AFRICAN DEVELOPMENT BANK
Piblic Disclosure Authorized PROJECT : NOOR MIDELT SOLAR COMPLEX PROJECT – PHASE I (NOORM I AND NOORM II SOLAR PLANTS)
COUNTRY : KINGDOM OF MOROCCO
PROJECT APPRAISAL REPORT
Piblic Disclosure Authorized
RDGN/PERN
November 2017
Translated Document
TABLE OF CONTENTS
CURRENCY EQUIVALENTS…………………………………………………………..… i ABBREVIATION AND ACRONYMS………………………………………………...... … ii 1. STRATEGIC THRUST AND RATIONALE ...... 1 1.1. Project Linkages with Country Strategy and Objectives ...... 1 1.2. Rationale for the Bank’s Involvement ...... 2 1.3. Aid Coordination ...... 3
2. PROJECT DESCRIPTION ...... 3 2.1 Project Description and Components ...... 3 2.2 Technical Solution Adopted and Alternatives Explored ...... 4 2.3 Project Type ...... 5 2.4 Project Cost and Financing Arrangements ...... 5 2.5 Project Area and Beneficiaries ...... 6 2.6 Participatory Approach for Project Identification, Design and Implementation ...... 7 2.7 Bank Group Experience and Lessons Reflected in Project Design ...... 8 2.8 Key Performance Indicators ...... 9
3. PROJECT FEASIBILITY ...... 9 3.1 Economic and Financial Performance ...... 9 3.2 Environmental and Social Impact ...... 10
4. PROJECT IMPLEMENTATION ...... 13 4.1 Implementation Arrangements ...... 13 4.2 Monitoring ...... 17 4.3 Governance ...... 17 4.4 Sustainability ...... 18 4.5 Risk Management ...... 18 4.6 Knowledge Building ...... 19
5. LEGAL FRAMEWORK ...... 19 5.1 Legal Instrument...... 19 5.2 Conditions Associated with the Bank’s Intervention ...... 19 5.3 Compliance with Bank Policies ...... 21 6. RECOMMENDATIONS ...... 21
Appendix I: Comparative Socioeconomic Indicators of Morocco ...... I Appendix II: Table of Bank Portfolio in Morocco (July 2017) ...... II Appendix III: Major On-going Related Projects in Morocco Financed by the Bank and Other Development Partners ...... V Appendix IV: Map of the Project Area ...... VII Appendix V: Note on the Moroccan Solar Programme and its Deployment ...... VIII
CURRENCY EQUIVALENTS June 2017
UA 1 = 13.4564 MAD UA 1 = 1.23369 EUR UA 1 = 1.38432 USD EUR 1 = 1.1221 USD EUR 1 = 10.9074 MAD USD 1 = 9.7205 MAD
FISCAL YEAR 1 January 31 December
WEIGHTS AND MEASURES
1 metre (m) = 3.280 feet 1 kilometre (km) = 1 000 m 1 acre (a) = 100 m² 1 square kilometre (km²) = 1 000 000 m² 1 hectare (ha) = 10 000 m² 1 kilogramme (kg) = 2.204 pounds 1 metric tonne = 1 000 kg 1 metric tonne = 2 204 pounds
V = Volt A = Ampere VA = Volt-ampere W = Watt Wh = Watt hour 1 kV = Kilovolts = 1 000 V 1 kVA = Kilovolt-ampere = 1 000 VA 1 kW = Kilowatt = 1 000 W 1 MW = Megawatt = 1 000 kW = 1 000 000 W 1 GW = Gigawatt = 1 000 MW = 1 000 000 kW 1 kWh = Kilowatt hour = 1 000 Wh 1 MWh = Megawatt hour = 1 000 kWh = 1 000 000 Wh 1 GWh = Gigawatt hour = 1 000 MWh = 1 000 000 kWh 1 toe = Tonne of oil equivalent (toe) = 41 868 joules = 11 630 kWh 1 Mtoe = Million tonnes of oil equivalent = 1 000 000 toe
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ABBREVIATION AND ACRONYMS
AFD French Development Agency AfDB African Development Bank AFESD Arab Fund for Economic and Social Development ANAPEC National Agency for the Promotion of Employment and Skills CBDs Competitive Bidding Documents COMA AfDB Country Office in Morocco CSP Concentrated solar power CSP Country Strategy Paper CTF Clean Technology Fund DEPP Directorate of Public and Private Institutions EBRD European Bank for Reconstruction and Development EIA Environmental Impact Assessment EIB European Investment Bank ENPV Economic Net Present Value ERR Economic Rate of Return ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan EU European Union FDE Electrification Development Fund FIRR Financial Internal Rate of Return GEF Global Environment Facility HCEFLCD High Commission for Water, Forests and Desertification Control HV High Voltage IGF General Inspectorate of Finance JICA Japan International Cooperation Agency KFW Kreditanstalt für Wiederaufbau (German Development Bank” LTA Lender Technical Advisor LV Low voltage MAD Moroccan Dirham MASEN Moroccan Agency for Sustainable Energy MEF Ministry of Economy and Finance (Morocco) MEMDD Ministry of Energy, Mines and Sustainable Development (Morocco) MENA Middle East and North Africa MIC-TAF Middle Income Countries’ Technical Assistance Fund (AfDB) MW Megawatt NGO Non-Governmental Organisation
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NIF Neighbourhood Investment Facility (European Union) NPV Net Present Value OFID OPEC Fund for International Development OFPPT Office of Vocational Training and Employment Promotion ONEE National Electricity and Water Authority (Morocco) PERG Global Rural Electrification Programme PERN Renewable Energy and Energy Efficiency Department (AfDB) PPP Public-Private Partnership PV Photovoltaic (solar) SEP Stakeholder Engagement Plan SIE Energy Investment Company SME Small and Medium-sized Enterprise SPC Solar Project Company TFP Technical and Financial Partners TOE Tonne of Oil Equivalent UA Unit of Account (AfDB) USD United States Dollar VHV Very High Voltage WB World Bank
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PROJECT INFORMATION SHEET BORROWER: Moroccan Agency for Sustainable Energy (MASEN)
EXECUTING AGENCY: Moroccan Agency for Sustainable Energy (MASEN) No. 50, Lot Massoudi Zénith Rabat, Angle rue Ait Malek Avenue Bir Kacem, Rocade Sud “Rabat-Casablanca” Rabat (Morocco), Fax: (212) 537 57 14 75 http://www.masen.ma/en/; http://www.masen.ma/fr/
Financing Plan (estimated) Sources Amounts (EUR million) Amounts (UA million) Instrument ADB (USD 240 million) 214 173 Loan CTF -ADB (USD 25 million) 22 18 Loan CTF-World Bank (USD 25 million) 22 18 Loan World Bank 178 144 Loan AFD 150 122 Loan EIB 342 277 Loan KfW 710 576 Loan NIF/EU 80 65 Grant (maximum amount) Private partners 307 249 Own funds MASEN 23 18 Own funds Total 2 048 1 660
Key AfDB Financial Information ADB Loan CTF-ADB Loan Loan Type Fully Flexible Loan Concessional Loan Loan Currency United States Dollars (USD) United States Dollars (USD) Maturity To be determined (up to 25 years 40 years maximum) Including the grace To be determined (up to 8 years 10 years period maximum) Interest Rate Base rate + Funding margin +Lending N/A spread + Maturity premium This interest rate must be above or equal to zero. Base Rate Floating (6-month EURIBOR, reset on N/A 1 February and 1 August or any other acceptable rate), with a free fixing option Loan margin 0.80% (80 basis points (bp)) N/A Financing cost margin Financing cost margin of the Bank in N/A relation to the 6-month EURIBOR
This margin is revised on 1 January and 1 July of each year and applied on 1 February and 1 August with the base rate Maturity premium To be determined: 0% if weighted average maturity <= 12.75 years
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0.10% if 12.75 < weighted average maturity <= 15 0.20% if weighted average maturity> 15 year Commitment fee 0.25% per annum of the undisbursed amount effective 60 days following the loan signature date and due on interest payment dates Front-end fee 0.25% of the loan amount Service commission N/A 0.25% per year of the disbursed loan amount not yet reimbursed. N/A 0.1% of the undisbursed amount, Administrative costs effective 120 days after the signature date, payable every six months Other commissions N/A N/A Base rate conversion Besides the free fixing option, the option* Borrower may revert to the floating rate or reset the rate on all or part of the disbursed amount of its loan. Transaction fees apply Rate cap or collar The Borrower may cap or collar the option* base rate for all or part of the disbursed amount of its loan. Transaction fees apply Loan currency The Borrower may change the currency conversion option* of all or part of its loan, whether disbursed or not, into another loan currency of the Bank.
Transaction fees apply.
* The related conversion options and transaction costs are governed by the Bank’s Directives on conversion available on the website https://www.afdb.org/en/documents/document/guidelines-for-conversion-of-loan-terms-july-2014-87643/ ** A weighted average maturity calculator is available on the website https://www.afdb.org/en/projects-and-operations/financial- products/african-development-bank/loans/
Timeframe – Main Milestones (expected)
Activities Date Approval of the project concept note May 2017 Project appraisal June 2017 Negotiation of loan agreements (AfDB and CTF/AfDB) October 2017 Project approval December 2017 Loan effectiveness (AfDB and CTF/AfDB) September 2018 Project completion December 2021 Last disbursement December 2023 Last reimbursement of the AfDB loan December 2043 Last reimbursement of the CTF/AfDB loan December 2058
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PROJECT SUMMARY
Project overview: The project is part of the deployment of the Moroccan Solar Programme (NOOR), which aims to develop a total power generating capacity of at least 2 000 MW by 2020. The first project under this programme was the Ouarzazate complex, with a total capacity of 580 MW, spread over four plants. The first plant (160 MW) was commissioned in January 2016 and the others will go operational in 2018. Two other sites totalling 100 MW are currently being developed and will be commissioned in 2018. The project before the Board aims to develop two solar power plants (NOORM I and NOORM II) with a cumulative capacity of up to 800 MW, under a public-private partnership (PPP). The plants will be connected to the national grid and will have a total annual output estimated at 1 886 GWh, thus guaranteeing electricity supply for more than 2 million Moroccans (almost 6% of the total population) and helping to avoid the release into the atmosphere of greenhouse gases equivalent to 0.7 million tonnes of CO2 per year. The project will help to improve the security of power supply in Morocco (where electricity is used by 99% of the population). It will be implemented by MASEN based on the same mechanisms put in place for previous projects (NOOR Ouarzazate Solar Complex - Phases I & II), which were financed by the same donors (including the Bank) and whose performance in terms of implementation is deemed satisfactory. The total cost of the project is estimated at EUR 2 048 million. The donors involved in its financing are, in addition to the Bank and the CTF, AFD, WB, EIB, KFW and NIF/EU. The project will be implemented over 48 months (2018-2021).
