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AFRICAN DEVELOPMENT BANK
OUARZAZATE SOLAR COMPLEX PROJECT - PHASE II (NOORo II AND
NOORo III POWER PLANTS)
COUNTRY : MOROCCO
PROJECT APPRAISAL REPORT
ONEC
November 2014
Translated Document
Table of contents
Currency Equivalents ............................................................................................................................... i
Acronyms and Abbreviations .................................................................................................................. ii
1. STRATEGIC THRUST AND RATIONALE ............................................................................. 1
1.1 Project Linkages to Country Strategy and Objectives .................................................................... 1
1.2 Rationale for Bank Involvement ..................................................................................................... 2
1.3 Aid Coordination ............................................................................................................................ 2
2. PROJECT DESCRIPTION ......................................................................................................... 3
2.1 Project Description and Components .............................................................................................. 3
2.2 Technical Solution Adopted and Alternative Solutions Explored .................................................. 3
2.3 Project Type .................................................................................................................................... 4
2.4 Project Cost and Financing Arrangements...................................................................................... 4
2.5 Project Area and Beneficiaries........................................................................................................ 6
2.6 Participatory Approach for Project Identification, Design and Implementation ............................ 6
2.7 Bank Group Experience and Lessons Reflected in Project Design ................................................ 7
2.8 Key Performance Indicators ........................................................................................................... 7
3. PROJECT FEASIBILITY ........................................................................................................... 7
3.1 Economic and Financial Performance ............................................................................................ 7
3.2 Environmental and Social Impact ................................................................................................... 8
4. PROJECT IMPLEMENTATION ............................................................................................. 11
4.1 Implementation Arrangements ..................................................................................................... 11
4.2 Monitoring .................................................................................................................................... 15
4.3 Governance ................................................................................................................................... 16
4.4 Sustainability ................................................................................................................................ 16
4.5 Risk Management ......................................................................................................................... 16
4.6 Knowledge Building ..................................................................................................................... 17
5. LEGAL FRAMEWORK ............................................................................................................ 17
5.1 Legal Instrument .......................................................................................................................... 17
5.2 Conditions Associated with Bank Involvement ............................................................................ 18
5.3 Compliance with Bank Policies .................................................................................................... 19
6. RECOMMENDATION .............................................................................................................. 19
Annex I. Comparative Socio-economic Indicators of Morocco
Annex II. Table of AfDB Portfolio in the Country (May 2014)_Toc402972212
Annex III. Major Related Ongoing Projects Financed by the Bank and Other Development Partners of Morocco
Annex IV. Map of the Project Area
Annex V. Note on the Moroccan Solar Programme and on the Implementation of Phase I
i
Currency Equivalents May 2014
UA 1 = 12.56643 MAD UA 1 = 1.11891 EUR UA 1 = 1.54969 USD EUR 1 = 11.23096 MAD USD 1 = 8.10900 MAD EUR 1 = 1.38500 USD
Fiscal Year 1st January – 31st December
Weights and Measures
1 kilometre (km) = 1,000 m 1 km² = 1,000,000 m² 1 hectare (ha) = 10,000 m² 1 ton = 1,000 kg 1 kilojoule (kJ) = 1,000 Joule (J) 1 kilovolt (kV) = 1,000 Volt (V) 1 kilovolt-Ampere (kVA) = 1,000 Volt – Ampere (VA) 1 kilowatt (kW) = 1,000 Watt 1 megawatt (MW) = 1,000,000 W = 1,000 kW 1 Gigawatt (GW) = 1,000,000 kW = 1,000 MW 1 kilowatt-hour (kWh) = 1,000 Watt-hour = 3,600,000 Joules (J) 1 megawatt-hour (MWh) = 1,000,000 Wh = 1,000 kWh 1 gigawatt-hour (GWh) = 1,000,000 kWh = 1,000 MWh 1 ton of oil equivalent (TOE) = 41,868 Joules = 11,630 kWh 1 million ton of oil equivalent (MTOE) = 1,000,000 TOE
ii
Acronyms and Abbreviations
AFD French Development Agency AfDB African Development Bank AFESD Arab Fund for Economic and Social Development BD Bidding documents CSP Country Strategy Paper CTF Clean Technologies Fund EBRD European Bank for Reconstruction and Development EDF Energy Development Fund EIB European Investment Bank ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan EU European Union HV High Voltage ICB International Competitive Bidding IGF General Inspectorate of Finance JBIC Japan Bank for International Cooperation KFW KreditanstaltfürWiederaufbau KSI Key Sector Indicators LV Low Voltage MAD Moroccan Dirham MASEN Moroccan Agency for Solar Energy MEF Ministry of the Economy and Finance MENA Middle East and NorthAfrica MIC TAF Middle-Income Country Technical Assistance Fund MMEE Ministry of Energy, Mines, Water Resources and the Environment NIF Neighbourhood Investment Facility (of the European Union) OFID OPEC Fund for International Development ONEC Department of Energy, Environment and Climate Change ONEE National Electricity and Water Authority (Morocco) OPsCOM Operations Committee (of the Bank) PPP Public-Private Partnership SIE Energy Investments Corporation SME Small and Medium-sized Enterprises TFP Technical and Financial Partners TOE Ton of Oil Equivalent UA Unit of Account USD United States Dollar WB World Bank
iii
Project Information Sheet
Borrower: Kingdom of Morocco
Executing Organ: Moroccan Agency for Solar Energy (MASEN)
Avenue Al Araar, Immeuble Extension CMR,
3rd Floor, Hay Riad; 10000 Rabat- Morocco
Fax: +212 537 57 14 75; http://www.masen.org.ma/
Financing Plan Sources Amount (EUR
million)
Amount (in UA
million)
Instrument
AfDB 100 89.37 Loan
CTF-ADB 85.92 76.79 Loan
CTF-World Bank 85.92 76.79 Loan
World Bank 216.60 193.58 Loan
EIB 350 312.80 Loan
AFD 50 44.69 Loan
KFW 654 584.50 Loan
NIF/EU 90 80.44 Grant
MASEN and Private Partners 264 235.94 Equity capital
Total 1 896.44 1 694.90
Comprising project costs (including
infrastructure and contingencies)
1 752.04 1 565.85
and operational support1 144.40 129.05
Key Financial Information of the AfDB
AfDB Loan CTF Loan
Loan currency Euro (EUR) United States dollar (USD)
Interest Type Floating base rate with a free fixing
option
Not applicable
Base rate (floating) 6-month EURIBOR Not applicable
Contractual margin 0.60% (60 base points (bp)) Not applicable
Funding margin
The Bank’s cost of borrowing relative
to six-month EURIBOR. This margin
is reviewed every 1st January and 1st
July
Not applicable
Service commission Not applicable 0.25% per year of the disbursed loan
amount not yet reimbursed
Administrative costs Not applicable 0.1% of the undisbursed amount taking
effect 120 days after signature date,
payable every six months
Other Fees None None
Maturity 20 years 40 years
Grace period 5 years 10 years
Timeframe – Main Milestones (expected)
Activities Date
Approval of concept note April 2014
Negotiation of loan agreements October 2014
Board presentation December 2014
Effectiveness December 2014
Last disbursement 31 December 2019
Project completion June 2018
Last reimbursement (AfDB loan) December 2034
Last reimbursement of CTF loan December 2054
1 This amount is the World Bank's financing support contribution to the operation of the NOORo II and III power plants.
iv
Project Summary
General Overview of Project: This project is Phase II of the Ouarzazate Solar Complex,
scheduled to be fully commissioned in 2017 to satisfy national needs. Phase I is underway and
comprises the construction of all common infrastructure and the first 160 MW solar power plant
(NOORo I) that will be operational at the end of 2015. The objective in Phase II is to achieve a
capacity of approximately 500 MW by developing two power plants (NOORo II and NOORo
III) under a public-private partnership (PPP), as was done for NOORo I. Thanks to the project,
the emission of approximately 522,000 tons of CO2 will be avoided, thus helping to mitigate
the effects of climate change. The Ouarzazate Complex is part of the Moroccan Solar
Programme to develop a capacity of 2000 MW by 2020. The project will help to ensure regular
energy supply for the population (over 98% of which have access to electricity) and productive
sectors. It will be implemented by MASEN and its estimated total cost is EUR 1,752 million.
Apart from the Bank and CTF, the other partners are AFD, World Bank, EIB, KFW and EU.
Needs Assessment: Morocco has limited fossil fuel resources and depends heavily on external
markets (95%) to satisfy its energy needs. The priority of the new 2010-2030 energy strategy
is to achieve regular energy supply within the country. This strategy seeks to diversify energy
sources by developing renewable energies with a view to raising their share in the electricity
mix to 42% in 2020 (13% in 2013). Over the 2002-2012 period, electricity needs grew by an
average of 7.2% annually, driven by economic growth, population growth as well as a rise in
living standards and the Global Rural Electrification Programme (PERG). In 2013, electricity
demand reached 32,000 GWh and was satisfied with energy generated from fossil fuels (70%),
hydro power (9%), wind energy (4%) and imports (17%). Demand for primary energy is
projected to triple and electricity demand to quadruple between 2010 and 2030 when it is
expected to reach 96,000 GWh, thus requiring a production capacity of 12,000 MW compared
to 6,892 MW in 2013.
Bank’s Value-added: The Bank supported Morocco by raising concessional climate resources
for the project under the CTF Investment Plan for concentrated solar thermal power technology
in the MENA region. The workshop to update this plan, held in April 2014 in Morocco, was
co-organized with the Bank. The Bank also helped to prepare the documents which enabled the
CTF Trust Fund Committee in June 2014 to: (i) approve the revised CTF Investment Plan for
the MENA region; and (ii) grant USD 238 million for this project. The project will strengthen
the Bank's role within Morocco's energy sector and especially in renewable energies, thereby
contributing to the green growth of the Moroccan economy.
Knowledge Management: The project is one of the Bank's innovative operations in the energy
sector, given the focus area, the technology used (high-capacity concentrated solar thermal
power plants with a capacity to store thermal energy for more than five hours) and the financial
arrangements made (electrical power generation through a PPP supported by several donors).
The knowledge to be capitalized through the project2 will enable Morocco and the other
Regional Member Countries of the Bank to better design and leverage opportunities for
replication. Data from the solar plants and the statistical reports that will be generated through
plant operation will provide specialized institutes and centres with reliable data for research and
development. Mission supervision, project progress, financial audit and completion reports will
provide information on the project.
2 The project introduces thermodynamic solar power technology and mechanisms that can store energy for over 5 (five) hours.
v
Results-based Logical Framework
Country and project name: Kingdom of Morocco – Ouarzazate Solar Complex – Phase II (NOORo II & III power plants) Project objective: Reduce Morocco's energy dependence on external markets by developing renewable energies.
RESULTS CHAIN PERFORMANCE INDICATORS
Means of
Verification RISKS AND MITIGATIVE MEASURES
Indicator (including ISCs)
Baseline
Situation Targets
IMP
AC
T
Energy dependence reduced
Increased share of renewable energies
in electricity generation
- volume of fuel imports avoided thanks to the
Moroccan Solar Programme
- % of renewable energies in total electricity supply
-
13% (2013)
2.5 million TOE
from 2020
42%(2020)
Reports: MMEE
MASEN
ONEE
OU
TC
OM
ES
Green house gas emissions avoided
More electricity generated from renewable energy sources
Effective industrial development in the solar energy sector
Jobs created
- Volume of green house gas emissions avoided
annually - Share of national electricity generated from
renewable sources - Industrial integration rate of the project - Jobs created during operation of the power plants
- Jobs created during construction of the power plants
-
4 345 GWh
(2013)
-
-
-
522 T/CO2
(2018)
5 501 GWh
(2019)
35%(2018)
200
1600
Reports:
MMEE
MEF MASEN
ONEE
Financial risk related to the difficulties that MASEN could have in financing
the gap between the purchase price per kWh from solar power station project
companies and the selling price to ONEE.
Risk Mitigation: The professed and constantly renewed commitment of the State to support the solar programme, including through sector reforms,
subsidies and the participation of certain donors in financing the gap. In this
regard, a specific agreement between the State and MASEN was signed for each power plant in order to ensure the financial balance of the project.
