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PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Report No.: AB5277
Project Name
Region
Sector
Project ID
Borrower(s)
Implementing Agency
Environment Category
Date PID Prepared
Estimated Date of
Appraisal Authorization
Estimated Date of Board
Approval
MA-Energy Development Fund
MIDDLE EAST AND NORTH AFRICA
Renewable energy (40%); Power (30%);District heating and
energy efficiency services (15%);General transportation sector
(15%)
P120166
KINGDOM OF MOROCCO
The Ministry of Energy, Mines, Water and the Environment
[ ] A [ ] B [ ] C [ ] FI [X] TBD (to be determined)
December 28, 2009
Late April, 2010
July 29, 2010
1. Key development issues and rationale for Bank involvement
Morocco is facing a number of challenges in its energy sector. GDP growth and increasing
population are driving rapid increases in investment needs. Morocco also relies heavily on
imports for 95 percent of its energy needs. This import dependency is growing as modest
domestic resources are depleted, placing a significant fiscal burden on the government to
maintain retail price stability in the face of high and volatile international prices. High reliance
on oil makes Morocco very vulnerable to oil price shocks. Furthermore, Morocco’s overall CO2
emissions have increased 35 percent during 2000-06 and are continuing to rise rapidly.
There is therefore a need to foster considerable extra investment in the Moroccan energy sector
going forward. Increased energy efficiency, especially with regards to industry and increased
domestically resourced (renewable) energy would be required to reduce import dependency.
Curbing energy use for transport (through greater efficiency and modal shifts) would play an
important role in reducing dependency on imports. There is also a need to diversify to less
carbon intensive forms of generation, use energy more efficiently or switch to less carbon
intensive fuels in end-use sectors and promote modal shifts to less carbon intensive transport
modes.
The [draft] Country Partnership Strategy (CPS) identifies activities to support a well functioning
energy sector, which will act as an engine of sustainable growth and of competitiveness for the
economy. To that end, the CPS will support actions in a number of areas including the following:
 Energy efficiency and renewable energy ( “maitrise de l’énergie”)
 Technology promotion for local use and therefore local environmental sustainability, but
also for exports, and global climate change mitigation and increased performance of the
national economy

Governance of the energy sector, to enable the necessary institutional and sector reforms
to improve sector performance.
The ongoing CPS discussions have also highlighted the importance of improving urban transport
services. Government officials at various levels in the Ministries of Finance, Economic Affairs,
and Interior have expressed their keen interest in having Bank support. Accordingly, there is also
an Urban Transport DPL under preparation and the urban transport projects financed under this
project will complement the work of the DPL.
One of the three pillars of the CPS specifically addresses sustainable development in a changing
climate. It identifies the need to target financing mechanisms for low carbon infrastructure
projects especially through low carbon power generation capacity. The CPS also points to the
need for urban transport policy to address transport related growing greenhouse gas emissions –
especially in Casablanca.
The proposed project addresses nearly all these actions. It will support the institutional
development of the Fond de Développement de l’énergie (“FDE”) which will in turn support
improved governance in the sector. The financing packages offered by the FDE supported by the
proposed IBRD project and Clean Technology Fund (CTF) will ensure more projects achieve
financial closure thereby promoting investment in technologies that lead to energy efficiency (in
all end-use sectors—industry, buildings and transport) and increased renewable energy. Energy
conservation through modal shifts to urban transport also contributes to improving sustainable
development and mitigating GHG emissions and reducing transport time and costs, leading to
improved competitiveness.
2. Proposed objective(s)
The project development objective is the establishment of the Energy Development Fund (or
FDE) as an institution capable of providing long-term financing in a manner that maximizes
private sector financing with the intention of transforming the energy sector and the most energy
intensive end-use sectors. Key performance indicators would be: increase in investments in
renewable energy/energy efficiency (i.e. amount of funding leveraged); increase in share of
renewable energy making up Morocco’s generation capacity; energy savings resulting from FDE
investment activities; increased modal shift to public transport.
3. Preliminary description
The proposed project will have, as a key component, institution building to support the
development of the FDE. The FDE will need to be designed to fully complement the significant
private sector interest in projects in Morocco and the need to crowd in private sector finance
wherever possible. The project will offer technical assistance for building up the FDE’s
institutional/governance capabilities and will offer linkages to wider Bank energy and transport
Development Policy Loans (DPLs) and other Bank operations in those sectors and the sector
reforms covered by such operations.
As well as supporting the institutional set up of the FDE, the proposed project, through a
combination of IBRD lines of credit ($100m) and CTF loans ($150m), will expand the FDE’s
capability to offer long-term debt financing to public and private sector projects. It will (i) allow
the FDE to provide long-term debt financing support to sub projects through direct lending by
FDE to infrastructure projects (possibly by joining a consortium of banks) and (ii) deliver Clean
Technology Funds to the FDE for disbursement to sub-projects that meet CTF criteria. Overall,
the project will complement funding already available to the FDE – but which has mainly been
earmarked for use as equity financing. Broadening the mix of sources of funds available to the
FDE (i.e. IBRD and CTF) will allow the FDE to better tailor financing packages to the particular
needs of less financially viable sub-projects to allow them to reach financial closure.
4. Safeguard policies that might apply
During project preparation, an indicative pipeline of likely projects will be developed which will
provide a better picture of the safeguards that may be required in each of the priority sectors.
Environment and social risks exist in different ways for all three priority sectors. Renewable
energy may face environment risk in installation of generating stations, as well as environment
and social risk in the installation of transmission lines connecting supply with load. Energy
efficiency may face environmental risk in some of the options for demand reduction, for
example, mercury content of CFLs and proper disposal procedures. Urban transport may face
social risks in the disturbance of local peoples in the construction work related to the urban
transport projects.
None of these risks represent new challenges and all have been addressed in numerous contexts
around the world (as well as in Morocco). The World Bank (and African Development Bank)
will provide Technical Assistance and other support as needed to help the GoM to properly
manage and mitigate these risks.
5. Tentative financing
Source:
Borrower
International Bank for Reconstruction and Development
Climate Investment Funds
Total
6. Contact point
Contact: Mustafa Zakir Hussain
Title: Senior Infrastructure Finance Specialist
Tel: (202) 458-9510
Fax:
Email: [email protected]
($m.)
1000
100
150
1250