Needs Assessment: The acceleration of Morocco's economic and social development has generated a growing demand for electricity (6.5% on average per year since 2000). To overcome the heavy dependence on external markets (94% in 2009) for its supply of energy from modern sources, Morocco is implementing its new National Energy Strategy (2010-2030), adopted in March 2009, aimed at strengthening the security of supply through the development of renewable energies. By 2020, the installed capacity of electricity generation from wind, hydropower and solar sources should each amount to 2 000 MW, representing 6 000 MW of power generated from renewable sources. The aim is to increase the share of renewable energy in the energy mix. The share of renewable energy in the national installed capacity is expected to reach 42% by 2020 and 52% by 2030. Thanks to its Renewable Energy Programme, the share of energy from renewable sources in the country’s total installed capacity increased from 28% in 2009 to 33.4% in 2015.
Bank's Value Added: The Bank supported Morocco in mobilizing concessional (climate) resources from the CTF for the project. Following a joint submission by the Bank and the World Bank, the CTF Trust Fund Committee in June 2017 approved USD 50 million for financing the project, under the Bank's CTF Investment Plan for the promotion of the Concentrated Solar Power (CSP) technology in the MENA region ("CTF Investment Plan for MENA-CSP"). This highly concessional financing arrangement has an impact on the average cost of electricity generated by the project. The project will strengthen the Bank's role in Morocco's energy sector and its contribution to the promotion of green energy and innovative projects. Knowledge Building: The project will help to strengthen the volume of the Bank's innovative operations in the energy sector. The technical configuration of the two project plants, based on hybrid solar technology (a combination of the CSP and PV technologies), is not so common at this stage. The knowledge that will be capitalized through the project will enable Morocco and other Regional Members Countries of the Bank to better design and leverage opportunities for replication with support from the Bank and/or MASEN through its Directorate of International Cooperation and Partnerships, which works, among other things, for South-South cooperation.
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RESULTS-BASED LOGICAL FRAMEWOR Country and Project Name: Morocco- NOOR Midelt Solar Complex Project – Phase I (NOORM I and NOORM II Plants) Project Objective: Contribute to reducing Morocco’s energy dependency on outside sources through the deployment of electricity generation from renewable energy sources and the use of innovative technology. PERFORMANCE INDICATORS Means of RISKS AND MITIGATION MEASURES RESULT CHAINS Indicators (including CSIs) Baseline Targets Verification
Reduce Morocco's dependence - Fossil fuel imports will be avoided, thanks to - 2.5 million Reports: on imported fossil fuels renewable energies TOE/years by MMEE report 2020 MASEN report Increase the share of renewable - Share of renewable energies in the overall electricity 33.4% ONEE report
IMPACT energy in the energy mix supply (2015) 42% (2020) and 52% in 2030
Avoid greenhouse gas - Quantities of CO2eq emissions avoided per year, - 0.7 million tCO2 Reports: .Financial Risk: The difficulties that MASEN might encounter during the emissions thanks to the project per year from MMEE report operation phase, in financing the gap between the purchase price per kWh 2021 MEF report it pays to private developers (SPC) and the resale price to ONEE, given the Power generation from MASEN report use in the two project plants of concentrated solar power (CSP) technology, renewable sources is increased National power generation from renewable sources 10 465 GWh 12 351 GWh ONEE report the cost of which remains relatively high. (2015) (2021) Increase the national installed - National installed electricity generation capacity Risk Mitigation: (i) The downward trend observed in recent years in the power generation capacity from from renewable sources costs of CSP technology (MAD 1.62/kWh in 2012 compared with MAD renewable sources 2 727,5 MW 3 5275 MW 1.36/kWh in 2014 for the Ouarzazate solar complex CSP plants, - National installed electricity generation capacity (2015) (2021) representing a decrease of 16% and USD 9.45/kWH (June 2017) in recent from solar energy bid invitations for the 200 MW DEWA CSP project (Dubai); (ii) the use 182 MW 980 MW of PV-CSP hybrid solar technologies in the project to reduce generation (2015) (2021) costs by taking advantage of the relatively low costs of solar PV technology - Project’s industrial integration rate1 (MAD 0.46 /kWh in 2016 for invitations to bid issued by MASEN); and
OUTCOMES Enhance the local renewable (iii) Government's commitment to support the Moroccan Solar Programme energy industry - 35% (NOOR), including by granting MASEN a financial balance subsidy corresponding to the difference between MASEN's revenue derived from - Jobs created during the operation phase of project selling electricity to ONEE and the expenditure incurred in purchasing Create jobs power plants electricity from solar power companies; and (iii) proceeds realized by - 200 (10% held MASEN from the project will go towards bridging the gap. by women) - Jobs created during the construction phase - 3 000 (5% held by women)
1 The share of expenditure for local service delivery (companies) out of the total expenditure for the Engineering Procurement Construction (EPC) contract for the project's solar power plants.
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New installed capacity for the - The NOORM II 400 MW hybrid (CSP-PV) solar 01 (2021) Appraisal, Implementation Risk: MASEN could find it difficult to monitor the solar energy generation power plant (with a storage capacity of at least 5 progress, project, given the relatively high number of plants (solar/wind) it will have hours) is built and commissioned supervision to supervise over the period 2018-2020. and completion Mitigation Measures: (i) The quality and strength of MASEN’s 01 (2021) reports workforce, which has increased steadily from 10 in 2010 to 65 in 2015 and - The commitment of the State/MASEN in respect of 120 in 2017; (ii) the support system put in place by MASEN, which the NOORM I power plant is signed receives technical services or assistance from its consultants (consulting engineers and consulting firms of international repute in their respective State Commitments /MASEN - The commitment of the State/MASEN in respect of areas of expertise) on various aspects (technical, financial and fiscal, legal, the NOORM II power plant is signed 01 (2018) etc.); and (iii) MASEN’s recruitment of one or two Lender Technical Advisors (LTA) to supervise the construction of the plants on its behalf. - The power supply and purchase contract between the M power company of the NOOR I plant and MASEN is 01 (2018) Technological Risk: The difficulties that developers may encounter in the signed design and roll-out of the project's two hybrid (CSP-PV) solar power Electricity purchase contracts plants, given their size or scope (high capacity) - The power supply and purchase contract between the power company of the NOORM II plant and MASEN 01 (2018) Risk Mitigation: The selection of developers through a rigorous and
OUTPUTS is signed competitive international bidding process that takes into account their specific proven experiences in the development of major solar power - The power supply and purchase contract between plants (CSP-PV) MASEN and ONEE for the NOORM I plant is signed 01 (2018)
- Power supply and purchase contract between MASEN and ONEE for the NOORM II power plant is signed 01 (2018)
01 (2018)
Solar project companies (SPC) - SPC – NOORM I solar plant is created -SPC – NOORM II solar plant is created Components Resources (EUR 2 048 million) Expenditure (EUR 2 048 million)
1. Energy infrastructure: Design and development of two power plants ((NOORM I and NOORM II), based on hybrid ADB Loan EUR 214 million Power infrastructure: EUR 2 048 million
technology (mix of CSP and PV technologies), each of which will have an installed capacity of over 400 MW (150 to 190 CTF-ADB Loan EUR 22 million S MW of CSP with a storage mechanism that can last at least 5 hours), including, in particular: development sites, solar fields, CTF -WB EUR 22 million power plants, power evacuation structures, thermal energy storage mechanism, heat energy transfer systems, dry cooling WB Loan EUR 178 million systems, environmental and social measures, technical assistance, engineering and development, works control and AFD Loan EUR 150 million supervision, testing and commissioning, project administration and management, financial audits, monitoring and evaluation EIB Loan EUR 342 million
ACTIVITIE KFW Loan EUR 710 million NIF/EU EUR 80 million MASEN EUR 23 million Private partners EUR 307 million
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PROJECT IMPLEMENTATION SCHEDULE 2016 2017 2018 2019 2020 2021 Designation of activitiess 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 28 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 Approval and Effectiveness Approval by the Board of Directors Signing of Loan Agreements (AfDB and CTF) Effectiveness of Loan Agreements (AfDB and CTF) Procurement for project plants Shortlisting of private developers Invitations to bid - Stage 1 Invitations to bid - Stage 2 Award of contracts for the two plants Signing of PPP contracts for the two plants Financial closure of the two plants Construction of the project plants Establishment of project companies Construction of two solar power plants Tests and commissioning of the two solar power plants Works control and supervision Recruitment of Technical Advisor(s) Control and supervision of the two solar power plants Project administration and management Monitoring and implementation of the project's ESMPs Auditing of the project's financial statements Bank supervision and monitoring of the project Joint donor oversight missions Project completion
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BANK GROUP MANAGEMENT’S REPORT AND RECOMMENDATIONS TO THE BOARD OF DIRECTORS CONCERNING A PROPOSAL TO GRANT AN ADB LOAN AND A CTF LOAN TO MASEN (MOROCCO) TO FINANCE THE NOOR MIDELT SOLAR COMPLEX PROJECT - PHASE I (NOORM I AND NOORM II PLANTS)
Management hereby submits this report and recommendations concerning a proposal to grant an ADB loan of USD 240 million and a CTF loan of USD 25 million to MASEN, to finance the NOOR Midelt Solar Complex Project - Phase I (NOORM I and NOORM II power plants).