OU
TP
UT
S
Increased national capacity to
generate electricity from solar sources
Concentrated solar thermal electricity
power plants constructed
Specific agreements signed
Project companies created
- Total installed capacity of solar power stations
- 200 MW solar power plant with reflectors (NOORo
II)
- 150 MW tower solar power plant (NOORo III)
- Specific agreement between the State and MASEN -
NOORoII) - Specific agreement between the State and MASEN -
NOORoIII)
- Project company - for NOORo II solar power plant
- Project company - for NOORo III solar power plant
22 MW
(2013)
- - - - - -
372 MW (2018)
01 (2018)
01 (2018)
01 (2015)
01 (2015)
01 (2015)
01 (2015)
Reports:
Appraisal report Progress report
Status report Supervision report Completion
report
Risk that MASEN may be unable to successfully monitor the power plants
given the relatively high number of plants it will have to supervise between 2015 and 2016. Mitigation: The quality of MASEN staff which has been
enhanced and support from its technical advisers. Risk that private developers may not be able to honour their commitments
during construction and operation of the power stations. Mitigation: Selection of developers through international competitive bidding which takes experience
and financial capacity into account.
KE
Y A
CT
IVIT
IES
Components Resources (EUR 1,896.44 million) Expenditure (EUR 1,896.44 million)
1. Energy Infrastructure: NOORo II solar power plants (parabolic trough) and NOORo III (tower), including site development, solar farms and towers, electric power plants, evacuation of electricity, thermal energy storage facilities, heat energy transfer systems,
cooling systems, environmental and social measures, technical assistance, engineering and development, works control and
supervision, project administration and management, audit of project financial statements, monitoring and evaluation. 2. Operational Support: Coverage of the differential between the production cost of 1 kWh of solar energy and its selling price
to ONEE.
AFD loan
AfDB loan
EIB loan
WB loan
CTF Loan KFW loan
NIF/EU grant
MASEN and
private concerns
EUR 50 million EUR 100 million EUR 350 million
EUR 216.60 million
EUR 171.84 million
EUR 654 million
EUR 90 million
EUR 264 million
Infrastructure: EUR 1,752.04 million Operational Support: EUR 144.40 million
1
REPORT AND RECOMMENDATIONS OF BANK GROUP MANAGEMENT TO THE
BOARD OF DIRECTORS CONCERNING A PROPOSAL TO AWARD AN AfDB LOAN
AND A CTF LOAN TO MASEN (MOROCCO) TO FINANCE THE OUARZAZATE
SOLAR COMPLEX PROJECT - PHASE II (NOORo II AND NOORo III)
Management submits this report and recommendations on proposals to award (i) an AfDB loan
of EUR 100 million; and (ii) a CTF loan of USD 119 million to MASEN, to finance the
Ouarzazate Solar Complex Project (NOOR Ouarzazate) -Phase II (NOORo II and NOORo III
power plants).
1. STRATEGIC THRUST AND RATIONALE
1.1. Project Linkages to Country Strategy and Objectives
1.1.1. For several years now, Morocco has embarked on a vast reform programme to lay the
foundation for rapid and balanced growth that can revive economic activity and reduce
unemployment. The Economic and Social Development Programme (2012-2016) is based on
broad strategic reforms and sector policies pertaining to major infrastructure projects. It seeks
to address the competitiveness challenge and preserve Morocco's macroeconomic viability in
order to generate sustained and inclusive growth that can sustainably improve the living
conditions of the people. Programme guidelines in the electricity sub-sector are essentially
geared towards diversifying production sources and ensuring respect of the environment.
1.1.2. Morocco has a limited fossil fuel resources and depends heavily on external markets
(over 95%) to satisfy its energy needs. Energy supply is a priority of the new national energy
strategy adopted in March 2009. To achieve this goal, there is need to diversify production
sources by the renewable energy potential so as to raise its share in electricity production to
42% in 2020. The scheduled actions include the development of 4,000 MW through two
integrated solar energy (2,000 MW) and wind energy (2,000 MW) programmes which were
officially launched in November 2009 in Ouarzazate and in June 2010 in Tangier, respectively.
In implementing these two programmes, the Government also expects positive externalities
such as the creation of a new job-creating industrial sector for the manufacture of solar
equipment. This accounts for its commitment and the subsidies granted. To promote the
development of new renewable energies, a new legislative framework was defined by Law No.
13-09 promulgated in February 2010, which recognizes the right of private developers to
generate electricity from renewable sources for a consumer or group of consumers connected
to the electricity power grid. Besides, Morocco intends to promote regional energy integration
by exporting renewable energy to Europe in the long term.
1.1.3. The first power plant (NOORo I) of the NOOR solar programme is under construction
on the Ouarzazate site and should be operational at the end of 2015. The project is Phase II of
development of the Ouarzazate complex which is also part of the national plan for the
procurement of electrical power generation equipment (2013-2017) that will help to satisfy
national electricity demand which grew by an annual average of 7.2% over the 2002-2012
decade. Demand for primary energy is projected to triple while demand for electricity should
quadruple by 2030. The project is central to the Bank's CSP (2012-2016) for Morocco whose
Pillar II focuses on supporting the development of green infrastructure. The project will also
help to attain the targets of CSP Pillar I which focuses on social inclusion. Indeed,
implementation of the project will increase electricity supply to all Moroccan households,
including those in rural areas where 98% of households have access to electricity. Lastly, the
project is expected to generate a new job-creating industrial sector for the manufacture of solar
power plant equipment. During construction and the 25 years of operation of the project's power
plants, several hundreds of jobs will be created.
2
1.2. Rationale for Bank Involvement
1.2.1. Several reasons justify the Bank's involvement in this operation, the first one being the
project's alignment with the Bank's CSP (2012-2016) priorities for Morocco. The project will
make possible the construction of two solar electricity power plants which will generate 1,100
GWh/year on average, or close to 4% of Morocco's electricity consumption in 2013. Thanks to
the project, the emission of 522,000 tons of CO2 per year (compared to fossil fuel-fired electrical
power plants) will be avoided. The second reason is the project's consistency with the Bank's
2013-2022 Ten-Year Strategy. The project is aligned with the operational pillar of the Ten-year
Strategy focused on developing sustainable infrastructure capable of improving energy security.
The third reason is the project's consistency with the Bank's Energy Sector Policy which seeks
to support Regional Member Countries in their efforts to offer modern and eco-friendly energy
services to their citizens and productive sectors.
1.2.2. The Bank's intervention is also justified by the fact that the project is Phase II of the
Ouarzazate solar complex whose first phase is being implemented with the financial support of
the Bank and other donors, and it is these same financial partners who have been solicited once
again. The Bank's involvement will strengthen its position as one of the leading development
partners in Morocco which is, in turn, the Bank's leading client in terms of portfolio volume.
Furthermore, the Bank, jointly with the World Bank, has already mobilized concessional
resources amounting to USD 238 million from the CTF for this project. Consequently, it has
the responsibility, as the executing organ of the CTF, to ensure the effective mobilization of
50%3 of this allocation which was approved on 27 June 2014 by the CTF Trust Fund
Committee; this will further enhance the Bank's already dominant role in the global fight against
the effects of climate change. Besides, there is complementarity between the project and certain
ongoing Bank-financed operations in Morocco's energy sector. A clear case is the electricity
transmission and distribution network development project under which are being constructed
two of the three electric lines which would evacuate and transmit all the electricity generated
by the Ouarzazate solar complex.
1.3. Aid Coordination
1.3.1. The technical and financial partners (TFPs) in Morocco consult each other regularly
through thematic meetings and sector work groups on water and sanitation, energy,
environment, education, health and migration. Regular consultations among TFPs help to
guarantee the synergy and complementarity of the various operations. Since it was opened in
2006, the AfDB country office in Morocco has played a key role in consolidating dialogue with
the Government and other development partners. Under the current project, 5 (five) TFP
consultative meetings were organized between December 2012 and May 2014, which enabled
the TFPs to coordinate and harmonize their actions.
1.3.2. In an attempt to enhance aid coordination among TFPs, the Government established
the Geographical Information System (GIS) used to monitor various operations by region,
sector and amount in real time. The GIS is managed by a steering committee composed of the
Ministry of the Economy and Finance and TFP focal points. Morocco's five leading financial
partners, apart from the Bank, are France, World Bank, European Union and the European
Investment Bank (EIB) with respective commitment levels ranging from EUR 1.9 to 2.2 billion.
Total TFP commitments are almost MAD 140 billion, or over EUR 12 billion, of which
approximately 10% is allocated to electricity projects.
3 The Bank and the World Bank will each mobilize USD 119 million from the CTF to finance the project.
3
2. PROJECT DESCRIPTION
2.1. Project Description and Components
2.1.1. The project seeks to boost Morocco's economic and social development, by using eco-
friendly approaches to build national capacity to generate electricity from clean sources. It
focuses on constructing two concentrated solar thermal power stations with a total capacity of
approximately 350 MW and a cumulative average output of over 1,100 GWh/year. These are a
200 MW parabolic trough power plant (NOORo II) and a 150 MW solar tower power plant
(NOORo III). Each power plant will have a thermal energy storage mechanism that can function
at full capacity for at least 5 (five) hours so as to enhance injection of the output into the
electricity mix especially at peak hours which in Morocco range from 5 p.m. to 10 p.m. in
winter and from 6 p.m. to 11 p.m. in summer.
2.1.2. The NOOR Ouarzazate site is one of the first sites identified for the Moroccan Solar
Programme with a minimum of 2000 MW (NOOR) which is integrated into the CTF Investment
Plan for the MENA region. This plan is aimed at developing concentrated solar thermal power
plants with a total cumulative capacity of 1 gigawatt. Given its solar radiation level of over
2,400 kWh/m2/year (6.6 kWh/m2/day), the Ouarzazate site is ideal for concentrated solar
thermal power plants. The first phase of the complex is under construction and comprises
construction of a the first 160 MW concentrated parabolic trough solar thermal power plant
(NOORoI) and common infrastructure (access roads, water and electricity supply,
telecommunications, security). The current phase comprises a main energy infrastructure
component (NOORo II and NOORo III power plants) as detailed in the table below:
Table 2.1 : Project Components
No. Name of
Component
Cost (in EUR million) Description of Components
NOORo
II
NOORo
III
Total
A Energy
Infrastructure
1 009 743.04 1 752.04
NOORo II parabolic trough power
plant with a capacity of approximately 200 MW,
a five-hour thermal storage mechanism and an
output of 600 GWh/year.
NOORo III tower power plant with a
capacity of approximately 150 MW, a five-hour
thermal storage mechanism and an output of 500
GWh/year.
Works control and supervision. Total 1 009 743.04 1 752.04
2.1.3. Furthermore, as was the case in Phase I, the current phase comprises an "Operational
Support" component, in addition to energy infrastructure construction. This component was
designed in order to raise resources from financial partners to cover part of the gap between the
price per kWh generated and the selling price to ONEE, during operation of the NOORo II and
NOORo III power plants.
2.2. Technical Solution Adopted and Alternative Solutions Explored
2.2.1. Given the level of mastery of the two variants of concentrated solar thermal power
plants currently developed worldwide (parabolic trough variant and solar tower variant),
MASEN opted to build the NOORo III power plant using solar tower technology to supplement
the NOORo I and NOORo II power plants which will use parabolic trough technology.
However, MASEN conducted comparative studies on these two variants with regard to the
cooling systems that can be used: dry cooling (air) or wet cooling (water). After conclusion of
these studies, it was decided that dry cooling will be used for two of the project's power plants
(NOORo II and NOORo III), rather than wet cooling used for NOORo I. The dry cooling system
4
will make it possible to save 3.6 million m3 of water annually, which is a substantial quantity
in an arid region like Ouarzazate.
2.2.2. The alternative technological option considered by MASEN for the NOORo II and
NOORo III power plants is photovoltaic technology which was not adopted at this stage mainly
because of its inability to satisfy demand at peak hours.
2.3. Project Type
The project is an autonomous investment operation executed under an electricity
production PPP that will be supported by the Bank, CTF and other donors (AFD, EIB, World
Bank, KFW and EU/NIF). The financing instruments proposed comprise an AfDB loan and a
CTF-AfDB loan to be awarded to MASEN and guaranteed by the State of Morocco. MASEN
is a State-owned limited liability company established in March 2010 to manage the Moroccan
Solar Programme (NOOR Programme). Its equity capital is shared equally between the State,
the Hassan II Fund for Economic and Social Development, ONEE and SIE. Its social goal, as
defined in Law No. 57-09 of 11 February 2009 to establish the company, is to develop a
Programme of integrated projects for the generation of electricity from solar energy, with the
aim of achieving a total capacity of at least 2000 MW by 2020. To cover part of the investment
expenditure for the project's power plants, the funds to be loaned to MASEN by financial
partners will be retroceded to two project companies that will be created: one for NOORo II
and the other for NOORo III. Each project company will be owned by a private consortium to
be selected through a bidding process (75%) and by MASEN (25%). MASEN will be the sole
purchaser of the electricity generated by the power plants. It will sign electricity purchase and
supply contracts with each of the project companies and two resale contracts with ONEE.
