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