I. STRATEGIC THRUST AND RATIONALE
1.1. Project Linkages with Country Strategy and Objectives
1.1.1. The acceleration of Morocco's economic and social development has generated a growing demand for electricity (6.5% on average per year since 2000). Total net amount of electrical energy demand from the national grid was 34 413 GWh, more than double the figure recorded in 2003 (16 779 GWh). To meet this demand and overcome the heavy dependence on external markets (94% in 2009) for its supply of energy from modern sources (fossil fuels), Morocco is implementing its new National Energy Strategy (2010-2030). Adopted in March 2009, the strategy aims at: (i) increasing electricity generated from renewable energy sources; (ii) enhancing the reliability and availability of energy supply; and (iii) generalizing access to electricity (rural areas) at reasonable costs. These objectives will be accomplished by diversifying energy sources through the development of the national renewable energy potential, promoting energy efficiency and ensuring closer integration with the regional energy system. By 2020, the installed capacity of electricity generation from wind, hydropower and solar sources will each amount to 2 000 MW, representing a total of 6 000 MW of power generated from renewable sources. In the green energy sector, the ambition of the Kingdom of Morocco is to develop an energy mix in which energy from renewable sources will account for 42% by 2020 and 52% by 2030. Following the implementation of various renewable energy projects, the share of energy from these sources increased from 28% in 2009 to 33.4% in 2015 (2 727.5 MW from hydropower, wind and solar sources out of a total installed capacity of 8 158.5 MW).
1.1.2. This project is part of the implementation of the Moroccan Solar Programme, known as the "NOOR Programme", which aims to achieve a production capacity of at least 2 000 MW of solar power by 2020. Several sites are slated for development, the first of which is the NOOR Ouarzazate Complex, with a capacity of 580 MW (comprising 510 MW CSP and 70 MW PV). This complex comprises four plants. The first of these plants - NOORo I (160 MW CSP) - was commissioned in January 2016. The other three (NOORo II - 200 MW CSP, NOORo III - 150 MW CSP, and NOORo IV - 70 MW PV) and two other plants (100 MW PV), which are also being built, will be commissioned in 2018. By supporting renewable energy programmes, the Government also expects positive externalities through the creation of a new industrial sector (manufacture of solar and wind equipment) (Annex VII - AfDB, 20172), and job creation (Annex VI - AfDB, 20163). In addition and in the context of regional energy integration, Morocco is considering exporting renewable energy (to Africa and Europe)4 in the long term.
2 AfDB, 2017 Internalisation of Renewable Energy Value Chains in Morocco (on-going) 3 AfDB, 2017 The Renewable Energy Sector and Youth Employment in Algeria, Libya, Morocco and Tunisia. 4 AfDB-AMU, 2016. The Structural Transformation of North Africa through Economic Integration 1
1.2. Rationale for the Bank’s Involvement
1.2.1 The rationale for the Bank's involvement in financing this operation lies in the fact that the project is in line5 with the indicative operations programme under the 2017-2021 Country Strategy Paper (CSP) for Morocco, especially with the first pillar on support for green industrialization through SMEs and the export sector. This pillar provides for the financing of renewable energy projects in an effort to offer a sustainable response to the growing demand for power stemming from industrialization. Moreover, this project aims to build two solar power plants with an industrial integration potential of at least 35% based on previous solar power projects (NOORo I, NOORo II and NOORo III), sourced from local companies or industries. It will also contribute to the achievement of the second pillar of the CSP aimed at improving living conditions through employment for young people and women, especially in rural areas. In this regard, during the construction phase, the project will create more than 3 000 temporary jobs primarily for (rural) youths of the Midelt region. Job opportunities will also be available for these young people during the 25-year lifespan of the power plants.
1.2.2 Furthermore, the project is in line with the Bank's 2013-2022 Ten-Year Strategy and more specifically with its operational pillar devoted to the development of sustainable infrastructure to improve energy security. It is also aligned on the Bank's High 5s defined in 2015, the purpose of which is to strengthen and accelerate the implementation and development impacts of the Ten-Year Strategy. Indeed, it will contribute to the achievement of the first High 5 priority objective "Light up and Power Africa", while serving as a catalyst in fostering the achievement of the objectives of two other priorities - "Industrialize Africa" and "Improve the quality of life for the people of Africa". Moreover, the project will contribute to the implementation of the Bank's Energy Sector Policy (approved in 2012), whose objective is twofold: (i) support the efforts of Regional Member Countries (RMCs) towards providing their entire population and productive sectors with access to modern, reliable and affordable energy infrastructure and services; and (ii) help RMCs to develop a socially, economically and environmentally sustainable energy sector. The Bank is also involved because the project is consistent with its New Deal on Energy for Africa Strategy (2016-2025, approved in June 2016), given that it will further the implementation of its Flagship #2: Renewable Energy Programme (this programme is dedicated to the development of renewable energies with a view to contributing to the installation of 4 GW of power generation capacity from renewable sources over the period 2016-2020, which should increase to 10 GW by 2025).
1.2.3 The Bank's involvement in this operation will enhance: (i) its already prominent role in mobilizing climate funds for investment projects; and (ii) its contribution to green growth, the global fight against the effects of climate change and the reduction of local greenhouse gas emissions related to the use of fossil fuels. Thus, the Bank has mobilized USD 50 million from the CTF for the project, jointly with the World Bank. Consequently, as the CTF’s executing agency, it has the responsibility to ensure the effective implementation of this highly concessional financing arrangement that was approved in June 2017 by the CTF Trust Fund Committee.
1.2.4 Lastly, the Bank's intervention is also justified by the complementarity between the project and a number of operations that is currently financing in Morocco's energy sector. These include the Electricity Transmission and Distribution Network Development Project (approved in 2009) and the 350 MW Abdelmoumen Pumped Power Transfer Station Project (STEP), which is under construction as part of the Integrated Wind Energy, Hydropower and Rural Electrification Programme (approved in June 2012). Several works (lines and sub-stations), will
5 The project was included in the 2017-2021 CSP with an indicative amount of UA 65 million for a 400 MW plant, as opposed to the current UA 170 million. The gap is attributable to the fact that, in order to meet national needs by 2021, MASEN launched the first phase of the NOOR Midelt Solar Complex (the project) with two solar power plants with a capacity of more than 400 MW each and 800 MW in total. 2
help to evacuate the power generated by the Midelt Solar Complex. Meanwhile, the Abdelmoumen STEP Project will allow for optimization of solar power plant operations, thanks to the energy storage capacity that it will provide, and promote the use of this clean energy through optimal placement, thus contributing to mitigate the impact of intermittency related to the solar and wind energy sources. From the industrial acceleration perspective, this project will also benefit from the spinoffs of measures promoted by the Industrialization Acceleration Support Programme in Morocco, approved by the Bank in July 2017. Ecosystems for the development of industrial projects in the renewable energy sector (for example, the Morocco Solar Cluster set up in 2014 in Casablanca) will benefit from the fallouts of the measures adopted to promote and develop industrial investments. The companies involved will benefit from the development of green bonds for corporate financing. Lastly, the Bank provides technical assistance programmes and supports public policies for the development of PPPs in Morocco, a tangible outcome of which is the NOOR programme6.
1.3. Aid Coordination
1.3.1 Alongside the WB, AFD and the EU (and its institutions including the EIB), the Bank is one of Morocco's largest donors. The other key partners are the IsDB, EBRD, JICA, KFW, OFID and climate funds (GEF and CTF). The support from Gulf countries (Qatar and Saudi Arabia) is also substantial and comes especially in the form of grants. Several donors are involved in the energy sector (AfDB, AFD, WB, EIB, IDB, KFW and EU). Energy sector coordination takes place through regular meetings of financial partners and executing agencies on specific projects, such as this one. These meetings offer the various institutions an opportunity to coordinate their activities. The list of on-going projects in Morocco financed by the Bank and other partners in the energy sector is provided in Appendix III.
1.3.2 Given the importance of the solar programme in Morocco's development and its impact on mitigating the effects of climate change, several technical and financial partners are involved in its implementation. Seven (07) donors participated in the financing of the NOOR Ouarzazate Solar Complex and worked closely together for the preparation and implementation of its various phases (joint missions and regular meetings). Similar arrangements are being made for this project, since the same donors, who have demonstrated their ability to collaborate and coordinate their activities within a single project, will again be involved. As part of this project appraisal, three missions and several conference calls involving all the donors took place from April 2016.
2 PROJECT DESCRIPTION
2.1 Project Description and Components
2.1.1 The objective of the project is to contribute to reducing Morocco's dependence on external sources for its energy supply and on imported fossil fuels, by developing electricity generation from renewable sources, using innovative technologies. The NOOR Midelt Solar Complex Project will be implemented in several phases under a PPP power generation arrangement, covering the design, financing, construction, operation and maintenance of solar power plants over a 25-year period. The first phase will comprise two hybrid solar power plants (NOORM I and NOORM II) - based on a mix of CSP and PV technologies. The purpose of mixing the two technologies within the same plant is to: (i) reduce electricity generation costs by taking advantage of lower solar PV costs; (ii) generate electricity during the day using the PV and/or the CSP (daytime power generation could be exclusively PV-based); and (iii) generate electricity at night time using the CSP technology in order to help meet the high
6 AfDB, 2017. Investment Incentives of the New Law No. 86-12 on Public-Private Partnership (PPP) Contracts: Prospects for Morocco's National PPP programme and Sector-Based Laws. 3
demand on the interconnected national grid at peak times (5 p.m. to 10 p.m. in winter and 6 p.m. to 11 p.m. in summer).
2.1.2 Each plant will have a CSP unit with a capacity of 150 MW to 190 MW, equipped with a thermal power storage system that will allow it to operate at full CSP capacity for at least five hours without solar radiation (after sunset). The CSP technology could be of the parabolic trough collector or solar tower type; and (ii) a PV unit whose capacity will be optimized by its developer to ensure a firm and linear power generation curve during the day). All mature photovoltaic technologies remain open on condition that they comply with MASEN's requirements in terms of guaranteeing the performance and sustainability of the equipment during the expected lifetime of the plant. At the point where power from each of the plant is injected or delivered into ONEE’s grid, the daytime power delivery (PV) could exceed that of the night time (CSP) by a maximum of 20%. Thus, the maximum power output of each of the power plants at daytime will range between 180 MW and 228 MW (alternating current). Therefore, the installed capacity of each PV unit could reach 300 MW. The total installed capacity per plant could exceed 400 MW, while the overall installed capacity of the project could exceed 800 MW (300 to 380 MW of CSP) .The average output of each plant is estimated at 943 GWh per year, or 1 886 GWh for the project. The timeframe for the construction of each plant is estimated at 30 months. Commissioning of Phase I of the Midelt Complex is scheduled for the first half of 2021.
