Every morning, the 45-year-old Tawfik Rahimi goes to one of the cafes in the city of Kasserine - in west central Tunisia - to meet several others who own land along the route of the gas pipeline that runs from Algeria to Italy. They discuss the next steps they are going to take to pressure the Trans Tunisian Pipeline Company - Sergaz - to increase the rents it pays for land through which the pipeline passes.

For more than a year, the endeavors of farmers and landowners in Kasserine Governorate have been closely monitored in their attempts to persuade Sergaz. Their goal is to increase rents on land located along the trans-Tunisian gas pipeline route and obtain their rightful financial dues at the rate they are demanding. This claim has been pending since 2020.

This report shows that Sergaz, the local representative of the Italian company Ente Nazionale Idrocarburi (ENI), has failed to respond to the demand by farmers for increase in land rents and has not kept promises to support development projects, nor met its corporate social responsibilities (CSR) in Kasserine Governorate.

The trans-Tunisian gas pipeline, which consists of two separate pipelines, runs for 370 km from the region of Ouled Marzouk, on the Tunisia-Algeria border in Kasserine Governorate,  to Haouaria in the coastal governorate of Nabeul. It has five pumping stations - in the Feriana and Sbeitla regions of Kasserine Governorate, in Sbikha region in Kairouan Governorate and in the Korba and Haouaria regions of Nabeul Governorate.

It forms part of the Transmed pipeline, which runs north from the Hassi R’mel gas field in the Algerian desert all the way to Italy. Measuring 2,500 km in total, it crosses hundreds of kilometers of Tunisian territory. The pipeline, under the management of Italian company ENI, carries 34 million cubic meters through Tunisia each year. The Algerian gas it carries provides roughly 30% of Italy’s requirements.

1980 saw the establishment of the company Sergaz, with a capital of 99 million dinars ($32,000), under an agreement concluded on 25 October 1977, between the Tunisian government and the Italian Hydrocarbons Authority, ENI*. This was designed to provide technical management and maintenance of the pipeline, which is owned by the Tunisian state and managed by Trans-Tunisian Gas Pipeline Company, SOTUGAT*, part of the Tunisian Ministry for Industry, Mines and Energy. ENI has a 67% stake in Sergaz, while the Tunisian government owns 33%.

The Tunisian Company for Petroleum Activities, ETAP*, holds a third of the capital in Sergaz. SOTUGAT contracted out to Sergaz the management of land rents, technical management of the transporting of gas, and maintenance of pumping stations.

ENI entered into a gas transporting contract with the Tunisian party to carry gas through the first pipeline in 1977. A 30-year contract was concluded with farmers in early 1979. In 2009, the agreement between SOTUGAT and local landowners was renewed for a further 30 years up to 2039.

In 1991, an agreement was made covering a second trans-Tunisia pipeline following the same route as the first. In 2019, shortly before the agreement expired, it was renewed for a further ten years, to run up to 2029.

On 2 July 2019, the Tunisian government, then headed by Youssef Chahed, announced the renewal of the agreement covering the second trans-Tunisia gas pipeline. Under this agreement, a continuation of the two previous agreements of 1977 and 1991, a percentage of transported gas was earmarked for the benefit of Tunisia, amounting to about 500 million dinars (about $162 million) annually. This represented approximately an extra 41 million dinars (about 13.3 million dollars) in annual fees payable to the Tunisian state, in exchange for ENI’s use of the pipeline's transport capacity.

The Italian side assumed responsibility for maintenance, development and rehabilitation of pipeline equipment at a cost of approximately $160 million, about 490 million dinars, over a ten-year period. The Tunisian government announced that ENI would also be responsible for providing Tunisia with 3.8 million cubic meters of natural gas - 65% of the country’s annual consumption, which reached 5,634 thousand tons in 2021.

The Tunisian Electricity and Gas Company (the only government company providing electricity and gas in Tunisia) meets an important part of Tunisia’s natural gas requirements via this pipeline, and this also plays a vital part in securing the country’s electricity supply.

On the basis of this renewed agreement, and the increase in royalties paid by ENI to the Tunisian state, farmers with land along the pipeline route expressed their desire for an increase in land rental fees.

Demonstrations by farmers calling for increase in land rents

Farmers in Kasserine Governorate, across whose land the Algerian pipeline passes, have been waiting since late 2020 for the Trans-Tunisian Pipeline Company Sergaz to pay them the money due for the ten-year rental of their land. 

On 1 October 2021, a number of landowners in the province staged a demonstration outside the pumping station in El Garaa El Hamra, in the administrative district of Southern Kassrine, to demand payment of money owed to them.

