1. The network is a public good
The interconnector creates system-wide benefits that are difficult to capture through one private revenue stream: grid stability, renewable integration and cross-border security of supply.
← All dealsPublic infrastructure / blended sovereign finance
ELMED
Tunisia / ItalyWhy Europe is giving Tunisia €307.6m for a power cable to Italy
ELMED is a 600 MW interconnector across the Strait of Sicily. Its financing mixes an EU grant, an IBRD sovereign loan, concessional climate capital and loans from European development banks.
Under implementation — expected operation in 2028
Capacity600 MW
Length~220 km~200 km subsea
EU CEF grant€307.6m
IBRD financing$268.4m
GCF financing$25m$20m concessional loan + $5m grant
Latest disclosed project cost€920mEarlier EU disclosure: €850m
Why use a €307.6m grant for an asset that can facilitate electricity trade?
ELMED is not simply 'aid to Tunisia'. It is simultaneously Tunisian grid investment, European energy-security policy and a cross-border market-integration project.
01
FOLLOW THE MONEY
Who pays — and why?
€307.6m
EU CEF grant
Construction grant shared across the cross-border project
$268.4m
IBRD loan
Tunisia-side converter and grid infrastructure
$20m + $5m
GCF loan + grant
Concessional climate finance and technical assistance
€45m
EBRD loan
Tunisia-side financing
€45m
EIB loan
Tunisia-side financing
€35m
KfW loan
Tunisia-side financing
ANALYST NOTE
Public disclosures mix EUR and USD and do not all cover the same project scope. Lyrios therefore shows the disclosed financing layers rather than forcing a false 100% capital stack. The Italian remainder is financed through Terna corporate debt and equity.
02
MECHANICS
How the deal becomes financeable
2. Tunisia still borrows
The World Bank does not fund the Tunisian side only with grants. The $268.4m IBRD financing is debt: the public borrower must ultimately repay it.
3. Concessional capital targets the bottleneck
The GCF layer supports grid reinforcement and renewable integration, where climate benefits are larger than the cash flows directly captured by the project.
03
RISK ALLOCATION
If it goes wrong, who takes the hit?
| Risk | Holder | Mitigant | Residual |
|---|---|---|---|
| Construction & interface | STEG / Terna / contractors | Split implementation responsibilities; MDB oversight; dedicated project entities | MEDIUM |
| Sovereign / execution capacity | Tunisia / public lenders | Long-tenor multilateral financing and institutional support | MEDIUM |
| Cross-border regulation | STEG / Terna / regulators | EU PMI framework and bilateral coordination | MEDIUM |
| Revenue / market design | System operators / states | Strategic value is not dependent on a single merchant revenue line | MEDIUM |
04
TIMELINE
The deal through time
2022
EU grant awarded
CEF allocates €307.6m to support construction.
2023
World Bank approval
$268.4m IBRD financing approved; GCF concessional financing mobilised.
2024
Project effective / European loans
World Bank project becomes effective; EBRD announces €45m alongside EIB and KfW.
2028
Expected operation
Current World Bank publications expect operations to begin in 2028.
05
ORDERS OF MAGNITUDE
Put the numbers in context
Transfer capacity
Large enough to matter at national-system scale, not a demonstration cable.
EU grant
More than one-third of the latest €920m disclosed project cost — although the grant is shared across both sides of the interconnector.
Public financiers
EU, World Bank, GCF, EBRD, EIB and KfW appear in the disclosed financing architecture.
06
LYRIOS VIEW
What this deal actually tells us
ELMED shows why the binary 'public vs private' debate is often too crude. The asset creates cross-border and system benefits that a single project company cannot fully monetise.
The political question is therefore not whether public money is present, but whether each public euro is paying for a genuine coordination or market failure rather than replacing finance that the market would have supplied anyway.
What we do not know — or not yet
• Project-cost disclosures changed over time: CINEA cited €850m in 2023; EBRD cited €920m in 2024.
• The EU grant is for the cross-border project and is split between Tunisia and Italy; it should not be presented as €307.6m paid solely to Tunisia.
07
SOURCES
Every material number should be traceable.
Priority goes to institutions, sponsors and project documents. Discrepancies are flagged rather than smoothed over.
World Bank · 2023-06-22PRIMARY
Project approval — $268.4m financing
Capacity, IBRD financing, GCF financing and project rationale.
Open sourceWorld Bank · 2025PRIMARY
2025 Tunisia Economic Update — ELMED financing summary
Breakdown of IBRD, GCF, EU, EIB, KfW and EBRD financing.
Open sourceCINEA / European Commission · 2023-12-05PRIMARY
CEF Energy grant agreement
€307m+ CEF grant and €850m project-cost disclosure at the time.
Open sourceEBRD · 2024PRIMARY
€45m EBRD financing announcement
Latest €920m project-cost disclosure and €125m EBRD/EIB/KfW package.
Open sourceKEEP READINGSuez Wind