2.1.3 The project is structured around a single component, "Energy Infrastructure", with two sub-components: (A): NOORM I Plant; and (B) NOORM II Plant
Table 2.1: Project Components (in EUR million) Estimated Designation Description of Components Cost Design and development of two (02) hybrid solar power plants (HSPs/PVs), each of which will have an installed capacity of over NOOR I M 1 024 400 MW, including: site development, solar fields, power plants, Plant Energy power evacuation works, thermal energy storage devices, heat Infrastructure energy transfer systems, dry cooling systems, environmental and social measures, technical assistance, engineering and NOOR II development, works control and supervision, testing and M 1 024 Plant commissioning, project administration and management, financial audits, monitoring and evaluation. Total Project Cost 2 048
2.1.4 Prior to the deployment of the solar power plants, MASEN and ONEE will build share or associated infrastructure, outside the project framework. Details of this infrastructure are provided in Technical Annex B.2. It will cover such areas as raw water supply, access roads and bridges. The total cost of the infrastructure is estimated at approximately EUR 100 million (MAD 1 billion), of which EUR 40 million allocated for power evacuation infrastructure. MASEN is in the process of raising a loan from KFW to finance the construction costs of this infrastructure, which mainly consists of 400 kV (140 km), 225 kV (24 km) power lines and a 225 kV sub-station.
2.2 Technical Solution Adopted and Alternatives Explored
2.2.1 The technical configuration of the project's two solar power plants was based on a technical/economic optimization solution designed to minimize the levelized unit cost of electricity (LCOE7) over the life cycle of the plants. In addition to the financing conditions and the overall investment costs, the main determinants are the operation and maintenance (O&M)
7 Levelized cost of electricity (LCOE) 4
costs and annual electricity production. Apart from the technical solution adopted and described in Section 2.1, the following alternative was explored, but rejected for the reasons given below.
Table 2.2 Alternative Solution Explored and Reasons for Rejection Alternative Solution Brief description Reasons for Rejection Use of a combination This involves combining the two types of CSP solar Minimal cost reduction; of CSP parabolic technology in a common power generation unit, supplying high technological risk trough technology and power to a joint steam turbine. The solution stemmed from (untested technology); no the CSP solar tower the idea that part of the costly technology used for the plant using this combination technology in the same central receiver of the solar tower could be replaced with has been built so far. plant less expensive cylindro-parabolic troughs.
2.3 Project Type
2.3.1 The project is an investment operation involving the construction of two solar power plants through a private-public partnership (PPP) supported by seven donors, including the Bank.
2.4 Project Cost and Financing Arrangements
2.4.1 The total project cost, net of taxes and customs duties, is estimated at EUR 2 048 million, or EUR 1 024 million per plant. The cost includes an overall provision of 5% for physical contingencies and price escalation. Detailed project costs are presented in the tables below. The conversion rates used are those shown on Page (i).
Table 2.3 Estimated Cost by Component (in EUR million) Component Cost in Cost in Local Total Cost % Foreign Foreign Currency8 Exchange Exchange Power Infrastructure NOORM I Plant 632 341 973 65% NOORM II Plant 632 341 973 65% Total Base Cost 1 264 682 1 946 65% Provision for contingencies 67 35 102 65% Total Project Cost 1 331 717 2 048 65%
2.4.2 The project will be co-financed by the seven other donors below. CTF resources totalling USD 50 million were mobilized by AfDB and the World Bank (each accounting for 50%). The rest of the funding will be provided by MASEN (counterpart) and private developers. Donor resources will be used for the capital expenditure of NOORM I and NOORM II. The Bank's proposed financing consists of an ADB loan (USD 240 million) and a CTF/ADB loan (USD 25 million). Tentatively, the resources of Bank financing could be distributed equitably (50%) between the two plants (NOORM I and NOORM II). The main financial information on the ADB and CTF/ADB loans is provided on Page (iii).
8 The foreign exchange/local currency distribution of costs is indicative, given that at least 35% of the contracts per plant will be performed by local companies. 5
Table 2.4 Sources of Estimated Project Financing (in EUR million) Sources of Financing Costs in Costs in Local Total Cost % Total Foreign Currency Exchange ADB-Loan 139 75 214 10% ADB –CTF 14 8 22 1% Sub-Total of Bank Group Financing 150 82 232 11% AFD 98 52 150 7% World Bank-Loan 116 62 178 9% World Bank –CTF 14 8 22 1% EIB 222 120 342 17% KFW 462 248 710 35% EU/NIF9 52 28 80 4% Total Donor Financing 1 117 601 1 718 84% MASEN (counterpart funding) - 23 23 1% Private developers 214 93 307 15% Total Financing 1 331 717 2 048 100%
2.4.3 The project cost by expenditure category is as follows:
Table 2.5 Project Cost by Expenditure Category (in EUR million) Expenditure Category Cost in FE Cost in LC Total Cost % FE Works 1 265 681 1 946 65% Total Base Cost 1 265 681 1 946 65% Provision for physical contingencies and 67 36 102 65% price escalation Total Project Cost 1 331 717 2 048 65%
2.4.4 The projected expenditure schedule by component is as follows:
Table 2.6 Project Expenditure by Component (in EUR million) Component 2018 2019 2020 2021 Total Power Infrastructure 307 1 024 410 307 2 048 Total Project Cost 307 1 024 410 307 2 048 % 15% 50% 20% 15% 100%
2.5 Project Area and Beneficiaries
2.5.1 The project is administratively located in Midelt Province, on the Haute Moulouya Plateau, about 20 km North-East of Midelt City. The estimated values of the solar radiation on the site, based on the measurements recorded over the past three years, are 2 359 kWh/m²/year for the DNI10 and 2 096 kWh /m²/year for the GHI11. The flat profile of the land is highly suitable for the construction of a solar power complex. The site is accessible 30 km from National Road No. 13 (RN13) linking Meknes and Midelt. Moreover, the site is located 11 km from the Hassan II dam (400 million m3), which will supply the crude water needed by the Midelt Solar Complex. It is worth noting that the Mibladen transformer substation (225 kV/60 kV), about 10 km away, will be used to evacuate part of the power generated by the complex. The inhabitants of the project’s immediate impact area are estimated at about 30 000. The municipalities (“communes”) most affected are Zaida (13 181 inhabitants), Ait Ben Yacoub (4 012 inhabitants) and Mibladen (3 084 inhabitants). The Midelt Solar Complex will be
9 Maximum amount of the subvention (Grant) from the NIF/EU 10 Direct Normal Irradiance 11 Global Horizontal Irradiance 6
developed on a land surface area of 4 141 hectares, involving the following beneficiaries: the State forest estate under the High Commission for Water, Forests and Desertification Control (HCEFLCD) and the Ait Oufella, Ait Masoud Ouali Enjil and Ait Rahou Ouali ethnic communities as well as individuals. The land acquisition process was carried out by MASEN in accordance with Moroccan legislation (procedure of expropriation in the public interest).
2.5.2 The main beneficiaries of the project are: the Moroccan State, MASEN, private sponsors, ONEE, productive sectors (industries, transport, agriculture, etc.) and especially the Moroccan population, more than 99% of which uses electricity. Hence, the project is inclusive in nature, and will contribute to improving the regularity and availability of power supply in all Moroccan homes. The project’s two plants project will be connected to the national power grid and will each have an estimated annual output of 943 GWh, amounting to a total of 1 886 GWh. Given that Morocco’s average per capita electricity consumption stood at approximately 900 kWh/year in 2015, the project’s two power plants will guarantee electricity supply for more than 2 million people, or nearly 6% of the total population. As far as the State is concerned, the project will help to reduce its dependence on imported fossil fuels (coal, gas and fuel oil) for its power generation, thereby improving its balance of payments.
2.5.3 It is estimated that in the construction phase, 3 000 temporary jobs will be created by the project (1 500 per plant) during the labour-intense period. Unskilled labour will essentially be recruited locally. During the 25 years of operation, the NOORM I and NOORM II power plants will each generate close to 100 direct and permanent jobs – that is 200 jobs in all - and several hundred indirect jobs. During the operation phase of these plants, national companies will benefit from supply, works and maintenance contracts. Moreover, at national level, the project is expected to trigger the development of an industrial subsector devoted to renewable energies (manufacture of solar power plant equipment)12. In this regard, future developers of the project’s power plants are encouraged to include proposed measures for local industrial integration in their bids. In the operations phase, universities and research institutes (national and international) could develop research programmes on the large-scale exploitation of solar energy that would produce reliable results and statistics on the use of hybrid CSP-PV solar technologies.
2.6 Participatory Approach for Project Identification, Design and Implementation
2.6.1 The main project stakeholders include the Government, MASEN, ONEE, the people; especially the residents of the project impact area, local authorities, devolved administrations; economic operators, including industrialists; etc. In general, the project preparation followed a participatory approach that involved all these stakeholders. They were consulted at the beginning of the framework ESIA and expressed their views, expectations and apprehensions regarding project impacts. These elements are contained in the minutes of the meetings organized for that purpose. Consultations continued during the conduct of the socio-economic impact assessment and the preparation of the various plans for the acquisition of land required for the construction of the project’s associated and ancillary infrastructure, including the complex site. The public consultation meeting was held in Midelt on 10 March 2016. The public notification was published in two national papers (in French and Arabic). The concerns raised (environmental impacts of the complex and its water supply, land transfer and compensation arrangements, jobs and training for young people, development of local infrastructure and social activities that will be carried out) during the various consultations were taken into consideration in preparing the ESMP and should be used by MASEN as the basis for the choice of local development projects for the people.
12 AfDB, 2017 Internalisation of Renewable Energy Value Chains in Morocco (in progress) 7
2.6.2 In addition, MASEN has developed a stakeholder engagement plan (SEP) that will make it possible to address, as much as possible, the concerns of all stakeholders, in an inclusive way and according to the appropriate cultural and social context. MASEN would continue to collaborate with key stakeholders throughout the project lifecycle, in line with the SEP principles, for the implementation of local development actions likely to amplify the benefits of the project.
