| 23 Feb 2007 |
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Energizing Morocco with a new energy plan
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December 2006
Desert kingdom turns to wind, partial privatization for needs
At the end of 2006, Morocco signed five new agreements designed to mitigate the kingdom's reliance on foreign sources of energy and to lessen the fiscal burden of rising costs.
A conference in late October on the outskirts of Rabat, entitled "Stakes, Challenges and Strategy of Morocco's Energy Policy," brought together government officials and private sector professionals, as well as international experts. Initiating the first national debate of its kind, the conference focused on security of supply, sources, renewable energy and efficiency.
At the conference, Prime Minister Driss Jettou highlighted the main planks of the government's liberalization strategy, saying that the government's objective was to diversify the sources of energy, pursue the liberalization of the sector and find mechanisms to cope with the impact of high hydrocarbon prices on the domestic economy, and thus on the state budget.
In the context of high prices for hydrocarbons, these issues have become all the more pressing. Consuming over 12.3 million tons of oil equivalent (TOE) a year, the economy relies on imported oil for 61.6% of its energy needs, which cost $3.85 billion in 2005. Morocco relies on foreign markets to supply 95% of its energy needs.
Rising demand for electricity, which grew by 8.8% in 2005, is contributing to the steep energy bill footed by the public sector. Figures from the National Office of Energy (ONE) indicate that demand for electricity is expected to grow by 8% a year through 2012, spurred by the rural electrification program (PERG) which should be finalized in 2007.
Wind farm development
This rising demand for electricity will require a total investment by the public and private sectors of some $1.15 billion a year in production, transport and distribution of electricity.
One of the agreements concluded this week focused on energy efficiency in rural areas, with a contract awarded to Philips Lighting due to their low-consumption lights.
Meanwhile, discussions in Rabat centered around renewable energy. The construction of a new 40MW capacity wind farm in Laâyoune, Western Sahara, was granted to Ciments du Maroc, one of the leading cement and construction contractors in the country. The construction should be concluded during 2007.
This new project will complement the existing electric plant in Tetouan, as well as two wind farms in Tanger and Essaouira that came online in 2006. And, as a sign of things to come, the launch of a thermo-solar plant in Ain Beni Mathar--the biggest in Africa--is set for 2007-8.
The wind farm in Tanger and the hydro-electric complexes of Khenifra and Ain Bani Mathar are pilot projects, announced Mohammed Boutaleb, the minister of energy and mining, to the conference.
The framework for cooperation between the Ministry of Energy and Mining, the Ministry of Agriculture and the Ministry of Labor and Training is included in the new National Program for the Development of Renewable Energies and Energy Efficiency.
Renewable energy investment
In a rapidly-evolving global market for renewable energy with a turnover of $51 billion in 2005, some commentators see Morocco as a relative late-comer to the sector. This has spurred the kingdom to announce an ambitious plan to increase the contribution of renewable energies to 10% of total energy consumption, up from the present 1%.
Alternative energy sources are set to account for over 7GWh (GW per hour) by 2012, including a 2.25GWh contribution from hydro-electric power. This will reduce the reliance on imported oil to 46% by 2012.
The 2007 budget includes a provision for the reduction of VAT for companies relying on renewable sources of energy.
The reduction in VAT from 20% to 7% will help to encourage investment in this sector, said Boutaleb. This will stimulate Small and Medium Enterprises (SMEs) and Industries (SMIs) to increase consumption of these types of energy.
Liberalization of the electricity sector does not, however, entail privatization of ONE, at least not in the foreseeable future. The minister of energy and mining emphasized a two-tiered structure for the supply of electricity in the coming years. Only medium and larger consumers will be able to choose their suppliers, while smaller customers will continue to rely on ONE provisions.
Although an eventual transformation of the public ONE into a private company, with the spinning off of its different activities, has been discussed, Boutaleb emphasized that it will not take place in the medium term.
© Executive 2006
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