2.4. Project Cost and Financing Arrangements
2.4.1. The total project cost net of taxes and customs duties is estimated at EUR 1,752.04
million, comprising EUR 1,138.83 million in foreign exchange (65%) and EUR 613.21 million
in local currency (35%)4. Its distribution per power plant is EUR 1,009 million for NOORo II
and EUR 743.04 million for NOORo III. This cost includes an overall provision of about 9%
(of which 4.5% for operational contingencies and 4.5% for price escalation). The detailed costs
are presented in the tables below. The conversion rates used are indicated on page (i).
Table 2.3: Cost Estimates by Component (in EUR million)
Component Cost in F.E
Costs in local
currency
Total cost % foreign
exchange
Energy Infrastructure 1 030.90 555.10 1 586.00 65%
Total baseline cost 1 030.0 555.10 1 586.00 65%
Provision for physical
contingencies
53.96 29.06 83.02 65%
Provision for price escalation 53.96 29.06 83.02 65%
Total project cost 1 138.82 613.22 1 752.04 65%
2.4.2. Apart from the Bank and CTF, the project will be co-financed by 5 (five) other donors,
private developers and MASEN.CTF resources will be mobilized by the Bank and the World
Bank. Bank financing will comprise an AfDB loan of EUR 100 million and a CTF loan of USD
119 million.
4 This distribution is done based on Bank estimates, taking into consideration the industrial integration target.
5
Table 2.4: Project Financing Sources (in EUR million)
Financing Sources F.E. Local Currency Total % total
AfDB loan 65.00 35.00 100.00 5%
ADB-CTF 55.85 30.07 85.92 5%
Bank Group Sub-Total 120.85 65.07 185.92 10%
AFD 32.50 17.50 50.00 3%
EIB 227.50 122.50 350 .00 18%
World Bank-Loan5 46.93 169.67 216.60 11%
World Bank-CTF 55.85 30.07 85.92 5%
KFW 425.10 228.90 654.00 34%
EU-NIF6 58.50 31.50 90.00 5%
MASEN and private developers 171.60 92.40 264.00 14%
Sub-total for other co-financiers 1 017.98 692.54 1 710.52 90%
Total financing 1 138.82 757.62 1 896.44 100%
Comprising project cost (energy
infrastructure: NOORo II and
NOORo III)
1 138.82 613.22 1 752.04 65%
And operational Support - 144.40 144.40 -
2.4.3 Borrowings from the various donors will be in foreign exchange. The foreign
exchange/local currency distribution is indicative based on a rate of 35% to reflect the fact that
part of the project costs will executed in local currency. All donor and CTF financing will be
allocated to energy infrastructure (NOORo II and NOORo III power plants), except part of
World Bank financing (EUR 114.4 million) that will be used to cover part of the g between the
production cost per kWh and the selling price (operational support). 2.4.4. Project cost by expenditure category is presented as follows:
Table 2.5: Cost by Expenditure Category
Expenditure
Categories
In EUR million
Cost in F.E Costs in local currency Total cost % Foreign
exchange
Works 1 138.82 613.22 1 752.04 65%
Total project cost 1 138.82 613.22 1 752.04 65%
2.4.5. The provisional project expenditure schedule by component is as follows: Table 2.6: Expenditure Schedule by Component (in EUR million) Component 2015 2016 2017 2018 2019 Total Energy Infrastructure 350 525 525 177 175.04 1,752.04
Total Project Cost 350 525 525 177 175.04 1,752.04
2.4.6. Bank financing will be allocated to investment spending on NOORo I and III. The
breakdown below is indicative and will be final once the investment budgets have been
determined at the end of the developer selection process.
Table 2.7: Bank Group Financing (in EUR million)
Financing Expenditure
category
Power
plants
F.E. Local
currency
Total % Foreign
exchange
AfDB Works NOORo II 46.80 25.20 72.00 65%
NOORo III 18.20 9.80 28.00 65%
AfDB Total - - 65.00 35.00 100.00 65%
CTF-AfDB
Works NOORo II 32.50 17.50 50.00 65%
NOORo III 23.35 12.57 35.92 65%
Total CTF/AfDB - - 55.85 30.07 85.92 65%
5 World Bank loan intended for operational support (price differential of kWh) 6 Subsidy (Grant) from the Neighbourhood Investment Facility (NIF) of the European Union.
6
2.5. Project Area and Beneficiaries
2.5.1. The project will be implemented on the Ouarzazate solar complex (3000 ha) whose
land, selected on the TamzaghtenIzerki site belongs to the Ait Ougrour Tondout ethnic
community (Ghessate rural council area). This site is situated 10 km from Ouarzazate town
along National Highway No. 10 which leads to Errachidia. The project beneficiaries will be the
Moroccan population, Moroccan businesses and all productive sectors (industries, transport,
agriculture, etc...) which benefit not only from better electricity supply but also from cleaner
electricity. Locally, the project will generate socio-economic fallouts for Ouarzazate province
which has a population of approximately 583,000 inhabitants and a poverty rate of almost 23%.7
The region's human development index is one of the lowest in the country (0.371) and more
than two-thirds of the unemployed are youths (particularly graduates) under the age of 35
years.8 Problems of inclusion have a significant gender aspect. In the project area (rural), there
is still a gender deficit in formal education, access to employment, land tenure and decision-
making. At the national level, the project is expected to trigger the development of an industrial
sub-sector devoted to the manufacture of solar power plant equipment. To that end, future
developers of the NOORo II and NOORo III power plants are encouraged to include proposed
measures for local industrial integration in their bids. 2.5.2. It is projected that 1,600 direct jobs will be created on average per year during
construction works on the NOORo II and NOORo III power plants. Unskilled labour will
essentially be recruited locally. Besides, it is stated in the bidding documents that future
developers should strive to promote local employment as was done for the NOORo I power
plant which, in twelve months of construction works, generated over 500 jobs on average per
month, of which 45% went to locals from Ouarzazate region. During their 25 years of operation,
the NOORo II and NOORoIII power stations will create over 200 direct jobs and several
hundreds of indirect jobs. A special effort will be made to enhance women's integration into the
socio-economic life of the region and thus generate jobs for them.
2.6. Participatory Approach for Project Identification, Design and Implementation
All stakeholders of the Ouarzazate solar complex (community representatives,
associations, socio-economic stakeholders, administrative authorities, elected officials) were
consulted during the environmental and social impact assessment conducted in July 2011 and
updated in June 2014 and during the socio-economic impact assessment conducted in
September 2011. Several public consultations were organized with these stakeholders to: (i)
inform them of the project impact; (ii) answer their questions; and (iii) record their views,
objections, worries and concerns which include employment for local labour, training for local
youth, local development actions and the need for regular communication between MASEN
and local stakeholders. These concerns were taken into account and provision was made for
mitigating and even preventive measures. A social action plan was prepared in May 2013 and
is partly the result of these assessments and public consultations. With the commencement of
Phase I, the local population became aware of the usefulness and positive economic fallout of
the project in Ouarzazate region.
7 This rate is exceeds the national average of 14% and means that over 20% of the population in Ouarzazate lives on less than MAD 10 per
day. In Ghessat municipality, where the power plant will be located, the poverty rate reported exceeds 36% (2007 figures). 8 Union Régionale de la CGEM Souss Massa Draa, Monographie De La Région Du Souss Massa Draa, 2010.
7
2.7. Bank Group Experience and Lessons Reflected in Project Design
2.7.1. The last review of the Bank's portfolio in Morocco conducted in June 2014 revealed
satisfactory performance with a score of 2.56 on 3. This performance has remained stable since
2012. The portfolio is new with an average age of 3 years and contains no at-risk project.
However, the main challenges noted in the implementation of investment projects in Morocco
relate to: (i) protracted procurement timeframes; (ii) poor quality at entry of certain operations;
(iii) late commencement of certain operations; and (iv) late submission of audit reports. 2.7.2. The main lessons learnt from the implementation of similar projects in Morocco or
other countries were taken into account. All (technical, financial, environmental and social)
studies needed for the project have been conducted and are available. Considering that the use
of Advanced Procurement Action (APA) led to the rapid commencement of Phase I works
(NOORo I power plant), the same arrangement was adopted for the current phase. Besides, the
constraint encountered in Phase I, pertaining to a ceiling of USD 40 million for each withdrawal
when disbursing CTF funds, was lifted to give priority to the disbursement of such funds. The
priority disbursement of CTF funds (more concessional) will enable the project to have the best
financial impact possible. As regards financial audit, the Bank’s terms of reference (TORs),
which were harmonized with those of other donors in Phase I, will be used in the current phase.
Besides, community opposition to land procurement, which usually causes delays or a change
of site for the construction of project infrastructure will not be encountered. Indeed, project
infrastructure (NOORo II and NOORo III power plants) will be constructed on the 3000 ha site
procured by MASEN between 2010 and 2011. Lastly, difficulties encountered during
commencement of the disbursement of Bank resources to the Integrated Wind Energy, Hydro
Power and Rural Electrification Programme (approved in 2012), related to the initial structuring
of this operation, were taken into account. Hence, it has been planned that the two sub-
components of the project, namely the NOORo II and NOORo III power stations will each
receive an AfDB loan and a CTF loan to ensure their autonomous implementation. 2.8. Key Performance Indicators
The output indicators of the project are: (i) the two project companies that will be
created; (ii) the two solar power plants of 200 MW (NOORo II) and 150 MW (NOORo III) to
be constructed; and (iii) the national installed capacity to generate electricity from solar energy
which will be increased. The impact indicators are: (i) the number of jobs created during the
construction phase and operation of the power plants (including the proportion of jobs created
for women); (ii) the increased share of national electricity generated from solar sources; (iii)
the rate of local industrial integration achieved in the development of solar power plants; and
(iii) the prevention of green house gas emissions thanks to the project. The data on these
indicators will be provided in the monthly progress reports of the power stations which will be
prepared by the project companies and/or Technical Adviser(s) or LTA (Lender Technical
Advisor) to be recruited by MASEN for works supervision and control and in the half-yearly
project reports that MASEN will submit to donors including the Bank. 3. PROJECT FEASIBILITY
3.1. Economic and Financial Performance
3.1.1. The economic and financial model of the NOORo II and NOORo III power plants is
based on the one used for NOORo I (Phase I). State commitment to ensure the financial balance
of the Moroccan Solar Programme, which includes the current project, is crucial to the financial
viability of the operation. This commitment which took concrete form in 2010 with the
signature of a trapartite agreement between the State, MASEN and ONEE led to the launching
8
of works on the NOORo I power plant. Under that agreement, the State undertook to finance
the gap between the kWh cost price paid by MASEN to the project companies and the selling
price which MASEN charges to ONEE. A special agreement on State financing of the gap to
be generated by NOORo I was signed on 13 July 2012 between the State and MASEN.
Furthermore, 2 (two) special agreements (one per plant) are scheduled to be signed between the
State and MASEN to cover the gaps to be generated by the NOORo II and NOORo III power
plants whose technologies, despite the concessional financing, are relatively expensive
compared to electricity generation from fossil fuels or hydro power. 3.1.2. Financial Performance: The project's financial rate of return (FRR) was calculated
taking into account the investment costs net of customs duties and taxes, as well as the
operational and maintenance costs (see details in Technical Annex B.7). Project income will
come from the sale of energy by MASEN to ONEE, being on average USD 0.12/kWh (HV-
VHV electricity rate). Indeed, the project will generate returns on investment based on a kWh
rate that guarantees minimum profit for the equity capital of the project companies. The details
of this analysis are presented in Technical Annex B7. 3.1.3. Economic Performance: Morocco is the biggest importer of primary fossil fuels in
the MENA region. Over 95% of its primary energy used for electricity generation is imported.