2.7 Bank Group Experience and Lessons Reflected in Project Design
2.7.1 As at July 2017, the Bank's active portfolio in Morocco comprised 29 operations for a total commitment of UA 1 728 million, disbursed up to 57.48%. It consists of 16 loans totalling UA 1.720 billion (99.6%) and 13 grants (technical assistance) for a total UA 7.320 million (0.4%). The portfolio is focused on infrastructure projects. Its breakdown shows the predominance of the energy sector (35.3%), followed by the transport sector (23.4%), the water and sanitation sector (16.7%), the energy sector, agriculture (11.5%), multi-sector (6.8%), the social sector (5.6%) and the private sector (0.7%). At the last country portfolio performance review (April 2016), the overall performance was deemed satisfactory. At the time of the same review, the Bank's portfolio in Morocco was relatively young (below 3.5 years old on average) and included no project-at-risk.
2.7.2 The active projects of the portfolio that are currently being implemented in the energy sector, co-financed with other donors, are: (i) the Power Transmission and Distribution Network Development Project, in the completion phase; (ii) the on-going Integrated Wind Energy, Hydro-Power and Rural Electrification Programme; (iii) the Ouarzazate Solar Complex Project - Phase I (NOORo I plant), in the completion phase; and (iv) the Ouarzazate Solar Complex Project - Phase II (NOORo II and NOORo III plants), on-going. As at June 2017, the energy portfolio disbursement rate was 61%. The energy portfolio has no project-at-risk or project suffering from significant delays. It may be recalled that since the beginning of its involvement in Morocco in 1970, the Bank has approved 17 investment operations in the energy sector from its own resources, for a total UA 1 148 million13. Completion reports were prepared for the last four completed projects, the most recent of which was the report on the Ain Béni Mathar solar thermal plant (472 MW) published in February 2014.
2.7.3 Previous projects approved by the Bank for MASEN, namely the Ouarzazate Solar Complex Projects - Phase I (NOORo I plant) and Phase II (NOORo II and NOORo III plants) experienced no delays in the start-up of works or in the fulfilment of conditions precedent to effectiveness and first disbursements (AfDB and CTF/AfDB). They were implemented within the agreed timeframes and performance was deemed satisfactory in the areas of plant construction works, disbursement, financial management (submission of interim financial reports and financial statement annual audit reports) and monitoring (submission of half-yearly progress reports to donors). The combined performance has made the projects a benchmark at the Bank. Thus, the Ouarzazate Solar Complex Project - Phase I, approved in May 2012, was implemented and the NOORo I plant (160 MW (CSP with parabolic trough) commissioned end-2015. The project completion report is being prepared. Regarding Phase II of the Ouarzazate project approved by the Bank in December 2014, the NOORo II (200 MW CSP with parabolic trough) and NOORo III plants (150 MW CSP with solar tower) are currently under construction. The implementation rate stood at more than 90% at end-June 2017, and commissioning is expected during the first half of 2018. In view of the foregoing, the same arrangements put in place for previous projects were renewed or even strengthened: (i) availability of detailed studies (technical, environmental, social, economic and financial); (ii) the existence of implementing entities within MASEN (the same used for previous projects);
13 Source: Compendium of Statistics on Bank Group Operations, 2016 Edition 8
(iii) early launching (July 2016) of the recruitment process through an international invitation to bid for private developers of the power plants (NOORM I and NOORM) using previous competitive bidding documents (CBDs) and adapting them to the context by making necessary improvements on certain criteria (bids assessment, contracting, etc.); (iv) acquisition of the project site (currently being finalized), avoiding land problems identified as a recurring constraint that causes significant delays in the start-up of works on infrastructure projects (energy, water and transport) in Morocco; (v) arrangements regarding disbursement and financial management mechanisms; and (vi) joint half-yearly project supervision missions to ensure proper coordination of donors’ efforts.
2.8 Key Performance Indicators
2.8.1 Project performance will be measured using the results-based logical framework indicators. The output indicators are: (i) the number of solar power companies (SPCs) established; (ii) the number of solar power plants built and their capacity (CSP and PV); (iii) the number of specific agreements signed between the State and MASEN; and (iv) the number of supply and procurement contracts signed. The outcome indicators comprise: (i) the number of jobs created during the construction and operation phases (including the proportion of jobs held by local residents and women); (iii) industrial (local) integration rates by plant; (iv) the increase of installed national electric power of solar source; (v) the increase in the installed national power generated by renewable energy sources; (vi) the increase in domestic renewable power generation; and (vi) the quantity of CO2eq emissions avoided.
2.8.2 Data on these indicators will be provided in the progress reports that will be produced by the SPCs. They will also be reflected in the periodic reports of the Lender Technical Advisor (LTA), who will be recruited by MASEN to oversee the construction of each plant on its behalf. The half-yearly project progress reports forwarded by MASEN to donors will also highlight the progress made in achieving these performance indicators. The related data will also be provided in MASEN's annual progress reports, the Bank’s supervision report and the project completion report. Analysis of the indicators will allow for measurement of the progress achieved and adjustments, if need be.
3 PROJECT FEASIBILITY
3.1 Economic and Financial Performance
3.1.1 Project financial and economic performance: The project’s economic and financial model is identical to that used for previous projects of the Ouarzazate Solar Complex (Phase I and II) and highlights, for the benefit of private developers who will be selected, the minimum rate of return that is in line with good market practices. The project will be implemented in a more favourable context than previous ones, characterized particularly by: (i) the downward trend in the cost of technologies, causing a sharp fall in the price per kWh; (ii) the increase in electricity selling rates in Morocco, which were adjusted four times between 1 August 2014 to 1 January 2017); and (iii) the use (hybridization) of the two solar technologies at the same plant, which makes it possible to reduce the relatively high cost of using the CSP technology exclusively (like in the Ouarzazate project).
3.1.2 The sustainability of the project is also based on the State's commitment to ensuring the financial balance of the Moroccan Solar Programme, which is a decisive factor in the financial viability of the operation. This commitment was reflected in 2010 in the two agreements signed on 26 October 2010, which served as a launching pad for the initial activities of the programme. These are: (i) the Framework Agreement between the State and MASEN defining the terms and conditions for implementing the Moroccan Solar Programme; and (ii) 9
the Tripartite Agreement between the State, ONEE and MASEN specifying the rules and conditions for the supply, transport and marketing of the power generated. Under the Framework Agreement, MASEN undertakes to carry out all actions necessary to implement each project with due regard to quality and timeliness, and the State undertakes to ensure the financial balance of MASEN by integrating the balance of each project. Given that the costs of the CSP technologies that will be deployed in the two project plants are still relatively high compared to those of conventional thermal power plants (fired with coal, fuel and gas) and hydropower plants in Morocco, a financial gap is expected in the operations phase resulting from that differential, despite the mobilization of concessional financing and the downward trend in solar technology costs.
3.1.3 Sensitivity of project financial and economic 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 operation and maintenance costs. The project's income will be derived from the sale of power by MASEN to ONEE, at the base selling rates in force and applicable in Morocco. Since the selection of private developers for the NOORM I and NOORM II plants is based on the most economical price per kWh generated, the project will in fact generate returns on investment adopting a kWh rate that guarantees minimum returns on own resources. The details of this analysis are presented in Technical Annex B7.
3.1.4 Economic performance: In addition to the gains of the initial solar project (Ouarzazate), this project will help to amplify the positive impact of the solar resource on Morocco’s trade balance as the country could save on foreign exchange as a result of the expected reduction in fossil energy (coal, fuel and gas) imports. The other positive externalities of the project stem from: (i) benefits related to the reduction of greenhouse gas emissions; (ii) increased reliability of power supply to productive sectors, which will improve the competitiveness of local enterprises; and (iii) the development of industrial integration measures and job creation. In light of these positive externalities, there will be a net increase of 3.2% in the financial rate of return, thus making the project more economically profitable.
3.1.5 Sensitivity: The project’s sensitivity is based on that of the levelized cost of electricity (LCOE), whose sensitivity was analysed in terms of investment cost variation and an increase in operation and maintenance costs (for a given level of financing cost). The analysis shows that the LCOE is highly sensitive to investment cost variations and less sensitive to operation and maintenance cost variations. Analysis conducted by varying the financing cost reveals high additionality linked to the concessional resources provided by the CTF (climate fund) and donors. The sensitivity test results are presented in Technical Annex B7.
3.2 Environmental and Social Impact
3.2.1 Environment: Given its scope, the project has been classified in Category 1 in accordance with the Bank's environmental and social assessment procedures. The Framework Environmental and Social Impact Assessment (FESIA14) was prepared in 2015 and submitted to the National Environmental Impact Assessment Committee, which declared the project’s environmental acceptability on 1 December 2015, and issued it on 12 January 2016. FESIA published in September 2016 on MASEN’s website and covers all sub-projects, all joint and associated infrastructure (on and off site) with the exception of power evacuation infrastructure, which is the subject of a separate ESIA report and Land Acquisition Plan (PAT). Three (03) PATs were prepared for the project. Summaries of the FESIA and PAT were published on the Bank's website on 24 July 2017. The published FESIA identifies the potential environmental and social risks, as well as project impacts. These potential risks and impacts will be mitigated
14 Framework Environmental and Social Impact Assessment 10
by the appropriate measures included in the ESMP relating to worksite best practices. Furthermore, detailed ESIAs of the power plants will be prepared by their respective SPCs. These ESIAs will propose mitigation measures, taking into account their specific features. The SPCs will ensure the implementation of the ESMPs of their power plants. The cost of the ESMP is mostly comprises the cost of Land Acquisition Plans (MAD 82 million). The main positive environmental impact is the improvement of air quality due to the reduction of CO2 emissions.
3.2.2 Monitoring of the ESMP implementation: MASEN has set up an Environmental and Social Management (GES) team to manage these issues during the preparation and implementation of its activities. The team in charge of Sustainable Development within the GES is tasked with: (i) monitoring the conduct of the ESIA; (ii) coordinating the environmental and social safeguard aspects in the context of MASEN's relationship with donors and the SPC's contractual commitments to the latter; and (iii) monitoring the implementation of environmental measures and the related reporting. MASEN is currently finalizing the recruitment of additional senior staff to strengthen its Sustainable Development Team.