They also demanded an increase in rental payments, since the annual amount paid per square meter was no more than 0.5 dinars ($0.16). It had been 0.13 dinars per square meter under the agreement relating to the first pipeline.

When asked, the spokesperson for the association of landowners on the gas pipeline route, Towfik Rahimi, said that this had been the first demonstration of its kind since the agreement between the Tunisian and Italian sides had come into effect. 

Rahimi also said that the landowners maintained that Sergaz had imposed this rental rate on them with no negotiation or consultation, and that they had hoped for a rate of at least 12 dinars per square meter, based on the placards they held up during the October  demonstration.

An attempt was made to examine the agreement between Tunisia and ENI. A request for a copy was submitted to the Tunisian Ministry of Industry, Energy and Mines, but it was declined. An official said the reason was that the relevant documents “were covered by a legal exemption, set out in Basic Law 24 No. 22 of 2016. This gives officials the right to reject requests under the freedom of information act, if this could harm national security, national defense or international relations.”

Ammar Nasri is a 63-year-old landowner in the Aouija region of Southern Kasserine. The two gas pipelines cross the land he and his brothers inherited from their father. Neither Ammar nor any of his brothers have a land rental contract with Sergaz for either of the two pipelines. Ammar, along with fellow members of the Landowners Association, is seeking to persuade the company to increase the rent, especially since most of them are living in difficult social circumstances.

“Sergaz imposed on us a price of 500 millimes ($0.16) per square meter for ten years through experts they had appointed. We do not know what criteria they used in setting this amount.”, says Ammar.

On 20 October 2021, a number of farmers from all districts of Kasserine Province, whose lands lie on the path of the pipeline, complained to the Tunisian Ministry of Industry, Energy and Mines and called on it to intervene to resolve what they called an “injustice committed against them” by the company.

The farmers pointed out that their contracts with Sergaz had expired and they had not received their due payment. They claimed that they had informed the company that the payment period had expired. The level of payments due to farmers varies according to the area taken up by the pipeline.

The farmers also complained of what they saw as a  “patronizing and belittling” behavior of the company, and its efforts to impose a “paltry and insulting” price of around 500 millimes ($0.16) per square meter per year. The farmers also demanded direct negotiations with the parent company (ENI), without intervention by a mediator or third party, under the supervision of the regional and national authorities concerned. They also called for “the land rental issue to be handled with transparency.”

This was not the first time farmers had complained to officials; it happened several times, but there has been no resolution.

In an interview, the then governor of Kasserine, Adel Mabrouk, was asked about the position of the governorate towards the farmers’ demands. He gave both a legal and a technical answer, saying the issue lies outside the authority of the governor, and that he had referred it to the local Sergaz officials.

These protests stem from what the farmers regard as the failure by the General Manager of Sergaz to keep the promises made to them during a visit to Kasserine Governorate in 2020. At that time, the General Manager of Sergaz undertook to modify the amount of rent, but without specifying a new figure, according to a release distributed to the press during the visit.

In 2022, Sergaz increased land rents from 0.4 dinars to 0.5 dinars, but this did not meet the aspirations of the landowners, who hoped for an increase to 12 dinars ($3.88) per square meter.

Regarding the criteria used for determining rental rates, the president and CEO of Sergaz, Moncef Matoussi, stated that "this was a matter for the court, which appointed experts that fixed the rental rate in 2021 at 500 millimes ($0.16), and there is no possibility of changing this."

The reporter requested the document or report produced by these experts based on which the level of rent was determined. However, the president and CEO of Sergaz responded that "this document could only be handed over in response to a court order because it was the sole preserve of the company management and could not be published."

Nevertheless, the reporter managed to obtain a copy of the contract held by one of the landowners in the Meghdoudech region of the Southern Kasserine district. This contract specified a payment of 292 dinars and 958 millimes ($95) for an area of 58 square meters for ten years, i.e., a pipeline passage rental fee of 500 millimes per square meter per year.

The total cost of rents paid by Sergaz to the Tunisian state for the entire length of one pipeline (from Feriana to Haouaria) was 70 million dinars ($22.7 million), according to the president and CEO of Sergaz. This included 60 million dinars ($19.4 million) earmarked for landowners and 10 million dinars ($3.24 million) for the expenditures of the Tunisian Electricity and Gas Company.

However, a report by the Commission for Industry, Energy, Natural Resources, Infrastructure, and Environment on the draft law relating to the approval of the agreement on managing the trans-Tunisian gas pipeline and related issues - No. 50 of 2019, regarding the rental cost of transporting capacity – states that the draft agreement includes the addition of an annual fee, estimated at $143 million dollars for a period of ten years, payable monthly to the Tunisian state in exchange for ENI’s exploitation of the pipeline’s capacity.

