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Tunisia: Zakaria Hamad, the inveterate optimist, against all odds!

In an exclusive interview with African Manager, Zakaria Hamad, Minister of Industry, Energy and Mining has reviewed causes behind the worsening of the energy deficit.

Referring to renewables, he focused on the ongoing revision of the implementing decree of the energy transition fund for the expansion of its field of intervention and increasing its resources to support the development of the sector in the coming period.

The minister also expressed optimism about the future of the industrial sector in view of the positive results in terms of investment, expecting an improved pace this year to 25 billion dinars of industrial exports.

For “promising” sectors, Zakaria Hamad announced the establishment of an action plan for the promotion of the aviation industry in the Euro-Mediterranean region.

Interview:

The current energy context is characterized by a deficit; can you explain its causes?

True, the national energy situation is characterized by a continuous and increasing worsening of the energy deficit that has been multiplied by 6 during the period 2010 -2014, from about 0.6 Mtoe in 2010 to 3.6 Mtoe in 2014, i.e. 40% of primary energy needs.

Indeed, the primary energy balance showed a deficit of 3.08 Mtoe- LHV (lower heating value) against a deficit of 2.76 Mtoe-LHV recorded at end-September 2014, i.e. a worsening of the energy deficit by 11%. During this period, primary energy resources available (domestic and royalty on the Algerian gas) were down 5% against an increase in primary energy demand by 1%. Thus the rate of energy independence increased from 60% at end-September 2014 to 56% at end-September 2015.

Parallel to the deficit of the primary energy balance, the trade balance showed a deficit of 2,896 MTD at the end of September 2015. This deficit is mainly due to the decline in oil production by 8%, natural gas by 2%, primary LPG by 7% and that of exports and increasing imports.

Moreover, the quantities of exported energy products (including crude) to September 2015 reached 1.97 Mtoe registering a decrease of 14% compared to the same period of 2014.

As for imports, they increased by 4% in quantity and were down 26% in value between late September 2015 and late September 2014, reaching 5.68 million toe-LHV and 4,444 MTD, respectively, during the first nine months of 2015.

What are the actions taken by the Ministry to resume the normal pace of exploration and development activities?

The department has taken actions to resume the normal pace of exploration and development activities, by convening the Hydrocarbons Consulting Committee on August 11, 2015 which had reviewed and processed 35 applications for extension and renewal of the validity of permits and concessions and various files.

This allowed companies operating in the field to better plan their work programs, mostly of exploration.

Thus, during this year 2015, five (5) exploration wells were drilled (one well is being drilled) against three wells drilled in 2014. Similarly, the program for 2016 covers 11 exploration wells.

It should also be mentioned that drilling activity may partly and in case of a profitable discovery bridge the natural decline in production and therefore reduce the deficit.

To facilitate the intervention and opening of oil companies to their environment, the ministry has also implemented Corporate Social Responsibility (CSR) programs, mainly in the governorates of Tataouine and Kebili and environment companies, in order to reduce the unemployment rate in these regions.

Almost five months after the promulgation of the Law on Renewable Energy, how much progress has been made?

To reach the target rate of penetration of renewable energy in terms of electricity production to 12% in 2020 and 30% in 2030 from only 3% today, a law on the production of electricity from renewable energy has been ratified and published May 12, 2015.

This legal framework aims to increase the share of renewable energies in the electricity mix and develop investment in the renewable energy field through the production of electricity by private operators and gives the possibility of export of electricity.

Implementing texts of that law are being developed as part of a commission at the Ministry, namely the decree implementing the law, the technical specifications for connection and sales contracts.

Furthermore, the implementing decree of the energy transition fund is being revised with the aim of broadening its field of intervention and increasing its resources to support the development of the sector in the next period and achieve the ambitious objectives already included in the new national strategy for energy transition.

The Tunisian Solar Plan, in turn, has been updated while highlighting the different objectives of the national energy transition strategy in the field of energy efficiency and renewable energy, including solar photovoltaic energy, wind energy and biomass.

Can you tell us about the current industry conditions?

The first 9 months of 2015 were characterized by a significant improvement in the business climate and the gradual return of confidence of business operators and investors whether Tunisian or foreign, despite the events linked to terrorism that struck twice our country with the aim to tarnish our image internationally and to curb the momentum of our compatriots for a prosperous economic and social future.

