Heat the vegetable oil in a large skillet over medium heat, and cook and stir the green and red peppers until tender, about 10 minutes. Remove the peppers from the pan and set aside.

Place the steak strips into the skillet with the grated onion, and cook and stir for about 10 minutes, until the steak is evenly browned and no longer pink inside. Return the cooked peppers to the skillet, and stir in tomatoes, water, and sugar. Sprinkle with salt and pepper to taste.

Simmer over low heat for 45 minutes to 1 hour, stirring occasionally, until the steak is tender and the sauce has thickened.