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Document of The World Bank FILECOPY FOR OFFICIALUSE ONLY Public Disclosure Authorized Report No.1156-MOR Public Disclosure Authorized STAFF PROJECT REPORT THE SIDI CHEHO-AL MASSIRA HYDRO PROJECT MOROCCO Public Disclosure Authorized June 11, 1976 Public Disclosure Authorized Europe, Middle East and North Africa Regional Office This documentbas a restrieteddistribution and may be used by recipients only ln the performanceof their officiaiduties. Its contents may not otherwisebe disclsed without World Bank authorization. CURRENCY EQUIVALENTS (April 1976) Currency Unit Dirham (DH) DH1 = Centimes (ctm) 100 DH1 = US$0.23 DH4.38 = US$1.00 DH 1,000 = US$228.31 DH 1,000,000 (MDH1) = US$228,310 (MUS$ 0.228) WEIGHTS AND MEASURES 1 meter (m) 3.281 feet (h) 2 1 hectare (ha; 10,000 m ) = 2.471 acres (ac) 1 square kilometyr (km2 ) 0.386 square mile (mi2 ) 1 cubic meter (m ) = 35.315 cubic feet (ft3 ) = 264.2 gallon (gal) = 6.289 barrels (bbl) = 220.0 Imperial gallons (Igal) 1 kilogram (kg) = 2.206 pounds (lb) 1 ton (t; metric; 1,000 kg) 1.100 short tons (sh tons) 1 kilowatt (kW) = 1,000 Watts (103 W) 1 Megawatt (MW) = 1,000 kW (10 W = 103 kW) 1 kilowatthour (kWh) = 1,000 Watthours (103 Wh) = 860.4 kilocalories (kcal) 1 Megawatthour (MWh) = 1,000 kilowatthours 1 kilovolt (kV) = 1,000 Volts (V) 1 kilovolt ampere (kVA) = 1,000 Volt amperes (103 VA) 1 Megavolt ampere (MVA) 1,000 kilovolt amperes 1 kilocalory (kcal) = 3.968 British thermal units (Btu) 1 ton coal equivalent (tce) = 7.106 kcal 1 Hertz (Hz) = 1 cycle/second per second; per hour; per day; per year = /s; /h; /d; /a GLOSSARY OF ABBREVIATIONS MTPC = Ministry of Public Works and Communications (Ministère des Travaux et des Communications) MI = Ministry of the Interior (Ministère de l'Interieur) ONE = National Office for Electricity (Office National de l'Electricité) Regie = Municipal Service for Water and Power (Régie Autonome de Distribution d'Eau et d'Electricité) ONEP = National Office for Water (Office National de l'Eau Potable) OCP = Phosphate Mining Company (Office Chérifienne de Phosphate CNA = National Coal Company (Charbonnages Nord-Africain) SAMIR = Oil Refinery (Société Anonyme Marocaine Italienne de Raffinage) SCP = Oil Ref-nery (Société Chérifienne des Petroles) FINANCIAL YEAR = CALENDAR YEAR FOROFFICLAL USE ONLY STAFF PROJECT REPORT SIDI CHEHO-AL MASSIRA HYDRO PROJECT MOROCCO TABLE OF CONTENTS Page No. INTRODUCTION AND SUMMARY............................... i-xiii 1. THE ENERGY SECTOR ...................................... l (a) Primary Energy Resources and Development .......... l (b) The Power Subsector ............................... 2 2. BORROWER AND EXECUTINC AGENCIES ........................ 7 (a) Hydraulique ....................................... 7 Construction Experience ...................... 7 (b) Office National de l'ELectricite (ONE) .... ........ 7 Background.......... 7 Board ........................................ 8 Organization and Management .... .............. 8 Iersonnel .................................... 8 'rraining ..................................... 9 Facilities ................................... 9 Development of Facilities .................... 10 International Interconnection .... ............ 12 Planning ..................................... 12 Operations ................................... 13 3. TH1E rMARKFTAND THE IIEANS T(o MtET IT .................... 16 -larket Aspects ............................... 16 Access to Supply ............................. 18 Forecasting .................................. 18 Balance of Energy and Capacities .... ......... 19 Mfaximum Demand ............................... 20 Satisfaction of Requirements .... ............. 20 Losses ....................................... 20 Transmission and Distribution Facilities ..... 21 Table 3-1 I1istoricand Forecast Sales of ONE and the Regies 22 Table 3-2 1iistoricand Forecast Balances of Energy and Capacities 23 This report was prepared by Messrs. W.F. Kupper (Engineer) and Y.P. Buphomene (Financial Analyst, Consultant) fron information obtained on an appraisal mis- sion to Morocco in November/December 1975. This documenthas a restricteddistribution and may be used by recipientsonly in the performance of their officialduties. Its contents may not otherwisebe disclosedwithout Worid Bank authorization. ,TABLE 0F CONTENTS (Continued) Page No. 4. PROGRMI AND PROJECT ......................... 24 (a) Construction Program 1975-1980 .24 Generating Plant .24 Transmission .24 Urban and Rural Distribution .25 Construction Program Cost .25 Economic Share of Costs of Dams .26 (b) The Project ....................................... 27 Description ................................... 27 Background ................................... 