Thus, the industrial sector saw an improvement in several of these performance indicators. As such, exports of manufacturing industries increased by 5.4% in the first nine months of 2015, from 17.2 billion dinars last year to 18.1 MD this year thanks to the significant growth of external olive oil sales which were multiplied by 6 compared to the first 9 months of last year and a number of niche markets and leading sectors in the Tunisian industry such as electrical wires and cables which account nearly for 20 % of exports of manufactured goods and pharmaceutical industries whose exports increased respectively by 5% and 4% compared to the same period in 2015.

This gives me reason to be optimistic and say that at this rate we will reach this year, under normal conditions, 25 billion dinars of industrial exports against 23.7 MD, last year, and only 20.5 billion dinars recorded in 2011.

In terms of value added, the industrial sector was able anyway to perform well, progressing positively by about 1% in 2015 at a time when the country’s GDP, that is to say growth of all production and service sectors will be only 0.5% at market prices. This means that the industrial sector even with all the difficulties experienced this year remained the sector that pulls the overall added value up.

On the terms of employment, it appears from quarterly surveys of the INS that the sector employed 627,000 people at the end of the first quarter of 2015 against 620,000 on average for the year 2014 (figures of population census). This strengthens the position of the industrial sector as first production sector generating jobs in Tunisia.

What about investment?

At the level of investment, the sector, in my opinion, has not yet managed to capture the full potential of attractiveness it deserves, despite the efforts made at the international, national and regional levels. This is also due to the international situation and geopolitical tensions in our region.

We have nonetheless managed to achieve positive results. For example, the industrial sector has drained Foreign Direct Investment (FDI) of about 392 MTD to September 2015, i.e. 6.1% more than the level recorded in 2014.

We are confident that these FDI, very important for the economy and that were negative in the past years, will contribute to nearly 20% of our annual investment target for the industry that is higher than 2,100 MTD.

We are also closely following the investment intentions in industrial and industry-related services sectors and we intend to redouble our efforts in the months ahead to transform the possible intentions into real projects.

What about the strategy put in place by your department for the promotion of “promising” sectors including essentially aeronautics?

Yes, the development of promising industrial niches is among the priorities that we have set for this year and is part of our strategic approach to promoting innovation and technological development as true drivers of growth and competitiveness our industry.

On this issue, we began by aeronautical industries. We worked for months to outline a strategy for the emergence of this sector in which Tunisia has some room to take.

I was even in the International Paris Air show for aerospace professionals to demonstrate, through figures, facts and assets, that aeronautical industries are a “Tunisian ambition.” Indeed, the sector has exported for 391 MTD to September 2015 against only 52 MTD in 2010.

The strategy focused on the development of this sector is organized around a set of complementary measures including the extension of the industrial area of El Mghira by 28 ha, with a bigger extension secondly of 170 Ha, grant of investment allowances between 5-10% for new projects in the area and assigning the Technopark of Sousse the mission of establishing and developing a cluster bringing together stakeholders in the aviation sector.

The sector will also benefit from an action plan for the promotion of Tunisia as a hub for the aviation industry in the Euro-Mediterranean region.

Moreover, the Ministry of Industry continues to work on other strategies in the field of niche markets, including pharmaceuticals, mechatronics, technical textiles and industries related to renewable energy…

Our goal in this area is to bring about in the next five years a new industrial fabric in these niches with high technological content and high added value.

Can you give us the current balance of the phosphate sector?

As you know, the area of phosphates and derivatives has experienced great difficulties during the second quarter of this year due to continuing social movements and blocking of the production and transportation of phosphate to the intended plants processing. This year, for the first time since January 2014, domestic phosphate production stopped two months in a row (April and May).

Thanks to government efforts and with the support of all active forces and the civil society in the country, we managed to stabilize the social climate in the phosphate production and processing basins, while launching projects and initiatives to promote overall economic development in these regions. It is an approach that we are pursuing at government level.

Indeed, we have produced over the first 10 months, more than 2.4 million tons of which about 1.4 million tons between June and October 2014. The month of October has also seen the production of over 410,000 tons against 300,000 tons in June / July 2015.

At this pace, we hope we will exceed 3.2 million tons and a come closer to the maximum to our goal of 2015, equivalent to 3.5 million tons.

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