In addition to the effects of Phase I (NOORo I), the project will help to enhance the positive
impact of solar energy on Morocco's trade balance. Hence, the country will be able to generate
foreign exchange earnings through the expected reduction of fossil fuel imports (coal, fuel oil
and gas). The other externalities of the project are: (i) benefits from the reduction of greenhouse
gas emissions; (ii) more regular electricity supply to productive sectors which will boost the
competitiveness of national businesses; and (iii) promotion of a new industrial sub-sector
devoted to the manufacture of solar equipment and job creation. 3.1.4. Sensitivity: The sensitivity of the project is based on that of CUME whose sensitivity
was analysed in terms of investment cost variation and an increase in operational and
maintenance costs (for a given level of financing cost). It shows that CUME is highly sensitive
to investment cost variations and less sensitive to operational and maintenance cost variations.
By varying the financing cost, the analysis reveals high additionality stemming from
concessional financing provided by donors and climate funds (CTF). The sensitivity test results
are presented in Technical Annex B7. 3.2. Environmental and Social Impact 3.2.1. Environment: The project is classified under Category I in accordance with the Bank's
environmental and social procedures. An environmental and social impact assessment of the
Ouarzazate complex (in its entirety) was conducted in July 2011. A first summary of this
assessment was posted on the Bank's website on 28 October 2011 for the project that
corresponds to Phase I of the complex. The study was updated in June 2014 to include specific
data on the NOORo II and NOORo III power plants in this project. A new public consultation
of the communities and of local and regional stakeholders was organized on 9 June 2014 in
Ouarzazate to inform them of Phase II and record their expectations and concerns. The
summary of the updated assessment was published on the Bank's website on 5 August 2014.
The complete updated study was published by MASEN on its website on 26 June 2014. 3.2.2. As was the case for the NOORo I power plant, once the project companies for the
NOORo II and NOORo III have been established and the detailed design of each plant is known,
a specific detailed environmental and social impact assessment will be conducted for each plant
by its project company. An environmental and social management plan (ESMP) will be
prepared and implemented by each project company. The company has to organize a public
9
consultation on the environmental and social impacts of its power plant. The specific
assessments of the power stations will be conducted in accordance with the demands of
international financial institutions and with Moroccan regulations and will be transmitted to the
Bank for opinion. MASEN will have to ensure that the measures recommended in the various
ESMPs are effectively implemented. Monitoring will be conducted within MASEN by
Environmental and Social Management Teams of the projects which comprise four officers
respectively in charge of the sustainable development of energy projects; local development;
quality, hygiene, health and safety (QHHS) and site-based local development. The officer in
charge of the sustainable development of energy projects will coordinate ESMP monitoring and
relations with donors. If need be, the team could be reinforced with an external structure
specialized in the domain. 3.2.3. The project is likely to have an impact on soil sealing, surface water, and the natural
environment. The potential risk of fire will remain because of the use of products such as
eutectic salts and synthetic oils. With the dry cooling system that will be used for Phase II,
water consumption at the NOORo II and NOORo III power plants will have a very low impact
on water resources in the area, especially on the Mansour Eddahbi retaining reservoir (situated
about ten kilometres away) from which the Ouarzazate solar complex will be supplied with raw
water. The annual water consumption of the two project plants is estimated at 355 000 m3
(comprising 230,000 m3 for NOORo II and 125,000 m3 for NOORo III), or 0.1% of the annual
regular volume of the retaining reservoir (250 million m3). The solar tower at the NOORo III
power plant will have a great impact on the landscape because it will be visible from Ouarzazate
town. It could also have a negative impact on the birds of the area as they search for food, on
account of the stifling heat it will generate and the blinding light from the heliostatic mirrors.
Other negative impacts related to noise pollution during the works should be expected. Soil
compaction and rehabilitation of the site at the end of plant operation will have a moderate
impact. The specific ESIAs and ESMPs to be conducted at the plants will further take into
account their particularities and help to mitigate possible negative impacts identified at
appraisal. 3.2.4. With regard to land tenure, the Ouarzazate solar complex will be constructed on 3000
ha of community land which belonged to the Ait Ougrour Toundout ethnic group. It ensues
from the initial procurement of 2500 ha of land in 2010 and a second procurement of three 500-
hectare plots in 2011. The NOORo II and NOORo III plants will have respective right-of-ways
of 680 ha and 750 ha compared to 450 ha for NOORo I which is under construction. Purchase
arrangements were conducted according to national procedures and are described in the Land
Procurement Plans (PAT) prepared by MASEN. The Ait Ougrour Toundout community and its
supervisory council were consulted and they gave their approval for the transfer of the two
parcels of land in accordance with the applicable statutory instruments governing land transfer
and at prices determined by expert commissions. The consultative procedures used to inform
local communities about the project and the land transfer procedure are described in the PAT.
The project does not require any destruction of habitat or economic activities. The site has very
little pastoral activity (penning), is unsuitable for farming and is of little tourism interest. 3.2.5. Climate Change: The project will help to mitigate the effects of climate change since
its execution will generate carbon-free electricity. It will help to reduce greenhouse gas
emissions in the Moroccan electricity sub-sector. This sub-sector is highly dominated by fossil
fuel-fired power plants which accounted for 70% of the total installed capacity in 2013. Within
the same year, net national demand for electricity was slightly over 32,000 GWh and was
satisfied with electricity generated respectively from coal (38%), fuel oil (14%), natural gas
(18%), hydro power (9%), wind (4%) and imports (17%). Hence, the share of renewable energy
in meeting electricity demand is only 13% of the electricity mix. When compared to power
plants that run on fuel oil, the NOORo II and NOORo III power plants will prevent the emission
10
of green house gases estimated at 522,000 tons of CO2 per year (comprising 300,000 tons of
CO2 for NOORo II and 222,000 tons of CO2 for NOORo III). Over 13 million tons of CO2
emissions will be avoided during the 25 years of operation of both power stations. Ultimately,
the Moroccan Solar Programme (NOOR) will generate fuel savings amounting to one million
tons of oil equivalent and prevent the emission of 3.7 million tons of CO2. 3.2.6. Gender: The project will strive to reduce gender disparities in the project area
(Ouarzazate) where women and girls are disproportionately under-employed and constitute the
largest group of unemployed persons in the region. The project seeks to reduce these disparities
by promoting the integration of women into the socio-economic fabric of the Ouarzazate region,
mainly through indirect jobs that will be generated by the NOORo II and II power plants. The
projects seeks to apply the same approach by using various planned training programmes to
achieve a greater female presence and thus improve the job market access, social and economic
empowerment and employability of local women. The planned actions include partnership with
Faculté Poly-disciplinaire d’Ouarzazate (section on renewable energies), training of female
entrepreneurs from Ouarzazate region, training of project area women in agricultural activities
(gardening, stockbreeding and tree farming) and providing them with farming kits,
apprenticeship programmes (handicraft), etc. Emphasis will be laid on women's participation
in decision-making under the project by including them (and women's organizations from
Ouarzazate region that have a gender-related agenda) in decision-making bodies, where
necessary. Besides, the project's Environmental and Social Management Team within MASEN,
could be reinforced, if need be, with gender experts to monitor social and local development
actions, including those aimed at empowering local women and ensuring their involvement in
economic and social development. The regional branch of the Moroccan Agency for Social
Development expressed its willingness to strengthen gender expertise during project
implementation. Actions and recommendations to increase project impact on gender are
presented in Technical Annex B.8.5. 3.2.7. Social: The project will generate major socio-economic fallouts for Ouarzazate region.
It will create approximately 1,600 direct jobs during the three years of construction of the
NOORo II and NOORo III power stations. Unskilled labour will essentially be recruited locally.
Approximately 200 direct jobs will be created during the 25 years of operation of the two power
plants to ensure their operation and maintenance. Hundreds of indirect jobs will also be created
through various sub-contracting arrangements. The project is also expected to trigger the
emergence of a new industrial sub-sector to be accompanied by the establishment of a solar
research and development platform that will generate several jobs. A study conducted in 2011
on the potential for local manufacturing of equipment for concentrated solar thermal power
plants in North Africa,9 indicates that the Moroccan Solar Power Programme as a whole could
generate 11,000 jobs. 3.2.8. As already initiated in Phase I (NOORo I), the project will play a catalytic role in local
development especially in the Ghessate rural council area which has a population of
approximately 9,000 inhabitants. Several infrastructure and social projects will be implemented
with proceeds from the sale of 3,000 ha of land for the Ouarzazate solar complex. This amount
is MAD 30.5 million deposited in a Fund at the Ministry of Interior to finance an economic and
social development plan for the local community. These projects are coordinated by the
Directorate for Rural Affairs (DAR) at the Ministry of Interior. Several social or local
development activities have been conducted or are ongoing, namely: irrigation, agricultural
water management, village water supply, socio-cultural projects including the students' centre
(Dar Taliba of Ghessate), crop area protection, construction of village highways and feeder
9 Ernst & Young et Associés, Fraunhofer Institute for Solar Energy Systems ISE, and Fraunhofer Institute for Systems and Innovation
Research ISI, Middle East and North Africa Region: Assessment of the Local Manufacturing Potential for Concentrated Solar Power
(CSP) Projects,The World Bank and the Energy Sector Management Assistance Program, January 2011.
11
roads, and the construction of health and school infrastructure. In addition to the above actions,
there are also volontary actions conducted by MASEN for the local population (dental and
ophtalmological caravans, school equipment, canteens and health centres, promotion of local
products prepared by women's associations, organization of summer camps for children from
the Ghessate community, etc.). 3.2.9. Forced Resettlement: The Ouarzazate solar complex as a whole will not lead to
displacement of the local population and does not require the destruction of habitats or
economic activities. The project is located on community land with no specific economic
activity and which is not intended to be used as a residential area for the local population. It has
very little pastoral activity (penning), is unsuitable for farming and of little tourism interest. The
Ait Oukrour Toundout community, which owned the land, and its supervisory council approved
the sale which was conducted in accordance with statutory terms of transfer and for the price
set by appraisal committees. 4. PROJECT IMPLEMENTATION
4.1. Implementation Arrangements
4.1.1. Project Implementation: The project will be implemented by MASEN which is also
the Contracting Authority. Its staff strength has been steadily increased since 2012 and it
currently has 64 employees. MASEN also receives technical assistance in various areas
(technical, fiscal, legal, procurement, PPP, etc.) from experts and specialized high-level firms.