3.2.3 Climate change: The project has been classified in Category 2 according to the Bank's Climate Safeguard System. The main risks are: (i) risk of overflow/flooding from the Sidi Ayad and Bou Tazart wadis; (ii) linear water erosion; and (iii) fairly high average annual number of frosty days (38), with wide inter-annual variability. The following measures will be taken to mitigate these risks: (a) bridge calibration, bank protection, etc.; and (b) an accurately sized artificial drainage system to minimize the risk of erosion on-site and flooding in downstream areas. In addition, the hydrological and hydraulic study carried out for water supply to the site takes into account an analysis of the long-term effects of the impacts of climate change, especially those concerning the availability of water and the selection of the intake at the level of the Hassan II dam, which has a capacity of 400 million m3. To minimize water consumption, the CSP plants will be designed to use a dry cooling system. Each plant should not consume more than 220 000 m3 of water, which puts the project’s total water consumption at 440 000 m3 (less than 0.5% of the dam’s annual capacity), hence the minimal impact of the project on the region's water resources.
3.2.4 Since by its very nature the project will generate electricity without CO2 emissions, it will significantly help to mitigate climate change by reducing the carbon footprint of the electricity sub-sector in Morocco, where fossil fuel-based electricity generation is still predominant. In 2015, the total installed capacity of the power generating system stood at 8 158.5 MW, of which 66.6% from fossil sources and 33.4% from renewable sources. In the same year, the national power demand serviceable by the grid stood at 34 413 GWh. Seventy two percent (72%) of the power supply was from fossil fuel plants (coal - 49%, natural gas – 16.6% and fuel oil/diesel - 6%), 13.4% from renewable sources and 14.9% imported from Spain. This project’s two generating plants will each have an estimated annual output of 943 GWh, bringing the output to a total 1 886 GWh. Compared to the mix of fossil-fired ONEE-operated power plants, each plant will prevent the emission of the equivalent of 350 000 tonnes of CO2 annually, representing a total 0.7 million tonnes for the project. During the planned 25 years of their operation, the plants will help to prevent the emission of 17.5 million tonnes of CO2 and 21 million tonnes of CO2, if their 30-year lifetime is considered.
3.2.5 Gender: In Midelt Province where the project is located, women make up 50.5% of the population. Given that they participate in all types of economic activities, securing power supply will enable them to develop new lucrative activities. In addition, the project will seek to reduce gender inequalities in its impact area where women and girls are disproportionately affected by illiteracy and under-employment, and therefore constitute the largest group of unemployed persons. Through its activities, the project seeks to reduce these inequalities by enhancing women’s integration into the socio-economic fabric, mainly through indirect jobs 11
that will be generated. The micro-enterprise incubator set up by MASEN will pay special attention to projects promoted by female or those that will employ a predominantly female workforce.
3.2.6 Training programmes in various trades will be provided in an effort to improve the professional integration, social and economic empowerment and employability of women in the region (where nearly 53% of women are illiterate). The construction of the roads planned under the project will improve the currently low medical coverage of the local population, and especially reduce infant and maternal mortality rates. Basic health facilities will be more accessible, thereby reducing the congestion in the regional hospital whose capacity is limited (one bed for 2 670 inhabitants and one physician for 5 442 inhabitants). Improving schooling conditions will also be crucial, especially for reducing the school dropout rate among girls (only 71% of girls are enrolled at primary level, compared to the national average of 99.8%), and combating illiteracy which remains predominantly a women’s issue. The local development actions planned by the project will enhance women’s empowerment, facilitate their integration into the associative fabric – often inadequate in the project area - and improve their living conditions. MASEN has a Directorate and a team of professionals dedicated to the promotion of sustainable development, some of whose units are run by women. Women make up almost 50% of the management team.
3.2.7 Social: In addition to considerably boosting energy supply, project implementation will create jobs and revitalize economic activities in the project area. During the construction phase, the works will have a temporary positive impact on the employment situation and activities of dredging and construction companies, and indirectly affect the local economy by means of fallouts related to the influx of workers into the region. More than 3 000 temporary jobs will be created by the NOORM I and NOORM II power plant construction project, while more than 600 to 800 jobs will be generated during the construction of the joint infrastructure. During the operation phase, 200 permanent jobs will be created to ensure the running and maintenance of the 2 power plants, and 50 other permanent jobs for management of the common infrastructure. The same mechanism put in place by MASEN, ANAPEC and the SPCs in Ouarzazate will be renewed to facilitate the recruitment of local labour. At end-2016, of the 8 400 cumulative temporary jobs created by the NOORo I; NOORo II and NOORo III plants (during the labour-intensive phase), 74% on average were held by Moroccans and 34% by workers from the region (Ouarzazate).
3.2.8 As part of its Local Development Strategy, MASEN plans to initiate several voluntary social actions for the local people aimed at supporting the integration of power plant projects in their socioeconomic and territorial environment. These projects will be concentrated primarily in such sectors as health, education, infrastructure and basic equipment. MASEN has already identified 12 projects in various sectors (infrastructure, health, education, etc.) to be implemented in Midelt Province, in line with the strategy. The cost of these projects is estimated at MAD 69 million. MASEN has already demonstrated its commitment to such local development projects initiated under the Ouarzazate Solar Complex Project where it carried out 70 operations and projects for an overall budget of MAD 68 million, directly and indirectly benefiting more than 34 000 people in various spheres. MASEN's local development projects will be supplemented by those initiated by the Directorate for Rural Affairs (DAR) of the Ministry of Interior, funded with the proceeds of the sale of land belonging to ethnic communities, as in the case of the Ouarzazate Complex complex where MAD 32 million resulting from the sale of community land (3 000 ha) was invested in several local development projects. The amount for the acquisition of land for the Midelt site was estimated at MAD 83 million. Lastly, the solar power companies (SPC) are also expected to carry out local development activities as part of their corporate social responsibility (CSR).
12
3.2.9 Involuntary resettlement: The project site is located in an unoccupied zone, used for extensive stockbreeding, but the grass is of poor quality. Therefore, the implementation of the project in this area will not entail physical displacement of people or any economic displacements. However, the land required for the construction of the power generation complex, and for ancillary deliverables and activities (on-site or off-site), has been acquired in accordance with Moroccan regulations in force. The Land Acquisition Plans (PAT) have been prepared and approved by the Moroccan authorities as well as the international financial institutions involved in the project, including the Bank. These plans serve as the relocation plan, in accordance with the Bank's Integrated Safeguards System. The amount deposited in an account with the Caisse de Dépôt et de Gestion totals MAD 83 million, representing the cost of acquiring 4 141 hectares of land from various rightful claimants (HCEFLCD, ethnic communities and individuals). Land acquisition plans related to site access infrastructure (involving the following rightful claimants: public road domain, ethnic communities and the Moulouya Watershed Agency (ABHM)) and raw water supply infrastructure (involving the following rightful claimants: forest estate, ethnic communities and ABHM) were prepared, in accordance with national regulations, thus obtaining the relevant corresponding temporary agreements and occupancy rights. The project does not involve any involuntary displacement of people.
4 PROJECT IMPLEMENTATION
4.1 Implementation Arrangements
4.1.1 Institutional mechanism: The project will be executed by MASEN, which is also the project contracting authority. The development of the Moroccan Solar Programme was entrusted to MASEN, a public limited liability company established in March 2010, jointly- owned with equal shareholding by the Moroccan State, the Hassan II Fund for Economic and Social Development, the National Electricity and Water Authority (ONEE) and the Energy Investment Company (SIE). MASEN’s corporate objective, as defined under Law No. 57-09 establishing the company, is to develop a programme of integrated solar-based power generation projects for a total minimum capacity of 2 000 MW by 2020, comprising: (i) solar power plants; and (ii) ancillary deliverables and activities aimed at contributing to the development of the areas hosting the plants and the country as a whole. MASEN’s scope was expanded in 2016 pursuant to Law No. 37-16 to cover all renewable energies. It is now known as the "Moroccan Agency for Sustainable Energy" and aims to implement a programme of integrated power generation projects with an additional minimum capacity that should total 3 000 MW by 2020 and 6 000 MW by 2030, under an agreement concluded with the State.
4.1.2 MASEN's staff strength has witnessed a steady increase, from 10 employees in 2010 to more than 120 in 2017. In terms of project design (financial and technical) and implementation monitoring, MASEN receives several kinds of support and technical assistance in various spheres (technical, financial and fiscal, legal, etc.) from experts or specialized firms of high repute. MASEN has several departments or units involved in project implementation (Site Survey, Technical Design, Structuring, Implementation, Operations, Administration and Finance, Strategic Management, Local Development, Internal Audit, etc.). The Technical Design Department and the Structuring Department coordinate the technical design, the financial package and the process for selection of private developers. The Implementation Department will execute the project once the private developers have been recruited, the SPCs established and the external financing put in place, including the lifting of the conditions precedent to its disbursement. The Strategic Steering Unit (attached to the MASEN Management Board) will ensure the implementation of the project. For the control of the works of the two project plants, MASEN will recruit one Technical Advisor (firm) or possibly two
13
(one per plant) who will certify the quality and quantity of the works carried out. The Operations Department will be in charge of monitoring the operation and maintenance of the plants.
4.1.3 Institutional arrangements: The Midelt NOOR Solar Complex Project will be implemented by MASEN based on the mechanisms and schemes already used for previous donor-funded projects. Following international competitive bidding, two private consortia will be recruited for the development of the NOORM I and NOORM II power plants under a public- private partnership (PPP) that entails a build, own, operate and transfer (BOOT)15 arrangement. Two solar project companies (SPCs) (under Moroccan law) will be established, one for each power plant, and in which the majority share will be owned by the private consortium (75%), while the rest (25%) will be held by MASEN through MASEN Capital, its subsidiary. Each SPC will be responsible for the design, financing, construction, operation and maintenance (over a 25-year period) of the plant for which it was established. The financial structuring provides that the total investment cost of the plant will be funded by debt (80%) and SPC own resources (20%). The borrowed resources will be provided by MASEN through a mechanism that entails on-lending the concessional loans obtained from donors. To keep down the cost of the electricity generated, the on-lending will be in a single concessional loan made to the SPC, on terms equivalent to a contracted loan mix (same terms as far as average maturity period is concerned, but with a potential interest margin in addition to the average lending rate).