Meanwhile, ENI bears responsibility for the entire budget of the Trans-Tunisian Gas Pipeline Company (SOTUGAT) and the Sergaz service company.

Farmers grappling with maintenance issues

Mohammed Subhi, residing in the Southern Kasserine district, has observed cracks in the walls of the house he constructed on land intersected by the two gas pipelines. He attributes this damage, as well as issues with his well-operating equipment, to the pipelines.

Subhi's land, situated on a slope, experiences a diversion of water flow to the well that irrigates his land—construction of which he financed through a bank loan. The pipelines altered the natural direction of water, causing significant cracks in the ground. Consequently, water seeped into the well-operating equipment, leading to damage and the cessation of water pumping. This, in turn, resulted in the death of his olive and almond trees.

However, Noureddine Saeed, the official responsible for maintenance and safety at Sergaz, refutes any threat or adverse impact on land or houses from the pipeline. He emphasized that maintenance teams rigorously monitor the entire pipeline's length and the pumping stations, spanning from Feriana on the Algerian border to Haouaria on the coast.

Addressing concerns about regular tremors reported by local residents, Saeed attributed them to the installation of machinery for monitoring gas flow, pipe thickness, and integrity. In his perspective, while these machines induce vibrations, they pose no danger to residents. He acknowledged that citizens were seeking compensation from the company through various means.

Sergaz actively engages in maintenance operations as part of its responsibilities, overseeing the pipeline's operation and safety to safeguard it from potential threats. According to the president and CEO, the allocated budget for maintenance totals 100 million dinars annually ($32.4 million). This budget covers maintenance expenses, supplies, as well as transportation and operational costs associated with maintenance and monitoring.

Gas-Deprived Zones Along Pipeline Route

The first station for monitoring gas pumping is located in the Ouled Mazrouk area, part of the Feriana administrative district, and Tarabya in the Majel Bel Abbes district (on the Tunisian-Algerian border), according to local sources in Kasserine Governorate – the point where the gas pipeline enters Tunisian territory. Majel Bel Abbes is one of the country's poorest regions and the fourth most deprived in the area, with a poverty rate of 41.40%, as per the most recent figures published by the Tunisian National Institute of Statistics in 2020, as part of its poverty mapping in the country.

On October 18, 2021, several local residents and unemployed youths initiated an open-ended sit-in outside the monitoring station, advocating for social improvement and job opportunities. They also demanded that a portion of Sergaz's profits be allocated to regional development projects and for homes to be connected to the gas network.

The residents of Majel Bel Abbes and Southern Kasserine districts in Kasserine Governorate, through which the pipeline passes, are not connected to the domestic gas supply network. Consequently, they are compelled to seek bottled gas during winter, a situation contradictory to the fact that substantial amounts of natural gas traverse the province without benefiting its inhabitants.

According to the minutes of a 2015 meeting between Majel Bel Abbes residents and the former governor, Atef Boughattas, a project to supply the city with natural gas was decided upon but has yet to be implemented (as of the time of this report). While residents hold Sergaz responsible, the company's CEO contends that it is the responsibility of the Tunisian Electricity and Gas Company (STEG) to connect towns and cities to the gas supply. He attributes the delay to financial problems currently faced by the company (STEG).

Asked during an interview about about why some towns, like Majel Bel Abbes, lack natural gas despite existing programs and studies, Ferhani Hanainia, the director of the Tunisian Electricity and Gas Company (STEG) in the Kasserine region, stated that the cost of setting up a station, estimated at around four million dinars ($1.29 million), was excessive, given the small number of people in Majel Bel Abbes - no more than four or five - who had expressed the wish to have a natural gas connection service. This assertion is inconsistent with the number who signed the minutes of the meeting in 2015.

The company’s CSR Realities: Uneven Impact and Unfilled Spaces

During a visit to the province of Kasserine in 2021, Sergaz CEO Moncef Matoussi stated in a press release that, "for years preceding the enactment of the law on corporate social responsibilities, the company had been proactive in supporting development in areas along the trans-Tunisian pipeline. It has established sustainable development schemes in cooperation with local and regional authorities."

The same press statement explained that a second agreement had been reached between the company and Kasserine Governorate for the years 2020 and 2021. This agreement included supplying a number of areas on the route of the pipeline with natural gas and drinking water. The agreement covered various projects, including drilling a deep well in the Majel Bel Abbes region, at a cost of around 300,000 dinars ($101,000), and another well in the Ouled Khlifa region, costing around 200,000 dinars.