Several teams from its energy Energy Projects Pool are involved in the project. For instance,
the Technical Design Department and the Structuring Department coordinate technical design,
financial arrangements and the private developer selection process. The Directorate for
Implementation will implement the project, once developers have been recruited, project
companies established and all financing available. The Strategic Steering Unit (directly attached
to Management) will ensure the implementation of all projects. MASEN will recruit a Technical
Adviser (firm) or two (one per plant) to monitor the quality and quantity of construction works
at the power plants. 4.1.2. Institutional Arrangements: The institutional arrangements adopted are the same
ones used in Phase I (NOORo I). After the selection of private developers through a PPP, two
project companies will be established (one per plant). It has been planned that each project
company will be owned by a selected private consortium (75%) and MASEN (25%). The
project companies will be responsible for building the two solar plants and operating them for
25 years. The projected financial structure of each project company will comprise 20% equity
and 80% borrowed capital. All the borrowed capital will be provided by MASEN through a
mechanism that entails retroceding the concessional loans obtained from donors as a single
concessional loan to each project company under conditions equivalent to those of the entire
loan mix. Hence, a credit agreement will be signed between MASEN and each project company,
setting out the terms and conditions. MASEN will be the sole purchaser of the electricity
generated by each power plant. For each plant, MASEN will sign (i) an electricity supply and
purchase contract with the project company; and (ii) an electricity supply and purchase contract
with ONEE. 4.1.3. Procurement Arrangements 4.1.3.1. Procurements under this project entail the recruitment of one or two private developers
with a mandate to establish the two project companies that will ensure the design, partial
financing, construction, operation and maintenance of the NOORo II and NOORo III power
plants. These mandates will be defined through a set of legal instruments determining the terms
12
of both Public-Private Partnership Contrats (PPPCs). The two developers will be selected on a
competitive basis through the same International Competitive Bidding (ICB) process. As was
the case in Phase I (NOORo I), the scope of the project, the amount of resources needed to
prepare such bids and the need to give each potential bidder the opportunity to make innovative
and profitable proposals, require that this ICB be conducted in 2 (two) stages, preceded by
pre-qualification under the terms set out in Technical Annex B.5. 4.1.3.2. Considering the need to co-finance the project and the fungible nature of pooled
resources, the partners (AfDB, World Bank, KFW, EIB, AFD, NIF/EU) agreed to use the
procurement rules and procedures of one of them. Hence, the majority agreed to use World
Bank procurement rules and procedures as the reference for the bidding process to select
private developers for the NOORo II and NOORo III power plants. In accordance with the
provisions of Article 1.17 (b) of the Bank’s rules and procedures governing the procurement of
goods and works (R&P), such a decision (use of other procurement rules for Bank
resources) must absolutely be ratified by the Board of Directors to become effective and
enable the pooling of Bank resources and those of other financial partners for use in this
project. Indeed, Article 1.17 (b) of the R&P provides that: "where the Bank finances on a joint
basis with financiers, other than the Borrower, it will require as condition for its financing that
its own Rules of Procedure apply, unless the Board of Directors authorizes a waiver". 4.1.3.3. Procurements planned under this project will benefit from the enriching and successful
experience of Phase I (NOORo I). Hence, the pre-qualification documents and BDs to be used
will be those acceptable to the Bank, prepared for that purpose based on similar documents used
for the NOORo I power plant and will be improved based on the experience garnered from
Phase I. Furthermore, the private developers to be selected will operate within the project
company to procure the goods, works and services (downstream contract) needed to achieve
the targets set under the PPPC. To that end and pursuant to Article 3.13.(a) of the Bank rules
and Article 3.14.(a) (similar provisions) of World Bank rules, the private developers recruited
on a competitive basis will have the latitude (through the project companies) to sign agreements
downstream with any eligible service provider of their choice (according to World Bank
procurement rules), following their own procedures. 4.1.3.4. Procurements shall be the responsibility of the Directorate for Structuring (in charge
of power plant development procurements) within MASEN. An assessment of this Directorate's
procurement capacity was conducted to ensure that it would be able to successfully carry out
its responsibilities. It followed from this assessment, detailed in Technical Annex B5, that
there was only a moderate procurement risk. This level of risk includes certain shortcomings
identified and described in Technical Annex B5 as well as favourable aspects such as: (a) the
structuring and reinforcement of MASEN; (b) leveraging of Phase I experience and the high
level of procurement expertise developed by MASEN within a short time for operations similar
to the scheduled project operations; and (c) guidance from a pool of international expert
consultants. To mitigate the identified risks, a series of measures was proposed as detailed in
Technical Annex B5 of the project appraisal report.
4.1.3.5. Special Procurement Provisions: The timeframe for implementing the NOOR Solar
Programme led MASEN to request and obtain an agreement in principle from the Bank, for the
implementation of an Advanced Procurement Action (APA) for the procurement of services
from the private developer(s) pursuant to Article 1.9 of the R&Ps which state that: "The
Borrower may wish to proceed with procurement before the related Financing Agreement is signed.
In such cases, the procurement procedures, including advertising, shall be in accordance with
these Rules in order for the eventual contracts to be eligible for Bank Financing, and the Bank
shall review the process used by the Borrower. A Borrower undertakes such advance
contracting at its own risk, and any concurrence by the Bank with the procedures,
13
documentation, or proposal for award does not commit the Bank to provide financing for the
project in question". The Bank's agreement in principle for an APA is accompanied by the
requirement that there should be a two-stage international competitive bidding process (adapted
for similar procurements) preceded by pre-qualification and subject to the Bank's ex ante
review. However, the late reception of an official request for Bank involvement in the project
did not make it possible of the Bank to conduct a timely ex ante review of the initial stages
(from pre-qualification to the BDs of the second phase) of the process. Hence, it was agreed
that, for practical reasons, the stages from pre-qualification to issuance of the BDs in the second
stage of the bidding process will rather be subject to an ex post review of the Bank while the
remaining stages will be subject to its prior review.
4.1.4. Financial Management and Audit Arrangements
4.1.4.1. MASEN will be accountable to donors, as regards project implementation and
management of financial resources. Nevertheless, the effective construction of the NOORo II
and NOORo III power plants will be directly ensured by the two Moroccan private project
companies to be created and whose projected shareholding structure will comprise private
developers (75%) and MASEN (25%). They will be accountable for the use of funds transferred
to them by MASEN. The financial management assessment conducted in accordance with Bank
guidelines and based on the successful experience of the current financial management system
established by MASEN and the project company ACWA Power Ouarzazate (APO) in Phase I
(NOORo I power plant), came to the conclusion that the project has a high initial fiduciary risk
(see the table of risks in Technical Annex B4) which could rapidly become moderate and
acceptable. Indeed, this risk, which stems mainly from the complexity and difficulties of
creating the project companies and establishing the financial arrangements of the project can
be mitigated by capitalizing on Phase I experience to fulfil the mitigating conditions and
through AfDB and CTF loan conditions (set out in detail in 4.1.4.7 below) and the agreed action
plan (see Technical Annex B4).
4.1.4.2. Financial Management Arrangements: The project's financial management is based
on harmonization of mechanisms with other donors (use of the same management structures,
methods and disbursement conditions, namely: recruitment of a Technical Adviser to approve
the progress reports that accompany disbursement requests, project audit in accordance with
the ToRs proposed by the Bank and accepted by the other donors) and will focus on systems
already established to the Bank's satisfaction by MASEN in Phase I, namely the accounting,
cash-flow, control, reporting and audit processes, as well as the financial management systems
to be put in place by the two project companies that will be created in the current phase. Hence,
apart from audits that the State may request in its capacity as MASEN shareholder, the national
public finance management system will not be used during project implementation. Compliance
with the scheduled arrangements will guarantee transparency, traceability and adequate
financial information on invested funds. The two project companies will implement their
respective annual programmes of activity, verified and transmitted by MASEN to the Bank at
the beginning of each fiscal year. The project companies will have to recruit qualified and
experienced financial and accounting staff and perform their general and budget accounting
with the appropriate software. Accounting principles will be described in the project's financial
management and accounting handbook. MASEN and each of the two project companies will
implement the appropriate documented internal control procedures, as was done in Phase I,
mainly for financial transactions, purchases and expenditure justification, accounting
registration and the protection of financial data and project assets. Internal audits will be
conducted for each entity by an internal auditor authorized by the audit committee attached to
the supervision committee.
4.1.4.3. Furthermore, the Technical Adviser, also known as LTA (Lender Technical Adviser)
shall ensure the technical and financial monitoring of the project. Moreover, given the
14
government stake in its shareholding, MASEN is subject to several State financial controls
(State controller, control service of the Ministry of the Economy and Finance) with the
possibility of ex poste controls by the IGF and the Court of Auditors. The project’s progress
reports and interim financial reports will be prepared every six months using a template
acceptable to all partners. The financial reports (see indicative content in Technical Annex B4)
will be prepared by each project company and will be verified and amended, as appropriate,
by MASEN and approved by the Technical Adviser, before transmission to donors within 30
days following the end of the six-month period or any other deadline set in the procedures
manual. Furthermore, the annual financial statements of the project (together with those of
MASEN and the project company) will be prepared according to Moroccan accounting norms
(see indicative content of financial statements in Technical Annex B4). Lastly, the project will
be subject to on-site and off-site financial management supervision missions from the Bank that
will target both MASEN and the two project companies. The Bank will ensure better
coordination with the other partners by organizing joint supervision missions. (See Technical
Annex B4).
4.1.4.4. External Audit Arrangements: The financial statements of MASEN and the two
project companies will be audited annually by their respective auditors. The audits will be
conducted in accordance with the international auditing norms of the International Federation
of Accountants and the harmonized TORs for auditing of the project, copies of which would
have been transmitted to the auditors. The audit reports of the project (that is, of the two project
companies) and of MASEN, accompanied by letters to the internal control directorates of each
entity, will be forwarded to the Bank within 6 (six) months after closure of the fiscal year
concerned. The first project audit report will cover the period from project commencement to
31 December 2015.
4.1.4.5. Common Disbursement Mechanisms: The project’s institutional and financial
arrangements provide that the funds lent by donors to MASEN be retroceded to the two project
companies as a debt under credit facility agreements that set the applicable terms and
conditions. Hence, for financial transactions during the construction phase, MASEN will open,
for each power plant (NOORo II or III), in a commercial bank acceptable to the Bank: (i) one
(1) Designated Transitional Account (CDT) for each loan; and (ii) three (3) Designated
Common Accounts (CDC1) (EUR-USD-MAD) to pool all funds from the CDTs to the project
company which will in turn open, three (3) Designated Common Accounts (CDC2) (EUR-
USD-MAD) to receive only funds transferred by MASEN (excluding equity funds). The
transfer agreements between MASEN and the project companies will specify the disbursement
mechanisms in accordance with principles acceptable to each donor, as well as the distribution
formula and payment conditions adopted. Payment requests will be presented to each donor
based on interim half-yearly financial reports approved by the Lender Technical Adviser (LTA)
and in accordance with the procedures of each donor. Funds disbursed into the CDTs will
immediately be transferred to the CDCs by MASEN and, within the shortest time possible, to
the project companies in which the investment expenditure scheduled under the financing
agreements will be initiated. It is understood that partners' contribution to the share capital of
the project companies will be deposited into different bank accounts. To ensure that the project
has the greatest financial impact possible, it was agreed that: (i) priority be given to the
disbursement of more concessional CTF funds; and (ii) a pari passu system be established
among all the donors (excluding the CTF) through which determination of each donor's share
will be prorated on its contribution to the external financing of the investment expenditure of
the power plants.
4.1.4.6. Special Disbursement Arrangements: Although there is agreement on a common
mechanism, payment requests on the AfDB and CTF loans have to be presented in accordance
with the procedures as described and applicable in the Bank's Disbursements Handbook. Each
15
of the project's power plants (NOORo II and NOORo III) will be subject to an AfDB loan
agreement and a CTF/AfDB loan agreement. The disbursement method adopted by donors will
be exclusively that of the special account. As regards conditions precedent to first
disbursement, the Bank must obtain proof of the opening by MASEN, in a commercial bank
acceptable to the AfDB, of: (i) 4 (four) CDTs (comprising 2 CDTs per power plant, one in EUR
(AfDB loan) and the other in USD (CTF loan); and (ii) 6 (six) CDCs, comprising 3 CDCs
(EUR-USD-MAD) per plant to pool the funds intended for the project company. Initial advance
requests will be presented using request form A1 and the form indicating the investment budgets
of the project companies for 6 months of activities with application of the quota for Bank
financing (A3). As was the case in Phase I, applications for reprovisioning should, in addition
to the above documents, be accompanied by a summary expenditure statement (A2)
highlighting the share of investments implemented and attributable to the Bank, along with an
interim financial report (IFR) for the preceding six-month period, audited and approved by the
Technical Adviser as well as the bank statements and reconciliations of the transitional and
common accounts. A disbursement letter will be reviewed by both parties during negotiation
of the loan agreements, and forwarded to MASEN, the Borrower, as soon as the Bank approves
the project.
4.1.4.7. Fiduciary Risk: The project’s initial fiduciary is estimated to be high mainly due to
the complex financial and legal arrangements of the operation and potential difficulties resulting
from the creation and establishment of the two project companies. Indeed, although MASEN,
the Borrower, has the advantage of being a structure whose organization and financial
management system have been established, the two project companies that will implement the
project have not yet been set up. Consequently, their capacity to ensure the sound financial
management of the project cannot be ascertained at this stage. Fulfilment of the conditions set
out in paragraph 5.2 below, will help to reduce the residual risk down to a moderate and
acceptable level. Apart from the effective creation of the two project companies and the
fiduciary responsibility clauses of the agreements to be signed between MASEN and the
companies which will have to be approved by the Bank, it will be necessary for the Bank and
the other donors to ensure or obtain proof of creation by these entities (project companies), each
in its own sphere, of an adequate financial management mechanism.
4.2. Monitoring
Bank activities scheduled under project monitoring are summed up in the table below.
These activities will be conducted following the project implementation schedule presented in
page (v). The schedule takes into account the use of the advanced procurement action (APA)
procedure. The project should be completed at the end of 2017. Half-yearly progress reports on
the project's physical and financial status will be prepared by MASEN and forwarded to all
donors. At least two joint project supervision missions by donors will be conducted per year.
At completion, MASEN will prepare and submit a completion report to donors. The Bank, in
turn, will prepare its own completion report that will be followed by a project performance
appraisal report.