4.1.4 Procurement Arrangements
4.1.4.1 Organization of procurement: The Structuring Directorate of MASEN (in charge of procurement for developing the power plants) will be tasked with coordinating the project- related contracting process. It will be supported by the Technical Design Directorate in drafting the minimum functional technical specifications and on the technical aspects during bid assessment. As in all previous projects, MASEN will be supported by a pool of internationally renowned consulting firms, most of which are already in place16. Legal support is provided by the Norton Rose Fulbright firm, while technical support will be provided by Intec Suntrace and financial and tax assistance by Ernst & Young.
4.1.4.2 Risk assessment and procurement capacity: To address the specific features of the project, the Bank assessed: (i) the risks in the borrower's regulatory framework at sector and project level; and (ii) the capacity of the executing agency. The outcomes of these assessments led to the conclusion that there was an overall substantial risk as regards project procurement. The outcomes also served as the basis for determining the mitigation measures proposed in paragraph 5.9 of Annex B.5. The funds needed to carry out these measures have been secured from MASEN's own resources.
4.1.4.3 Advance contracting: Considering the time constraints linked to the borrower's agenda, a substantiated request for advance contracting in connection with bids for the selection of the private consortia responsible for developing the NOORM I and NOORM II solar power plants was received by the Bank, and was granted on 27 July 2016, in accordance with the provisions of Article 11.2 of the AfDB Procurement Policy.
4.1.4.4 Specific modalities due to the use of the "World Bank procurement system": In the absence of a Mutual Acceptance Agreement (MAA) with the World Bank (WB), approved by the Board of Directors of the Bank, the use of the World Band procurement system for bids related to the selection of private operators for the development of the NOORM I and NOORM
15 Build, Own, Operate and Transfer (BOOT) 16 Only the consulting firm in charge of insurance is not yet under contract. However, the contract process is already underway and well advanced. 14
II solar project, and jointly financed by the Bank, requires the following special measures:
Requesting a waiver for the use of the World Bank’s procurement system: In accordance with the provisions of Article 8.1 of the Bank's new Procurement Policy, the procurement of Bank- financed transactions should be done using the borrower's procurement system, subject to certain conditions or in compliance with the Bank's Procurement Policy. This requirement is applicable where Bank financing is provided on a joint basis with other financiers, unless the Bank's Board of Directors ("The Board") authorizes a waiver allowing the application of the procurement policy, regulations and guidelines of one of the other co-financiers (see Art 10.3 of the Bank's Procurement Policy). Therefore, to allow the application of the World Bank’s procurement policy for the selection of private operators for the development of the NOORM I and NOORM power plants, a formal waiver will be sought from the AfDB Board of Directors for: (i) the application of the World Bank's procurement policies; and (ii) the application of the World Bank's eligibility rules, which are broader than those of the Bank’s ADB window. If this waiver is formally obtained, the World Bank's procurement policy and rules of eligibility and integrity could legally be applicable to bids for the selection of developers, even if the operation is co-financed with Bank resources. The advance action authorization granted by the Bank mentions the need to obtain that waiver.
4.1.5 Financial Management Arrangements
4.1.5.1 MASEN will be accountable to donors as regards project implementation and financial resource management. Nevertheless, the effective construction of the two solar power plants will be directly ensured by the two Moroccan solar power companies that will be set up for the purpose. They will be accountable for the use of loan resources granted by donors to MASEN and on-lent to them by the latter. In view of the financial management assessment conducted in accordance with Bank guidelines and considering the current functioning of the financial management system used by MASEN for previous project, it was concluded that the system is satisfactory in terms of resource management (reception and on-lending of funds from donors), control of SPC expenditure, and preparation of the interim financial report to be certified by the LTA and which is the basis for the half-yearly withdrawal of funds (see Technical Annex B4).
4.1.5.2 Financial management arrangements: The project’s financial management will be underpinned by mechanisms to ensure harmonization with other donors (use of the same arrangements as previous projects, notably the same types of management structures, methods and disbursement conditions, as well as the same reporting system (format and information, audit of MASEN and SPCs). The project’s financial management system will also be based on: (i) the systems put in place by MASEN for previous projects, should the Bank deem them satisfactory, namely: the accounting, special account management, SPC expenditure control, reporting and audit processes, as well as (ii) the financial management systems to be put in place by the two SPCs that will be established during this project. Compliance with the scheduled arrangements will guarantee transparency, traceability and adequate financial information on invested funds. In this regard, the two SPCs will implement their respective programmes in accordance with the budget estimates proposed in the bids. The budgets executed by the two SPCs will be verified and forwarded by MASEN to the Bank and other donors at the beginning of each six-month budget period. To put in place an efficient financial management system, the two SPCs will need to recruit qualified and experienced financial and accounting staff, and install a computerized budget and accounting management system. The accounting principles will be described in the respective financial and accounting management manuals. MASEN and each SPC will implement appropriate and documented internal oversight procedures, similar to those adopted for the NOORo II and NOORo III (Ouarzazate) plants, particularly with respect to financial transactions, procurement with reliable justification of expenditure, comprehensive accounting registration, safeguard of financial data as well as 15
project assets. Internal oversight will be performed for each entity (MASEN and SPC) by an experienced internal auditor. Furthermore, MASEN will recruit a Lender Technical Advisor (LTA) to ensure continuous technical and financial monitoring of each plant. However, since MASEN is a public-owned company, it is subject to several State financial controls (control by the State Controller and control by the Directorate of Public and Private Institutions or DEPP of the Ministry of Finance), without discounting the possibility of ex post control by the General Inspectorate of Finance (IGF) and the Court of Auditors.
4.1.5.3 The project’s progress reports and interim financial reports (IFRs) will be prepared on a half-yearly basis using the same template that was used for previous projects and is acceptable to all partners. Interim financial reports will be prepared by each solar power company (SPC) and certified by the Lender Technical Advisor. The reports will be transmitted to donors within 30 days following the end of the six-month period and will constitute the basis for fund withdrawal requests. Furthermore, the project annual financial statements (together with those of MASEN and the SPC) will be prepared according to Moroccan accounting standards. Lastly, the project will be subject to on-site and off-site financial management supervision targeting both MASEN and the two solar power companies. The Bank will ensure proper coordination with the other partners, including by organizing joint supervision missions.
4.1.6 Disbursement arrangements: The project’s institutional and financial arrangements provide that the resources of the loans granted to MASEN by donors be on-lent by the latter to the two SPCs of NOORM I and NOORM under two credit facility agreements defining the terms and conditions of the on-lending. Therefore, the common disbursement mechanism applicable to the other project donors (AFD, EIB, WB and KFW) will be based on the template adopted for previous projects under the Ouarzazate Solar Complex (NOORo I, NOORo II and NOORo III plants). Loans will be exclusively disbursed using the special account method. For each power plant (NOORM I and NOORM), MASEN will open in an acceptable bank: (i) one Designated Transitional Account (CDT) for each loan, denominated in its currency (EUR-USD- MAD); and (ii) Designated Common Accounts (CDC1) to pool all CDT funds. The number and currencies of the CDC1 will depend on the currencies presented in SPC's bid. In turn, each SPC will open Designated Common Accounts (CDC2) to receive funds that will be on-lent by MASEN. The on-lending agreements between MASEN and the SPCs will specify the disbursement mechanisms in accordance with principles acceptable to each donor, including the distribution formula and terms of payment adopted.
4.1.7 Special account (CDT) replenishment will subject to a pari-passu between the donors (excluding the CTF). Disbursement requests will be submitted to each donor based on half- yearly interim financial reports (RFIs), approved by the Lender Technical Advisor (LTA) and in accordance with each donor’s procedures. Funds disbursed from CDTs will be immediately transferred to MASEN’s CDCs and then, on a monthly basis, to those of the two solar project companies (SPCs) from which the investment expenditure under the on-lending agreements will be committed. Partners’ equity holdings in the solar power companies may be paid into separate bank accounts.
4.1.8 Fiduciary risk: The project’s initial fiduciary risk is deemed "high" mainly due to the magnitude of the investment (USD 2.3 billion) and the complexity of the financial and legal arrangements involved in the operation. This level also entails risks related not only to the mobilization of MASEN's own funds, but also to the establishment and operation of the two SPCs (delays in the establishment of these companies and in the release of share capital, staff recruitment difficulties, etc.). While MASEN (the Borrower) has the advantage of being a structure with a proven organization and financial management system, the two solar power companies (SPCs) have not yet been set up and their capacity to ensure sound project financial management cannot be ascertained at this stage. The fulfilment of the preliminary 16
conditionalities set out below (see 5.2) will help to bring the residual risk down to a "moderate" and acceptable level. Apart from the effective creation of the two SPCs and fulfilment of the fiduciary responsibility clauses of the agreements to be concluded between them and MASEN, and which will be subject to Bank approval, it will be necessary for the Bank and the other donors, each in its own sphere, to ensure or obtain evidence of the establishment of an appropriate and efficient financial management mechanism by the two SPCs.
4.1.9 External audit arrangements: The financial statements of MASEN and the two SPCs 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 (IFAC) and the harmonized ToRs for the project auditing, copies of which would have been transmitted to the auditors. The audit reports, accompanied by letters to the internal oversight directorates of each entity, will be forwarded to the Bank within six (6) months following the close of each fiscal year. The first project audit report will cover the period from project start-up to 31 December 2019. In addition, MASEN shall likely be controlled by the General Inspectorate of Finance (IGF) and the Moroccan Court of Auditors.
4.2 Monitoring
4.2.1 The Bank's activities planned as part of project monitoring are summarized in the table below. These activities will be conducted following the project implementation schedule presented on Page (v), according to which the project completion is planned for 2021. Half- yearly progress reports will be prepared by MASEN using the template adopted by donors for previous projects. These reports will be submitted to the donors within 45 days following the end of each half-year. The project will be subject to at least two (02) Bank supervision missions per year. The missions will be conducted jointly with other donors to ensure better project implementation coordination. At the end of the project, MASEN will prepare and submit a project completion report to donors. In turn, the Bank will prepare its own completion report that will be followed by a project performance appraisal report.