29 Objectives ................................... 29 Construction and Supervision Responsibilities. 29 Project Cost ..... 30 Project Financing Plan.32 Fngineering and Supervision ................. 33 Merija Hydro Plant Study .................... .. 33 Dam Design and Inspection .................... 33 Implementation ............................... 34 Procurement .................................. 34 Construction Schedule ........................ 35 Disbursements ................................ 34 Operation of the Sidi Cheho Hydro Works ...... 37 Environment and Resettlement ................. 37 Table 4-1 Development Program Cost...................... 38 Table 4-2 Project Cost Estimate ........................ 39 5. FINANCE ................................................ 40 (a) Background ........................................ 40 (b) Past Performance .................................. 40 Operating Results ............................ 40 Taxes and Duties ............................. 41 Rate of Return ............................... 41 Receivables .................................. 41 Inventories ................................... 43 Valuation of Assets .......................... 43 Cash Flow .................................... 44 Insurance .................................... 45 Financial Management Problems ................ 45 Accounting ................................... 45 Budgeting .................................... 45 Audit ........................................ 45 (c) Future Performance ................................ 46 Rate of Return ............................... 46 Income Statements ............................ 47 Balance Sheets .................. ............. 48 (d) Financing Plan ..................................... 49 Terms and Conditions of the Loan .... .......... 50 TABLE OF CONTENTS (Continued) Page No. Table 5-1 Balance Sheets ............................... 51 Table 5-2 Income Statements ............................ 52 Table 5-3 Statement of Sources and Applications of Funds 53 Table 5-4 Borrowing 54 6. ECONOMIC ANALYSIS .55 (a) Tariffs and Rates .55 General .55 Marginal Cost of Supply .56 (b) Justification of Project .56 Optimum Development .56 River Basin Study .57 Basic Approach for Economic Study .57 Ranking of Hydro Plants .59 Comparison of Generation Development Schemes 59 Comparison of Industrial and Potable Water Developments .60 Irrigation Developments .61 Comparison of the Multipurpose Scheme "with" and "without" Sidi Cheho .62 Economic Rate of Return .62 Return on Project Components .64 Table 6-1 Multipurpose Comparison: Summary of Present Values of Costs and Cost Avoided 65 Table 6-2 Rate of Return on Investment: Summary of Present Values of Costs and Benefits 66 7. AGREEMENTS REACHED AND RECOMMENDATIONS .... ............. 67 ANNEX Documents Available in Project File MAPS 1. Morocco: Main Power System, Fossil Fuel Resources (IBRD 12065R) 2. Morocco: Development of Oum er Rbia Basin (IBRD 11853R) SIDI CUEHO-AL MASSIRA KYDRO PROJECT MOOROCCO INTRODUC7?ION AND SUMMARY I. THE ENERGY SECTOR (a) Primary Energy Resources and Development i. Thcl main indigenous energy resources in Morocco are coal and hydro- power. Known cil deposits are nearly exhausted but exploration efforts have been intenslfied. Large deposits of bituminous schists are a possible source of oil in the long-tern but their development will be expensive. A UNDP- financed uranium exploration program is under way. 2. Eniergy demand has growa at 7% per year on average over the last 14 years with an upward trend in the growth rate, total consumption rising froam 1,975 millicn tons coal equivalent (mtce) in 1961 to 4,707 mtce in 1974. Energy use has intensified over the period and energy consumption per capita has risen from 164 kgce in 1961 to 282 kgce in 1974; however, this still leaves M4orocco near the lower end of the world range (10-12,000 kgce). Morocco is highly dependent on imported oil, the share of which in total energy consumption rose from 60% in 1961 to nearly 80% in 1974. Oil is main- ly imported as crude, for refining in two refineries with a combined capacity of 3 million tons per year. 3. Moroccan forecasts of energy demand imply growth rates in the range 9-13% per year. They also foresee increasing dependence on imported oil, demand for which is expected to rise 3-4 times over the next 10 years from 3 million tons in 1974 to 10-13 million tons in 1985. The cost of oil imports by 1985 is projected at 2-6 times the 1974 figure of US$260 million, depending on the demand and cil price assumptions adopted. 4. AUl energy prices are subject to Government control. Except for petrol, the prices of petrcleum products in Morocco remained unchanged from 1962 until the end of 1975. Through a compensation account, the Government has subsidized the