSY PARIS PRIORITY 1783
RUEHRB/AMEMBASSY RABAT PRIORITY 8406
RUEHRO/AMEMBASSY ROME PRIORITY 0770
RUEHTRO/AMEMBASSY TRIPOLI PRIORITY 0110
RUEHCL/AMCONSUL CASABLANCA PRIORITY 4110
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 TUNIS 000896 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/MAG (HARRIS) 
STATE PASS USTR (BELL), USPTO (ADLIN AND ADAMS), USAID (MCCLOUD) 
USDOC FOR ITA/MAC/ONE (NATHAN MASON), ADVOCACY CTR (JAMES), AND CLDP 
(TEJTEL AND MCMANUS) 
CASABLANCA FOR FCS (ORTIZ) 
LONDON AND PARIS FOR NEA WATCHER 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV EFIN ECPS ENRG EPET TS
SUBJECT: TUNISIA ECONOMIC HIGHLIGHTS 
 
REF: 06 TUNIS 2950 
 
¶1. (U) This cable contains highlights of recent economic 
developments in Tunisia on the following topics: 
 
¶A. Creation of a New Agency for E-Commerce 
¶B. British Gas to Invest US $1.3 billion in Tunisia 
¶C. Central Bank June Report 
¶D. Italy and Tunisia Agree to Connect Electrical Grids 
 
--------------------------------------- 
Creation of a New Agency for E-Commerce 
--------------------------------------- 
 
¶2. (U) The Ministry of Commerce and Handicrafts plans to create the 
Technical Agency for the Development of E-Commerce (AGTDCE). 
Although widely reported in local press, a Ministry of Commerce 
contact indicated that the agency is still in the initial planning 
stages.  The AGTDCE will act as a one-stop shop where companies can 
receive assistance in launching websites, marketing goods and 
providing online services.  Observers note that online commercial 
transactions in Tunisia have strongly increased from 7,658 in 2005 
to 63,000 transactions in 2006, an increase of 800 percent. 
However, e-commerce remains relatively limited with only 250 
Tunisian websites out of 4,566 offering the possibility of online 
payment. 
 
¶3. (SBU) COMMENT AND BACKGROUND: Despite GOT interest in e-commerce, 
the potential remains limited due to low Internet use.  Most reports 
place Internet use at around 10 percent of the population.  In 
addition, due to the non-convertibility of the dinar, Tunisians are 
not able to make international purchases online.  The Tunisian Post 
has developed a credit card called "e-dinar" with which users can 
make online payments for some government services.  The GOT is 
trying to promote such online services by pushing institutions as 
universities, public utilities and state-owned companies, such as 
national airline Tunisair, to accept payment via e-dinar.  END 
COMMENT AND BACKGROUND. 
 
--------------------------------------------- ---- 
British Gas to Invest US $1.3 billion in Tunisia 
--------------------------------------------- ---- 
 
¶4. (U) On June 20, Robert Wilson, Chairman of British Gas (BG) 
Group, the largest foreign investor in Tunisia, announced that BG 
would invest US $1.3 billion to boost its natural gas production in 
Tunisia.  The first project, an investment of US$ 500 million, will 
raise output at the Miskar field near the southern town of Gabes. BG 
has already invested US $1 billion in Miskar.  In addition to the 
Miskar project, BG will invest US $800 billion along with 
state-owned Tunisian Company for Petroleum Activities (ETAP) to 
finance the development of new gas field in Hasdrubal.  ETAP will 
contribute US $400 million to the Hasdrubal project. 
 
¶5. (U) BACKGROUND: Tunisia imports most of its refined oil product 
needs due to declining output from its aging fields over the past 
decade.  BG Tunisia is the leading company on the Tunisian gas 
market, supplying more than 50 percent of domestic demand. 
Production comes from the Miskar offshore fields in the Gulf of 
Gabes.  Natural gas is piped to the coast south of Sfax where it is 
processed at the Hannibal plant and sold to the state-owned Tunisian 
Electricity and Gas Company (STEG).  END BACKGROUND. 
 
------------------------ 
Central Bank June Report 
------------------------ 
 
¶6. (U) According to the Central Bank's June report, the inflation 
rate was 2.3 percent for the first five months of 2007, down from 
4.6 percent in the same period of 2006.   The current account 
deficit was 1.4 percent of GDP over the first five months of 2007, 
down slightly from 1.6 percent over the same period of last year. 
The improvement in the current account deficit is the result of a 
 
TUNIS 00000896  002 OF 002 
 
 
lower trade deficit (NFI).  Hard currency reserves topped 8.675 
billion dinars (US $6.5 billion), up 67 percent due to a 9.4 percent 
rise in tourist receipts and a 5.8 percent rise in expatriate 
remittances. 
 
--------------------------------------------- 
Privatization of Magasin General Retail Chain 
--------------------------------------------- 
 
¶7. (U) On June 26, Tunisian consortium GIAN-Poulina won the tender 
to purchase a majority share in state-owned retail grocery chain 
Magasin General.  The consortium has offered 70 million dinar (about 
US $55 million) for the purchase of a 76.31 percent stake in Magasin 
General.  The remaining shares are privately held.  Created in the 
1920s, Magasin General has a network of 45 stores throughout 
Tunisia.  According to Tunisian financial online magazine Tustex, 
annual turnover is approximately 100 million dinars (about US $78 
million).  GIAN belongs to the Bayahi family group, which owns 
business in the aluminum industry, agribusiness, textile, retail 
sector and finance.  The Bayahis' partner, Poulina, is one of the 
largest Tunisian groups with 40 subsidiaries in both industrial and 
service sectors, including agribusiness, computer science, tourism, 
ceramics and others. 
 
¶7. (SBU) COMMENT: Retail distribution has expanded rapidly with the 
success of French retail chains Carrefour and Geant.  According to 
Tustex, total annual turnover for the four main retail chains 
operating in Tunisia (Carrefour, Geant, Monoprix and Magasin 
General) is roughly US $606 million, or nearly 2 percent of GDP. 
Tustex estimates that the Tunisian retail sector is growing by 15 
percent annually.  While the French retail chains have successfully 
expanded their operations, Magasin General has had difficulty 
competing with the wider selection and better advertising of the 
international chains.  As with many state-owned enterprises, Magasin 
General is also believed to be overstaffed.  In recent weeks, the 
local press has reported strikes by Magasin General employees, who 
fear the privatization will bring job cuts.  END COMMENT. 
 
--------------------------------------------- ------ 
Italy and Tunisia Agree to Connect Electrical Grids 
--------------------------------------------- ------ 
 
¶9. (U) On June 29, state-owned Tunisian Electricity and Gas Company 
(STEG) signed a memorandum of understanding with Italian Terna Spa 
to build a submarine cable connecting the two countries' electrical 
grids and to launch a tender to build and manage a new electrical 
plant in El Haouaria. The El Haouaria plant, scheduled to be 
operational in 2011, will produce 1200 megawatts: 800 megawatts for 
the Italian market and 400 megawatts for Tunisia. The total project 
is estimated to cost between 2 and 2.5 billion dinars (roughly US 
$1.55 to 1.93 billion).  The project falls under the framework of an 
agreement signed in July 2003 between Tunisia and Italy to promote 
energy cooperation.  In 2006, the GOT signed several agreements with 
Italian energy firms to expand the transit capacity of Algerian gas 
to Italy (Reftel). 
GODEC