VIS, in consortium with MRC, implemented a World Bank-funded Cost of Service and Tariff Study for Tunisia’s electricity and gas sectors, aimed at supporting STEG, the state-owned utility, in developing cost-reflective tariffs. VIS led the work on gas tariffs, while MRC focused on electricity. The study sought to ensure STEG’s financial viability through cost reflective and efficient tariffs , while also reducing government subsidies and exposure to financial guarantees.
Gas tariffs were based on the required revenue approach, incorporating allowed operating costs and a return (based on WACC) on STEG’s regulated gas assets base. Allowed costs were allocated to to energy, capacity and cost components, and then to each of transmission, distribution and supply activities. Finally, costs were allocated to the different customer classes.
In developing gas tariffs, VIS carried out an extensive data collection and assessment exercise, covering gas customer classes, gas demand (energy, peak demand) and projections, gas supply costs and projections, operational and maintenance costs, system assets and investment plans/costs. VIS examined cost drivers and applied efficiency factors to several cost components of required revenues, based on benchmarked data.
VIS developed a custom tariff model to calculate cost-reflective tariffs and conducted sensitivity analyses to examine the impact of key parameters on tariff outcomes. A phased transition strategy was also designed to gradually align existing tariffs with cost-reflective levels. In addition, the impact of tariffs on government subsidies was quantified. A socioeconomic impact assessment was undertaken to evaluate affordability for low-income households, and cross-subsidies were recommended to protect vulnerable consumers within the tariff structure.