MINISTER OF INDUSTRY SEEKS INCREASED US INVESTMENT

UNCLAS TUNIS 000453

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/MAG (HARRIS)
STATE PASS USTR (BELL),USAID (MCCLOUD)
USDOC FOR ITA/MAC/ONE (NATHAN MASON),ADVOCACY CTR (JAMES)
CASABLANCA FOR FCS (ORTIZ)
LONDON AND PARIS FOR NEA WATCHER

E.O. 12958: N/A
TAGS: EINV EIND ENRG EPET ETRD EAIR TS
SUBJECT: MINISTER OF INDUSTRY SEEKS INCREASED US INVESTMENT

REF: 06 TUNIS 2665


1. (SBU) SUMMARY: During Ambassador's April 10 courtesy call,
Minister of Industry, Energy, and Small and Medium Enterprise
Afif Chelbi focused on the potential opportunities for US
investment and expressed his readiness to meet with US
investors. Chelbi also highlighted the broader economic
challenges facing the GOT: the January 2008 implementation of
the European Union Association Agreement and creating jobs
for new graduates. Chelbi responded enthusiastically to
Ambassador's mention of a potential US business delegation
and volunteered his assistance. END SUMMARY.


2. (SBU) During Ambassador's courtesy call, Minister of
Industry, Energy, and Small and Medium Enterprise Afif Chelbi
quickly outlined two major challenges for the Tunisian
economy: the January 2008 implementation of the EU
Association Agreement and absorbing the growing number of
unemployed university graduates. Chelbi stressed that
confronting these challenges would require Tunisia to advance
technologically both to compete with EU entrants to the
Tunisian market and to create skilled employment for new
graduates.


3. (SBU) Chelbi expressed a desire for increased US
investment in Tunisia and highlighted several potential
opportunities for American companies. In particular, Chelbi
noted the great potential in the oil and gas sector. There
are currently about 40 international companies in the oil and
gas sector, but exploration has increased in response to high
oil prices. Chelbi stated that exploration has been
productive and that the GOT expects production and
consumption to be in equilibrium in 2007. (Post will report
septel in greater detail on potential investment opportunies
in the oil and gas sector.) In addition to his interest in
attracting US oil and gas companies, Chelbi named Boeing and
General Motors as two firms that could have sizeable
manufacturing presences in Tunisia. He suggested that Boeing
could undertake long-term contracts that included production
of parts in Tunisia and plane purchases. He noted that
Airbus currently produces parts in Tunisia. (NOTE: Local
newspapers have recently reported several Tunisair Airbus
purchases. END NOTE.) While GM is currently present in
Tunisia, Chelbi remarked that he would like to see a larger
investment. Ambassador raised the possibility of a US
business delegation. Chelbi responded enthusiastically to
the potential visit and volunteered his own participation and
assistance to US investors.


4. (SBU) Ambassador raised Enerciel's ongoing dispute with
state-owned Tunisian Electricity and Gas Company (STEG) about
the production of wind energy (Reftel). Chelbi, who was
familiar with the details of Enerciel's case, stated
unequivocally that the GOT is not interested in private
sector wind energy. While Enerciel had an agreement with
STEG to collect test data for wind energy production, Chelbi
said that GOT cost analysis revealed that the price of wind
energy would be prohibitive. The GOT is already subsidizing
gas and could not afford to undertake further energy
subsidies to Tunisian consumers. Chelbi offered to provide
the Embassy with the cost analysis conducted on wind energy.
Chelbi added that while almost all of the remaining
state-owned industrial entities would be privatized, energy
provision would remain public. (NOTE: Post will follow up on
this meeting with the Ministry and with Enerciel. END NOTE.)
GODEC