To verify the implementation of these schemes and assess the company's commitment to its corporate social responsibilities towards areas along the pipeline, a right-to-information request was submitted to the Department of Economic Affairs in Kasserine Province. The request aimed to obtain minutes of the meetings dealing with agreements made by Sergaz and the province of Kasserine between 1979 and 2021.

Additionally, reports were obtained, detailing loans earmarked by the company for Kasserine Province to fund projects, including drilling wells, connecting areas to the drinking water supply, and building security posts and schools.

The first of these reports, dated 29 March 2017, covers the creation of a deep well in the Ouled Mbarak area, at a cost of around 150,000 dinars, and connecting the village of Boukheil to the drinking water supply, at an approximate cost of 50,000 dinars.

The second report, issued on 26 September 2020, includes some of the same projects as the first report but adds a scheme to drill a deep well to supply the Ouled Khlifa area in Sbeitla district with drinking water, at an estimated cost of 200,000 dinars. The two documents, however, contain no projects for the Southern Kasserine region, which lies along the route of the gas pipeline.

When the Sergaz CEO was questioned about the exclusion of Southern Kasserine from the areas benefiting from these projects or being considered part of the company’s corporate social responsibilities (CSR), he clarified that determining the needs of each region was a collaborative effort between the company and officials in Kasserine Province. Regarding the number of wells that had not yet entered the 'usage phase,' despite being planned for years, the Sergaz CEO explained that the company's responsibility extended only to drilling the wells. The accompanying preparation and electrification work fell under the jurisdiction of the Regional Commission for Agricultural Development (CRDA).

The Regional Commission for Agricultural Development (CRDA), responsible for drilling wells and overseeing follow-up work, informed that the Ouled Mbarak well had been temporarily outfitted in 2022, with water tanks provided for people. However, it lacked a reservoir and electrification system, tasks estimated to cost about 30,000 dinars ($9,720).

Civil society activist Tawfik Khleifi from Ouled Khlifa had organized multiple protests demanding the supply of drinking water to the local residents who currently consumed polluted water, posing a health risk. He expressed disappointment, stating, 'We were happy to hear about the Sergaz projects, but not a single well has been drilled in our area. Instead, the focus of the projects has shifted elsewhere without any given reason.'

Accompanied by Tawfik Khleifi and local residents, the well site in the El Ghradeg region was visited. The observed well, drilled in 2021, lacked machinery or electrical connection, rendering it nonfunctional for water supply.

The head of the water department at CRDA acknowledged that the well had been drilled in El Ghradeg and assured that the necessary equipment would be arranged to bring water to Ouled Khlifa. He also highlighted the 'inadequacy of the local water table,' mentioning that a study had been prepared on equipment and electrification. The African Development Bank was expected to fund the process of equipping and electrification.

Gains for the State, no benefits for farmers in the Russia-Ukraine War

After the outbreak of the Russia-Ukraine war, leading the European Union to seek alternative gas pipelines outside Russia, there was a surge in Italian consumption of gas from Algeria. In May 2022, the Algerian petroleum company Sonatrach and the Italian company ENI signed a memorandum of understanding to boost the supply of Algerian gas to Italy through the Transmed pipeline. The agreement aimed to generate three billion cubic meters per year.

This development positively impacted the Tunisian state treasury. As per the Sergaz president and CEO, the state amassed $600 million in 2022, equivalent to two billion Tunisian dinars. Typically, the state would receive between 500 and 600 million dinars ($162 to $195 million). However, a report on the 2023 state budget reveals that income from the transit of Algerian gas reached about 1,537 million Tunisian dinars by the end of October 2022. Despite this increase directed to the state treasury, there has been no corresponding rise in rental payments.

Efforts were made to contact departments in the Tunisian Ministry of Industry and Energy to inquire about why some of these profits haven't been allocated for the benefit of farmers, landowners, or used in development projects in areas through which the gas pipelines pass. Despite repeated attempts, no responses were received to the phone calls.

As of June 2023, Tawfiq Rahimi and several landowners, particularly residents of the Southern Kasserine and Feriana districts, are still awaiting rental payments for their land. They have also expressed their rejection of the rental rates imposed by Sergaz.

Rahimi explained that the Landowners Association had written to President Kais Saied, urging direct intervention to resolve the issue, but they are yet to receive a response.

This situation unfolds as ENI expresses its intent to terminate its involvement with Tunisia in exploration and production due to limited reserves in the country, according to Moncef Matoussi, CEO of SOTUGAT and Sergaz.

On January 10, 2023, ENI officially transferred 49.9% of its stake to the Snam Gas Group. Both companies will jointly manage gas transportation through a new entity called SeaCorridor, securing the gas transportation process from Algeria to Italy moving forward.