Period Stages Monitoring Activities/Feedback Loop
December 2014 Signature and effectiveness of
loan and guarantee agreements
Forwarding of invitation letters to the Borrower
and the Guarantor (Bank)
December 2014 -
March 2015
Recruitment of developers Signature of PPP contracts (MASEN)
June 2015 - December
2017
Solar plant construction works Works execution (project companies)
Control and supervision (MASEN)
Project supervision (donors)
January 2010 -
December 2017
Project supervision by the Bank Administration of Bank loans
Project supervision by the Office
16
Joint field supervision of the project with other
donors (twice a year)
December 2017 MASEN project completion
report
Preparation of the Borrowers completion report
(MASEN, donors)
March 2018 Bank's project completion
report
Project completion mission (Bank, MASEN,
donors)
Preparation of the programme completion report
(Bank)
4.3. Governance
4.3.1. Morocco continues to implement reforms to modernize public administration and the
financial sectors with a view to boosting the performance of its economy and increasing its
competitiveness in a rapidly changing regional and international context. In the energy sector,
the signing of a programme contract for 2014-2017 on 26 May 2014, between the State and
ONEE, falls within the framework of these reforms to improve governance within the sector.
Provision was made for several measures including: (i) the adjustment of electricity rates; (ii)
recovery of the outstanding electricity bills from government services and establishments; (iii)
energy saving plans; and (iv) the improvement of technical performance. A bill is also being
prepared to establish a regulatory body for the sector. 4.3.2. The governance risk within the specific framework of the project remains very low
and could reside in the private developer selection process. However, this risk is mitigated by
the experience acquired during Phase I whose lessons have informed the design of the current
project. Furthermore, donors ensure the smooth implementation of their applicable rules and
regulations. Regular project supervision missions and the annual audit reports on the project's
financial statements will enable the Bank to monitor compliance with the terms of reference,
the progress status of the power plants and compliance in the use of the project's financial
resources. Moreover, it is also worth noting that the full involvement of Morocco's highest
authorities in the project will guarantee good governance. Besides, MASEN has a Board of
Directors and a Surveillance Board that exercises control over its activities.
4.4. Sustainability
4.4.1. Project sustainability hinges essentially on the capacity of the private developers, who
will be recruited within the framework of PPP with MASEN, to design, finance, construct,
operate and maintain the NOORo II and NOORo III power stations. They will be selected
through a two-stage international competitive bidding process preceded by a prequalification
phase making it possible to use the initial bid submission stage to initiate serious technical
discussions with bidders and to better understand their technical proposals which will then be
improved for the second stage of bidding.
4.4.2. The provisions of the electricity purchase contracts between MASEN and the project
companies and of resale contracts between MASEN and ONEE as well as the terms for
operating and maintaining the power stations will be similar to those adopted for the NOORo I
power plant. These provisions will be used to determine the responsibilities of the project
companies as regards operation and maintenance of the power plants. The sustainability of
project impact also depends on State support to ensure financial equilibrium through subsidies
that will cover the gap between the kWh purchase price paid by MASEN to the project
companies and the sales price to ONEE.
4.5. Risk Management
4.5.1. The project risks are: (i) the possibility that private developers may not be able to
honour their commitments during construction and operation of the power plants; (ii) the risk
that MASEN may not be able to efficiently monitor power plant construction activities given
17
the relatively high number of power plants it has to supervise from 2015 to 2016 (NOORo I, II
and III); and (iii) a financial risk resulting from the difficulties that MASEN could encounter in
financing the gap between the kWh purchase price paid to project companies and the selling
price charged to ONEE.
4.5.2. These risks are respectively mitigated by: (i) the selection of developers through
international competitive bidding based on experience and financial viability; (iii) the enhanced
quality of MASEN staff and support from experienced high-level advisers in various domains
(technical, fiscal, legal, procurements); and (iii) strong State commitment to support the
Moroccan Solar Programme (including through ongoing sector reforms and subsidies) and the
participation of certain donors in financing the gap.
4.6. Knowledge Building
4.6.1. The project is an opportunity for the various donors and the Moroccan Government to
disseminate new knowledge. This is the Bank's second operation in Morocco under the
combined Moroccan Solar Programme NOOR (2000 MW) and the CTF Investment Plan for
the MENA region. The project will help to strengthen the Bank's experience in the development
of PPPs for renewable energy projects. More specifically, the project will enhance the Bank's
knowledge on the development of solar tower power plants that will supplement the parabolic
trough solar power plants already financed by the Bank (Ain Beni Mathar solar power plant
and Phase I of the Ouarzazate solar complex) as well as large-scale thermal energy storage
facilities that enable the solar power plants to operate at full capacity for over 5 (five) hours
after sunset.
4.6.2. The two variants of concentrated solar thermal power plants (parabolic trough and
solar tower) that will be developed by the project, will provide universities as well as institutes
and centres specialized in solar energy with reliable statistical data for research and
development on the use of solar energy to generate electricity on a large scale. The solar energy
knowledge and skills developed in Morocco under the project could be shared with other
countries of the MENA region and Africa, within the framework of South-South cooperation.
In this regard, MASEN intends to create a research and development platform on the site of the
Ouarzazate complex. This platform could benefit from the support of the CTF technical
assistance programme in the MENA region that will be jointly implemented by the Bank and
the World Bank in coordination with the national structures involved in the development of
concentrated solar thermal power plants and the promotion of industrial units for the
manufacture of solar equipment.
4.6.3. The project's half-yearly financial reports, interim financial reports, and annual
external audit reports will provide information on the project and serve as a basis for Bank
supervision missions from which lessons will be learnt. The publication of project completion
and performance evaluation reports will facilitate knowledge dissemination to Bank staff and
the public. The lessons learnt will enhance the design of similar future Bank operations.
5. LEGAL FRAMEWORK
5.1. Legal Instrument
To finance this project, the Bank will use: (i) an AfDB loan of EUR 100 million
awarded to MASEN; and (ii) a CTF loan of USD 119 million awarded to MASEN by the Bank
in its capacity as the executing agency of the CTF Trust Fund. Both loans are guaranteed by the
State.
18
5.2. Conditions Associated with Bank Involvement
A) Conditions Precedent to AfDB and CTF Loan Effectiveness
5.2.1. The AfDB and CTF loan agreements will become effective on their date of signature.
The AfDB and CTF loan guarantee agreements will become effective on the date the guarantor
fulfils the conditions provided under Section 12.01 of the General Conditions, to the satisfaction
of the Bank.
B) Conditions Precedent to First Disbursement of the AfDB and CTF Loans
5.2.2. Apart from the effectiveness of the Loan Agreements, the first disbursement of each
loan shall be subject to fulfilment by the Borrower of the following conditions, to the
satisfaction of the Bank:
(i) Fulfil the conditions set out in Section 12.02, paragraph (a), sub-paragraphs (i)
and (ii) of the General Conditions;
(ii) Provide the Bank with evidence of finalization of project financing, by
presenting proof that the other donors have approved their financing (paragraph
2.4.2);
(iii) Provide the Bank with a copy of the specific Convention through which the State
of Morocco undertakes to finance the gap between the purchase price of
electricity by MASEN from the project companies and its selling price to the
National Electricity and Drinking Water Authority (ONEE) or any other
company that replaces ONEE, pursuant to the framework agreement signed
between the State and MASEN on 26 October 2010 (paragraphs 3.1.1 and 4.5.2);
(iv) Provide the Bank with the original or certified true copy of an attestation
confirming the opening of special accounts by the Borrower in a commercial
bank acceptable to the Bank, through which loan resources will be channelled,
and containing the full bank details of the account (Paragraph 4.1.4.6);
(v) Provide the Bank, under conditions acceptable to the Bank, with a certified true
copy of: (a) signed and registered articles of incorporation of the project
company; (b) the attestation of registration of the project company; (c) the
electricity purchase contract between the Borrower and the project company; (b)
the electricity purchase contract between the Borrower and ONEE; and (e) the
agreement for transfer of all or part of the loan resources by the Borrower to the
project company, indicating that: (i) financial and accounting information will
be submitted by the project company to the Borrower every six months; and (2)
the annual financial statements of the project company will be audited by its
auditor, according to the norms applicable in Morocco and the Bank’s terms of
reference (Paragraph 4.1.4.1); and
(vi) Provide the Bank with proof of recruitment by the Borrower of a Lender
Technical Adviser (LTA) to monitor the works (Paragraphs 4.1.4.2 and 4.1.4.6).
19
C) Other AfDB and CTF Loan Conditions
5.2.3. Furthermore, the Borrower should fulfil the following conditions, to the satisfaction of
the Bank:
(i) Provide proof, within 3 (three months) after first disbursement, that each project
company has established a satisfactory accounting and financial management
mechanism by essentially: (a) appointing a qualified and experienced financial
officer; (b) establishing an accounting system capable of providing accounts that
meet the applicable standards and ensuring analytical and budget monitoring;
and (c) preparing a financial management handbook deemed satisfactory by the
Bank (Paragraph 4.1.4.2) ; and
(ii) Provide the Bank, prior to commencement of works on each power plant, with
the following documents prepared in accordance with the requirements of
international financial institutions and Moroccan regulations: (a) the detailed
Environmental and Social Impact Assessment (ESIA) prepared by the project
company; (b) the Environmental and Social Management Plan (ESMP); and (c)
where applicable, proof of the environmental acceptability of the detailed study
on the power plant (Paragraph 3.2.2).
D) Commitments
5.2.4. The Borrower undertakes to:
(i) Provide the Bank with any document that is reasonably necessary for monitoring
project implementation; and
(ii) Ensure that the project companies implement the ESMP in accordance with the
applicable Bank rules and procedures (Paragraph 3.1.5).
5.3. Compliance with Bank Policies
The Ouarzazate Solar Complex Project - Phase II (NOORo II and NOORo III power
plants) is in conformity with all applicable policies of the Bank.
6. RECOMMENDATION
Management recommends that the Board of Directors should: (i) exceptionally waive
the application of Bank rules and procedures in preference to the World Bank's rules and
procedures for the procurement of goods, works and services; and (ii) approve: (a) an AfDB
loan of EUR 100 million to MASEN; and (ii) a CTF loan of USD 119 million to MASEN
awarded by the Bank in its capacity as the executing agency of the CTF Trust Fund. Both loans
are guaranteed by the Kingdom of Morocco to finance the Ouarzazate Solar Complex Project -
Phase II (NOORo II and NOORo III) in accordance with the terms and conditions set out in
this report.
I
Annex I. Comparative Socio-economic Indicators of Morocco
Year Morocco Africa
Develo-
ping
Countries
Develo-
ped
Countries
Basic Indicators
Area ( '000 Km²) 2011 447 30 323 98 458 35 811Total Population (millions) 2013 33,0 1 109,0 5 909,3 1 252,8Urban Population (% of Total) 2013 57,8 40,2 47,7 78,3Population Density (per Km²) 2013 72,3 46,9 70,7 23,5GNI per Capita (US $) 2012 2 960 1 719 3 815 38 412Labor Force Participation - Total (%) 2012-2013 34,9 37,4 67,9 72,1Labor Force Participation - Female (%) 2012-2013 27,2 42,5 38,6 44,6Gender -Related Dev elopment Index Value 2007-2011 0,625 0,502 0,694 0,911Human Dev elop. Index (Rank among 187 countries) 2012 130 ... ... ...Popul. Liv ing Below $ 1.25 a Day (% of Population)2007-2011 2,5 40,0 20,6 ...
Demographic Indicators
Population Grow th Rate - Total (%) 2013 1,5 2,5 1,3 0,3Population Grow th Rate - Urban (%) 2013 2,1 3,4 2,5 0,6Population < 15 y ears (%) 2013 27,9 40,9 28,3 16,4Population >= 65 y ears (%) 2013 5,0 3,5 6,1 16,8Dependency Ratio (%) 2013 48,7 77,9 52,4 49,9Sex Ratio (per 100 female) 2013 97,5 100,0 103,3 94,4Female Population 15-49 y ears (% of total population) 2013 27,9 24,0 53,1 45,2Life Ex pectancy at Birth - Total (y ears) 2013 70,9 59,2 68,4 77,8Life Ex pectancy at Birth - Female (y ears) 2013 72,7 60,3 70,3 81,2Crude Birth Rate (per 1,000) 2013 22,7 34,8 21,2 11,2Crude Death Rate (per 1,000) 2013 6,3 10,4 7,6 10,4Infant Mortality Rate (per 1,000) 2013 25,8 61,9 39,8 5,5Child Mortality Rate (per 1,000) 2013 31,4 97,4 56,3 6,6Total Fertility Rate (per w oman) 2013 2,7 4,6 2,6 1,7Maternal Mortality Rate (per 100,000) 2010 100,0 415,3 240,0 16,0Women Using Contraception (%) 2013 66,7 34,9 62,6 71,3
Health & Nutrition Indicators
Phy sicians (per 100,000 people) 2004-2011 62,0 47,1 117,8 297,8Nurses (per 100,000 people)* 2004-2011 89,0 132,6 202,7 842,7Births attended by Trained Health Personnel (%) 2006-2011 73,6 52,6 66,3 ...Access to Safe Water (% of Population) 2012 83,6 68,8 87,2 99,2Access to Health Serv ices (% of Population) 2000 70,0 65,2 80,0 100,0Access to Sanitation (% of Population) 2012 75,4 39,4 56,9 96,2Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2012 0,1 3,9 1,2 ...Incidence of Tuberculosis (per 100,000) 2012 103,0 223,6 144,0 23,0Child Immunization Against Tuberculosis (%) 2012 99,0 83,0 81,5 96,1Child Immunization Against Measles (%) 2012 99,0 74,0 83,0 94,3Underw eight Children (% of children under 5 y ears) 2005-2012 3,1 19,7 17,0 1,4Daily Calorie Supply per Capita 2009 3 264 2 481 2 675 3 285Public Ex penditure on Health (as % of GDP) 2011-2012 2,1 2,9 3,0 7,5
Education Indicators
Gross Enrolment Ratio (%)
Primary School - Total 2012-2013 116,9 101,9 109,4 100,9 Primary School - Female 2012-2013 114,1 97,9 107,6 100,6 Secondary School - Total 2012 68,9 47,4 69,1 100,2 Secondary School - Female 2012 63,4 44,0 67,8 99,7Primary School Female Teaching Staff (% of Total) 2012-2013 54,0 46,6 58,0 84,3Adult literacy Rate - Total (%) 2011-2012 67,1 62,0 80,3 99,2Adult literacy Rate - Male (%) 2011-2012 76,1 70,7 85,9 99,3Adult literacy Rate - Female (%) 2011-2012 57,6 53,7 74,9 99,0Percentage of GDP Spent on Education 2009-2012 5,4 5,3 4,3 5,5
Environmental Indicators
Land Use (Arable Land as % of Total Land Area) 2011 17,8 7,6 10,7 10,8Annual Rate of Deforestation (%) 2000-2009 0,0 0,6 0,4 -0,2Forest (As % of Land Area) 2011 11,5 23,0 28,2 35,0Per Capita CO2 Emissions (metric tons) 2010 1,4 1,2 3,0 11,6
Sources: AfDB Statistics Department Databases; last update :
United Nations Population Division, World Population Prospects: The 2012 Revision;
World Bank: World Development Indicators; UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports.
For any given interval, the value refers to the most recent year available during the period
Note : n.a. : Not Applicable ; … : Data Not Available.
COMPARATIVE SOCIO-ECONOMIC INDICATORS
Morocco
mai 2014
0102030405060708090
2005
2006
2007
2008
2009
2010
2011
2012
2013
Infant Mortality Rate( Per 1000 )
Morocco Africa
0
500
1000
1500
2000
2500
3000
3500
2004
2005
2006
2007
2008
2009
2010
2011
2012
GNI Per Capita US $
Morocco Africa
0,0
0,5
1,0
1,5
2,0
2,5
3,0
2005
2006
2007
2008
2009
2010
2011
2012
2013
Population Growth Rate (%)
Morocco Africa
111213141516171
2005
2006
2007
2008
2009
2010
2011
2012
2013
Life Expectancy at Birth (years)
Morocco Africa
II
Annex II. Table of AfDB Portfolio in the Country (May 2014)
SECTEUR AGRICOLE 3,0 0,9 3,6 133 211 436 159 791 692 117 697 009 42 013 274 73,7% 88,3% 7,3%
1 Projet d'ap. tech. prom. jeunes entrepreneurs - DON PRI 12-janv.-12 4-May-12 4-May-12 31-oct.-14 2,4 0,8 3,8 UC 497 200 569 244 157 874 339 326 31,8% 100,0%
2 Projet d'ap. au Prog. nat. d' eco. d'eau d'Irrig. (PAPNEI) 14-déc.-09 01-mai-14 2-Jul-10 31-Dec-15 4,5 0,7 6,7 EUR 44 679 184 53 590 000 12 339 128 41 250 872 23,0% 65,0%
3 Appui tech. dév. Infrastr. d’irrigation - DON PRI 21-févr.-11 17-mars-11 17-mars-11 30-juin-14 3,3 1,0 0,8 UC 494 200 494 200 158 834 335 366 32,1% 100,0%
4 Programme d' appui au Plan Maroc Vert (PAPMV) 18-juil.-12 7-sept.-12 24-oct.-12 31-juil.-14 1,9 0,9 3,3 EUR 87 540 852 105 000 000 105 000 000 0 100,0% 100,0%
SECTEUR TRANSPORTS 5,1 0,7 6,3 487 727 606 585 000 000 145 278 588 112 436 639 334 131 243 30,7% 31,1% 21,6%
5 2è phase Progr. Nation. de routes rurales (PNRR 2) 5-sept.-07 23-nov.-07 8-mars-08 31-déc.-14 6,8 0,9 6,2 EUR 37 517 508 45 000 000 45 000 000 0 100,0% 100,0%
6 3ème Projet aéroportuaire 16-avr.-09 8-mai-09 22-oct.-09 31-déc.-15 5,2 0,7 6,3 EUR 200 093 377 240 000 000 30 175 447 112 436 639 97 387 914 23,7% 32,0%
7 Projet d'augm. de capa. Ferrov. Tanger-Marrakech 17-déc.-10 17-mars-11 30-Jun-11 31-déc.-16 3,5 0,5 6,5 EUR 250 116 721 300 000 000 70 103 141 229 896 858 23,4% 20,0%
SECTEUR ENERGIE 2,5 0,5 6,0 678 220 003 810 070 000 175 266 885 68 000 000 566 803 115 23,6% 33,6% 34,0%
8 Progr. déve. réseau transp. et réparti. élect. 02-déc.-09 11-déc.-09 29-Apr-10 31-déc.-14 4,5 0,9 4,9 EUR 91 559 394 109 820 000 45 713 198 64 106 801 41,6% 35,0%
Projet de la centrale solaire de Ouarzazate 16-mai-12 19-nov.-12 19-nov.-12 31-déc.-16 2,1 0,4 6,2 EUR 140 065 364 168 000 000 25 250 000 68 000 000 74 750 000 25,3% 56,0%
Projet de la centrale solaire de Ouarzazate (CTF) 16-mai-12 19-nov.-12 19-nov.-12 31-déc.-16 2,1 0,4 6,2 USD 65 461 734 100 000 000 40 000 000 60 000 000 40,0% 100,0%
Programme intégré éolien et PERG 13-juin-12 19-déc.-12 19-déc.-12 31-déc.-16 2,0 0,4 6,3 EUR 299 306 343 359 000 000 64 303 687 294 696 313 17,9% 16,7%
Programme intégré éolien et PERG (CTF) 13-juin-12 19-déc.-12 19-déc.-12 31-déc.-16 2,0 0,4 6,3 USD 81 827 168 125 000 000 125 000 000 0,0% 6,1%
SECTEUR SOCIAL 1,2 0,7 1,8 205 850 832 232 850 544 140 544 942 92 386 480 60,4% 99,4% 10,7%
11 Appui strat. dével. enseig. Privés - DON PRI 11-mars-11 17-mars-11 09-juin-11 31-déc.-13 3,3 1,2 3,0 UC 470 406 470 406 470 406 0 100,0% 100,0%
12 Système Information Carte Sanitaire Don PRI 30-juil.-13 30-dec-13 30-dec-13 31-dec-16 0,9 UC 380 800 380 800 380 800
13 Université numérique UIR 10-oct.-13 27-fev-14 31-dec-16 0,7 UC 774 600 774 600 774 600 0,0%
14 Appui à l'adéquation format°-emploi (PAAFE) 22-juil.-13 26-juil.-13 02-oct.-13 31-déc.-15 0,9 0,3 2,4 EUR 101 903 666 116 000 000 70 000 000 46 000 000 60,3% 100,0%
15 Appui Couverture Médicale PARCOUM III 18-déc.-13 18-déc.-13 19-déc.-13 31-déc.-14 0,5 0,5 0,0 EUR 102 321 360 115 000 000 70 000 000 45 000 000 60,9% 100,0%
SECTEUR EAU ET ASSAINISSEMENT 3,4 0,7 5,7 359 924 034 423 977 643 74 549 577 50 064 000 299 364 066 19,9% 33,3% 17,1%
Dixième Projet d'AEP 19-nov.-08 26-déc.-08 17-juil.-09 31-déc.-14 5,6 0,9 8,0 EUR 28 213 166 33 840 000 23 436 489 10 403 510 69,4% 80,0%
Dixième Projet d'AEP 19-nov.-08 26-déc.-08 17-juil.-09 31-déc.-14 5,6 0,9 8,0 USD 34 917 289 53 340 000 35 105 440 18 234 560 65,8% 80,0%
Onzième Projet d'AEPA Rabat-Casa 12-mai-10 19-août-10 13-janv.-11 31-déc.-14 4,1 0,9 8,2 EUR 135 321 483 162 310 000 18 278 235 40 000 000 104 031 764 14,9% 40,0%
Onzième Projet d'AEPA Rabat-Casa 12-mai-10 19-août-10 13-janv.-11 31-déc.-14 4,1 0,9 8,2 USD 36 043 231 55 060 000 8 952 952 13 600 000 32 507 047 21,6% 40,0%
Douzième projet d'AEP de Marrakech 7-nov.-12 19-déc.-12 19-déc.-12 31-déc.-18 1,6 0,2 1,4 EUR 101 206 800 120 000 000 120 000 000 0,0% 3,0%
Douzième projet d'AEP de Marrakech 7-nov.-12 19-déc.-12 19-déc.-12 31-déc.-18 1,6 0,2 1,4 USD 24 017 070 37 000 000 37 000 000 0,0% 3,0%
19 Etude schéma directeur AEP MOULOUYA- DON PRI 10-janv.-13 22-mai-13 22-mai-13 31-déc.-14 1,4 0,7 4,4 UC 204 994 204 994 204 994 0 100,0% 100,0%
SECTEUR MULTISECTEUR 2,4 0,7 2,7 2 558 772 2 891 412 1 150 599 1 740 814 39,8% 77,7% 0,1%
20 Projet d'améliorat. du syst. de garantie - DON PRI 19-janv.-11 17-mars-11 17-mars-11 31-déc.-15 3,4 0,7 1,9 UC 464 988 464 988 312 188 152 800 67,1% 100,0%
21 Projet de renf. du contr. marché. fin. - DON PRI 13-déc.-10 17-mars-11 17-mars-11 31-déc.-14 3,5 0,9 3,1 UC 480 350 480 350 480 350 0 100,0% 100,0%
22Appui à la modernisation du cadre organisationnel de gestion
de la dette - DON PRI27-févr.-13 31-mai-13 31-mai-13 31-déc.-14 1,3 0,7 3,1 UC 536 976 536 976 79 705 457 271 14,8% 30,0%
23 Etude sur la croissance et l' emploi au Maroc - DON PRI 27-juin-12 7-sept.-12 7-sept.-12 31-déc.-14 2,0 0,8 2,4 UC 587 200 587 200 587 200 0,0% 100,0%
24Projet d'Appui à l'élaboration du code monétaire et financier
marocain - DON PRI20-sept.-12 19-déc.-12 19-déc.-12 31-déc.-15 1,7 0,5 3,0 UC 489 258 489 258 145 986 343 272 29,8% 60,0%
SECTEUR PRIVE 3,6 0,6 7,8 177 133 336 198 877 124 186 858 124 12 019 000 94,0% 94,5% 9.1%
25 Fond Argan pour le développement des infrast. 17-févr.-10 21-juil.-10 21-juil.-10 31-déc.-18 4,3 0,5 5,1 EUR 13 479 000 15 000 000 2 981 000 12 019 000 19,9% 19,9%
26 Prêt à l'Office Chérifien des Phosphates 29-juin-11 10-mai-12 10-mai-12 10-mai-15 3,0 0,7 10,5 USD 163 654 336 250 000 000 250 000 000 0 100,0% 100,0%
Récapitulatif: Répartition sectorielle des opérations Approbations (millions EUR) Situation des décaissements
Montant du portefeuille Total %
En Unités de compte 1 784 160 297 100,0%
Prêts (15 projets) 1 778 779 325 99,7%
Dons (11 projets) 5 380 972 0,3%
En Euros 2 182 957 776
Actuel Proj. 2014
Montant Total des décaissements en Euros 841 345 723 1 179 197 606
Prêts 838 996 229 Dons 2 349 495
Taux de décaissement global 38,54% 54,0%
Prêts 38,55% Dons 37,36%Montant moyen par prêt (en UC) 111 173 708
Delai moyen de mise en vigeur (mois) 4,9 Prêts 5,1 Dons 2,1Age relatif du portefeuille (an) *** 0,7
Age moyen du portefeuille (an) 3,1 Prêts 3,0 Dons 1,9
Note: Les zones gisée correspondent à des opérations non encore en vigueur ( ψ): Projet non encore en vigueur et par conséquent non inclus dans la détermination du taux de décaissement global du portefeuille.
* PRI: Pays à revenu intermédiaire ** FAE : Facilité africaine de l'eau *** Age relatif (ratio < ou = à 1): Age du projet depuis sa mise en vigueur rapporté à la période entre la date de mise en vigueur et la date de clôture telle que prévue à l'évaluation du projet.
Nbre Nom du ProjetDate
d'approbation
Date de
signature
Date de
mise en
vigueur
Date de
clôture
Age
moyen
projet
(an)
Age
relatif
du
projet
(an)
delai
mise en
vigeur
(mois)
Part
dans le
portefe
uille
Monnaie
du prêten Unités de
compte
en monnaie du
prêt (total par
sect. en EUR)
ActuelProject.
2014
Montant approuvé Décaissement
cumulé en
monnaie du
prêt par projet /
en euro par
secteur
Taux décaissements
cumulés (en %)Annulation en
monnaie du
prêt
Montant non
décaissé en
monnaie du prêt
par projet /en
EUR par secteur
9
10
16
17
18
158
643 634
476
1091
2008 2009 2010 2011 2012
Agric; 6,6%
Transp.; 24,3%
Energ.; 33,7%
Eau/ass.; 21,3%
Multisect.; 5,2%
Sect. privé; 8,8%
88%
31%34%
99%
45%
81%
95%
56%
74%
29%20%
60%
30%
43%
94%
38%
Tx déc. prév. fin 2014 Tx de décais. 28 Février 2014
158
643 634
476
1091
231
2008 2009 2010 2011 2012 2013
Agric; 7%
Transp. 22%
Energ.; 34%
Social 11%
Eau/ass. 17%
Multisect.; 0,1%
Sect. privé 9%
III
Annex III. Major Related Ongoing Projects Financed by the Bank and Other Development Partners of Morocco
Donors Amount F.E. Projects Progress Status
AFD
AfDB
EIB
WB
CTF
KFW
EU/NIF
1 042 000 000 EUR Ouarzazate Solar Power Station Project - Phase I (NOORo I) Ongoing
AfDB 109 820 000 EUR Electricity Transmission and Distribution Network Development Project Ongoing 359 000 000 EUR Integrated Wind Energy, Hydro Power and Rural Electrification Programme Commencing
CTF/AfDB 125 000 000 USD Integrated Wind Energy, Hydro Power and Rural Electrification Programme Commencing WB 122 100 000 EUR Support to the National Electricity and Drinking Water Authority (Electricity Branch) Ongoing EIB 152 000 000 EUR Electrical Power Grids II Ongoing EIB 180 000 000 EUR Electrical Power Grids III Ongoing EIB 150 000 000 EUR Hydroelectricity II (Abdelmoumen Energy Transfer Pumping Station) Commencing EIB 200 000 000 EUR 850 MW Integrated Wind Energy Programme Commencing AFD 57 000 000 EUR Programme to Reinforce the High Voltage and Medium-Voltage Electrical Power Grid in
Morocco Ongoing
AFD 50 000 000 EUR Development of the Transmission Network Ongoing KFW 100 000 000 EUR Programme to Reinforce the High-Voltage and Medium-Voltage Electrical Power Grid in
Morocco Ongoing
KFW 26 000 000 EUR Distance Management and Rehabilitation of Hydroelectricity power stations Ongoing KFW 20 000 000 EUR Low-Consumption Loans Ongoing IsDB 40 000 000 EUR Rural Electrification Programme (PERG) - Last tranche Ongoing IsDB 99 850 000 EUR Extension of the Quay at the Jorf Lasfar Power Plant Ongoing IsDB 200 000 000 USD M’Dez El Menzel Hydroelectricity Complex Commencing EBRD 60 000 000 EUR Rural Electrification Programme (PERG) - Last tranche Ongoing OFID 60 000 000 USD Rural Electrification Programme (PERG) - Last tranche Ongoing KFAED 20 000 000 KWD Development of the Southern Network Ongoing
IV
Annex IV. Map of the Project Area
The staff of the African Development Bank Group (AfDB) have provided this map for the exclusive use of
readers of this report to which it is appended. The appellations and the demarcations on this map do not imply
any judgment on the part of the ADB Group and its members concerning either the legal status of a territory or
the approval or acceptance of its boundaries.
V
Annex V. Note on the Moroccan Solar Programme and on the Implementation of Phase I
The Moroccan Solar Programme was officially launched on 2 November 2009 in Ouarzazate by His Majesty
King Mohamed VI. The Solar Programme is aimed at developing the capacity to generate at least 2,000 MW
of electricity from solar energy by 2020. This production capacity will represent 14% of the projected
electricity output in 2020. The programme's total investment cost is estimated at USD 9 billion. The first solar
power plant is scheduled to be commissioned in 2015. This programme, which is international in scope, will
help to generate an annual output of 4500 GWh, or 14% of Morocco’s projected energy demand in 2020.
Annually, it will generate 1 million ton of oil equivalent (TOE) in fuel savings and avoid the emission of 3.7
million tons of CO2.
Some initial 5 (five) sites with a total surface area of 10,000 ha were identified for the development of the solar
programme which falls within the framework of Morocco's new energy strategy aimed at raising the share of
renewable energies to 42% of the electricity mix in 2020, in accordance with the High Directives of the
Sovereign. The solar programme will be developed through integrated projects. Apart from electricity
generation, the solar programme includes training, technical expertise, research and development, the
promotion of an integrated solar industry and potentially the desalination of sea water. Implementation of the
solar programme was entrusted to the Moroccan Agency for Solar Energy (MASEN), a State-owned limited
liability company established in March 2010. It is jointly-owned, with equal shareholding, by the Moroccan
State, the Hassan II Fund for Economic and Social Development, the National Electricity and Drinking Water
Authority (ONEE) and the Energy Investments Corporation (SIE).
Ouarzazate is the first implementation site of the solar programme. The Ouarzazate solar complex, with a
capacity of approximately 500 MW is scheduled to be developed in two main phases: (i) Phase I comprises
the construction of all common infrastructure (access roads, water supply, electrical power grids for energy
evacuation, telecommunications, safety, etc.) and construction of the first 160 MW solar plant called NOORo
I, under a PPP, which will be equipped with thermal energy storage facilities capable of running for three hours
at full capacity, thus enabling the plant to increase its electricity output during peak periods which are from 5
p.m. to 10 p.m. The electrical power output of the NOORo I power plant is estimated at 370 GWh per year.
Compared to an electricity power plant that runs on heavy fuel oil, the NOORo I power plant will help to avoid
the emission of greenhouse gases equivalent to 240,000 tons of CO2 per year.
Common Infrastructure: The construction of common infrastructure financed with counterpart funds
(MASEN, ONEE) is at a very advanced stage. The access road to the site, which is 4 km long from National
Highway No. 10 (Ouarzazate - Errachidia) has been completed and has been operational since the end of 2013.
Electricity supply, telecommunications and safety infrastructure has also be constructed. The remaining
common infrastructure is being constructed and is at an advanced stage. These are: (i) construction of the
reservoir and water treatment plant; (ii) laying of the raw water supply pipe between the complex and the
Mansour Ed Dahbi dam situated 25 km away; (iii) the 225 kV electricity post for evacuating the entire
electricity output of the complex; and (iv) 225 kV lines for evacuating energy to Ouarzazate, Errachidia and
Tazarte. The 225 kV lines leading to Ouarzazate and Errachidia are being completed and are financed by the
Bank under the electricity transmission and distribution network development project. According to the
timeframe in the works contract, all common infrastructure will be constructed by the beginning of 2015,
except the 225 kV line leading to Tazarte scheduled for end-2016.
Construction of the NOORo I Power Plant: The developer for NOORo I was selected under a PPP, through
a two-stage international competitive bidding process, preceded by pre-qualification. The pre-qualification
process was launched on 29 July 2010. As of 4 October 2010, the deadline for submission of documents, 19
application files had been received. After an assessment of these files, 6 (six) consortiums were pre-qualified.
The first stage in the bidding exercise was launched on 18 May 2011. As of the deadline for submission of
bids for the first stage, 4 (four) pre-qualified consortiums had submitted their technical bids. At the end of the
second stage of the bidding exercise (revised technical bids and commercial bids), the consortium led by
International Company for Water and Power (Saudi Arabia), whose operational members are Aries
Ingenieria y Sistemas and TSK Electronica y Electricidad, was selected because it proposed a more
VI
economical rate per kWh (peak rate of MAD 1.6187/kWh net of VAT). The Bank approved the final result of
the selection in October 2012.
A project company named ACWA Power Ouarzazate (APO) was created on 8 November 2012 to construct,
operate and maintain NOORo I for 25 years. APO is owned by ACWA Power International (majority stake of
75%) and MASEN (25%) through its subsidiary, MASEN Capital. APO entrusted the construction work to a
Spanish group composed of Acciona, Sener and TSI, under an Engineering Procurement Construction (EPC)
contract. The NOORo I power plant, with a capacity of 160 MW, will use concentrated solar thermal
technology with parabolic trough reflectors and 3 hours of thermal storage at full capacity.
Works on the power station were officially launched on 10 May 2013 and His Majesty King Mohamed VI
effectively presided over the occasion. NOORo I is scheduled to be completed at the end of 2015 after a
construction period of 22 months followed by a maximum test period of 6 months. It will be the largest
parabolic trough solar thermal power plant in the world. The first parabolic trough reflectors were installed in
March 2014. The overall construction rate of the power plant was over 30% in May 2014 when the Phase II
appraisal mission visited the project. Furthermore and in accordance with its contract, APO will have to build
the NOORo I power plant with a total industrial integration rate of at least 30%. APO considers that this rate
will be attained and even exceeded. In May 2014, the total industrial integration rate achieved by APO was
evaluated at approximately 6%. Within the same period, the total number of persons working on the site of the
complex was 1,400, of whom 42% came from the project area (Ouarzazate/Ghessate).
The total cost of the NOORo I power plant is approximately MAD 7 billion. MASEN raised the necessary
resources from donors to cover 80% of the eligible investment expenditure, amounting to a total debt of MAD
6.07 billion. The remaining 20% will be borne by APO shareholders. The following amounts were raised from
donors: AFD (EUR 100 million loan); AfDB (EUR 100 million loan); EIB (EUR 100 million loan); KFW
(EUR 100 million loan); CTF (USD 200 million loan, 50% from the AfDB and 50% from the World Bank)
and NIF/EU (EUR 30 million grant). On 26 April 2013, MASEN and APO signed a credit facility agreement
for retrocession of the loans.
On 19 November 2012, the electricity supply and purchase contract between MASEN and APO was signed.
On the same day, MASEN and ONEE signed a contract for the supply and purchase of the electricity generated
from NOORo I. As regards the State's financial support to the NOORo I project, a specific convention was
signed on 13 July 2012 between MASEN and the Moroccan State which has undertaken to ensure the financial
equilibrium of the project by financing the gap between the purchase price of a kWh by MASEN from APO
and its selling price to ONEE. In November 2011, the World Bank also approved the award of a loan of USD
200 million to the State of Morocco to support the financial equilibrium of NOORo I.