Period Stages Monitoring Activities/Feedback Loop December 2017 – Approval and effectiveness of loan and Approval and notification September 2018 guarantee agreements Signing and effectiveness of agreements July 2016 – Recruitment of private developers for the Signing of the PPP contracts for the power December 2018 plants plants by MASEN and private developers January 2019 – Solar plant construction, tests and Works implementation (SPC) June 2021 commissioning Control and supervision (MASEN) Project supervision (Donors) January 2022 – Project completion Preparation of completion reports (MASEN December 2023 and AfDB)
4.3 Governance
4.3.1 The governance risk within the specific framework of the project remains very low and could reside in the process for selecting the two private consortia that will be responsible for developing the NOORM I and NOORM II plants. However, this risk is mitigated by the experience gained from previous projects, whose lessons have enriched the design of this project. Furthermore, donors ensure the smooth implementation of their applicable rules and procedures. Regular project supervision missions and the annual audit reports on the project's financial statements will enable the Bank and other donors to monitor compliance with the terms of reference, the progress in the construction of the two power plants and compliance in the use of project financial resources. It is also worth noting that the full involvement of Morocco's highest authorities in the project will guarantee good governance. Moreover,
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MASEN has a Supervisory Board, a Management Board and an Audit Committee that exercise control over its activities. In addition, as a public-owned entity, it is subject to State financial control in accordance with Law No. 69-00.
4.4 Sustainability
4.4.1 Project sustainability hinges essentially on the capacity of the private developers, who will be recruited to design, finance, construct, operate and maintain the NOORM I and NOORM project. As for previous projects, the selection of these developers will be based on a two-stage international competitive bidding process, preceded by a shortlisting phase. The initial bid submission stage will be used 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. 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 previous power plants. These provisions will be used to determine the responsibilities of the project companies regarding the operation and maintenance of the power plants. Project impact sustainability also depends on State support. The State undertakes to ensure the financial stability of the project, if need be, by making up for the difference between the purchase price per kWh paid by MASEN to the project companies and the resale price to ONEE.
4.5 Risk Management
N° Potential Risks Mitigation Measures 1 Financial risk: Difficulties that MASEN Mitigation: (i) The downward trend in CSP costs: MAD 1.6 /kWh might encounter during the operating (2012) for NOORo I and MAD 1.36/kWh (2014) for NOORo III (150 phase, in the event of a significant MW) (a decrease of 16%); USD 9.45/kWh (June 2017) for the 200 difference between the prices per kWh paid MW DEWA CSP project (Dubai); (ii) hybridization of PV and CSP by MASEN to SPCs and the resale price to solar technologies in the project to bring down power generation costs ONEE, given the use of the concentrated by taking advantage of the relatively low costs of solar PV technology solar power (CSP) technology that will be (MAD 0.46/kWh in 2016 for bid invitations issued by MASEN; (iii) deployed in the project power plants the commitment of the State to ensuring the financial balance of the (NOORM I and NOORM II) and whose costs project (coverage of the gap); and (iii) the financial proceeds realized are still relatively high despite the from the project by MASEN will be channelled towards filling the gap. mobilization of concessional funds. 2 Implementation risk: The difficulties that Mitigation: (i) The quality and strength of MASEN’s workforce, MASEN might encounter in monitoring the which has increased steadily from 10 in 2010 to 65 in 2015 and 120 in project, given the relatively high number of 2017; (ii) the support system put in place by MASEN, which receives plants (solar/wind) being deployed over the technical services or assistance from its consultants (consulting period 2018-2020. engineers and consulting firms of international repute in their respective areas of expertise) on various aspects (technical, financial and fiscal, legal, etc.); and (iii) MASEN’s recruitment of one or two Lender Technical Advisors (LTA) to supervise the construction of the plants on its behalf. 3 Technological risk: The difficulties that Risk mitigation: (i) The selection of developers through a rigorous developers could encounter in the design and competitive international bidding process that takes into account and roll-out of the project's two hybrid their specific experience in developing major solar power plants; (ii) (CSP-PV) solar power plants, given their the recruitment (MASEN/SPC) of an independent consulting engineer size (high capacity); who will be responsible for supervising the testing of major equipment, the commissioning of the plant and the certification of performance tests; and (iii) the adoption of contractual measures aimed at mitigating technological risks by MASEN, in cooperation with each SPC (and its contractors).
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4.6 Knowledge Building
4.6.1 The knowledge and skills developed in Morocco in the solar energy sector (including industrial integration), through this project, could be shared with other MENA countries and Africa, as part of South-South cooperation. MASEN has a Directorate of International Cooperation and Partnerships. It works for South-South cooperation by sharing Moroccan expertise in solar energy in a context of regional solidarity and enhanced regional integration. The half-yearly project progress reports, the interim financial reports and annual external audit reports will be the sources of information on the project and will serve as a basis for the Bank's supervision missions, after which lessons will be learned. The project completion and appraisal reports published by the Bank will make the knowledge available to Bank staff and the public. The lessons learned will enhance the design of similar future Bank operations.
5 LEGAL FRAMEWORK
5.1 Legal Instrument
5.1.1 To finance the project, the Bank will use: (i) an ADB loan of USD 240 million granted to MASEN; and (ii) a CTF loan of USD 25 million granted to MASEN, with AfDB and CTF loans split between two ADB loan agreements and two CTF loan agreements to make a distinction between the financing of each of the two power plants, granted by the Bank in its capacity as the CTF executing entity; both loans will be guaranteed by the Moroccan State.
5.2 Conditions Associated with the Bank’s Intervention
A) Conditions precedent to effectiveness of the ADB and CTF loans
5.2.1 The ADB and CTF Loan Agreements shall become effective on the date of their signature. The ADB and CTF Loan Guarantee Agreements shall become effective on the date on which the Guarantor, to the Bank’s satisfaction, fulfils conditions set out in Section 12.01 of the General Conditions Applicable to Loan Agreements and Guarantee Agreements of the Bank.
B) Conditions precedent to first disbursement of the ADB and CTF loans
5.2.2 In addition to the effectiveness conditions, the first disbursement of each loan shall be subject to the fulfilment of the following conditions by the Borrower, to the Bank’s satisfaction:
(i) Fulfil the conditions set out in Section 12.02, paragraph (a), sub-paragraphs (i) and (ii) of the General Conditions;
(ii) Provide proof to the Bank of the conclusion of project financing by presenting evidence that the other donors have approved their funding (paragraph 2.4.2);
(iii) Provide the Bank with evidence of the undertaking by the Kingdom of Morocco to make up for the difference between the purchase price of electricity by MASEN to each NOORM I and NOORM II Project Company (SPNM I and SPNM II) and resale of the electricity to Office National de l’Electricité et de l’Eau Potable (ONEE) (the National Power and Water Agency) or to any company that may replace the latter, under the Framework Agreement concluded between the State and MASEN on 26 October 2010 (paragraphs 3.1.2 and 4.5);
(iv) Provide the Bank with a certified true copy of: (a) the signed and registered Articles of Association of each Project Corporation - NOORM I and NOORM II 19
(SPNM I and SPNM II); (b) the registration attestation of each SPN; (c) the power purchase agreement between the Borrower and each SPN; (d) the power purchase agreement between the Borrower and ONEE; and (e) the agreement to on-lend all or part of the loan resources by the Borrower to each SPN, indicating that: (1) the financial and accounting information will be forwarded by the solar power company (SPC) to the Borrower on a half-yearly basis; and (2) the annual financial statements of the SPC will be audited by its auditor, in accordance with the standards applicable in Morocco and taking into account the Bank's terms of reference (paragraph 4.1.6.1); and
(v) Provide the Bank with evidence of the Borrower's hiring of a Lender Technical Advisor for the works control (paragraphs 2.8.2, 4.1.5, 4.1.7);
C) Condition precedent to the disbursement of ADB and CTF loan resources in connection with works requiring expropriation
5.2.2 Apart from effectiveness and fulfilment of the above conditions precedent, the disbursement of each loan resources in connection with works requiring expropriation is subject to the Borrower’s fulfilment of the following condition, to the Bank’s satisfaction:
(i) As works advance and prior to the start of any works on areas concerned, provide evidence of payment to and/or resettlement of project-affected persons in such areas, in line with the Environmental and Social Management Plan (ESMP), the Land Acquisition Plan (PAT) and relevant Bank rules of procedure, in particular the Involuntary Resettlement Policy and the Integrated Safeguards System. It is noted that when this compensation or resettlement is not possible either in full or in part, due to inability to identify beneficiaries, or in case of litigation or any other impossibility outside the Borrower’s control and deemed duly acceptable to the Bank (hereinafter called "Disputed Cases"), the condition may be deemed fulfilled if the Borrower presents evidence that the resources allocated to the compensation and/or resettlement of the Disputed Cases have been paid into a bank account acceptable to the Bank and specially set aside for this compensation and/or resettlement, or transferred to a trusted third party acceptable to the Bank (paragraph 3.2.8).
D) Other conditions
5.2.3 The Borrower shall also, to the satisfaction of the Bank, fulfil the following conditions:
(i) Provide, within three months of the first disbursement, evidence that the SPN has established a satisfactory accounting and financial management system, including: (a) the appointment of a qualified and experienced financial officer; (b) the establishment of an accounting system capable of generating accounts compliant with the accepted standards and of integrating an analytical and budgetary monitoring process; and (c) the preparation of a financial management manual satisfactory to the Bank (paragraph 4.1.6.2); and
(ii) Provide the Bank, prior to the start-up of works on each 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 relevant SPN, (b) the Environmental and Social Management Plan (ESMP); and (c) where applicable, evidence of the environmental acceptability of the detailed assessment of the 20
plant, if required by Moroccan law or if obtained on a voluntary basis (paragraph 3.2.1).
E) Undertaking
5.2.4 The Borrower undertakes to:
(i) Provide the Bank with any document reasonably necessary for monitoring project implementation;
(ii) Implement the project and have each SPN concerned and its sub-contractors execute the ESMP, in line with: (a) Bank rules and procedures; and (b) national law (paragraph 3.2.1);
(iii) Not start work on a project area without paying full compensation and/or resettling project-affected persons in the area concerned, except for Disputed Cases, in accordance with the PAT, updated as necessary (paragraph 3.2.8); and;
(iv) Submit to the Bank half-yearly reports on the implementation of the ESMP and the PAT, updated as necessary, including any weaknesses and corrective actions initiated or to be initiated.
5.3 Compliance with Bank Policies
5.3.1 The project complies with all applicable Bank policies, including the Bank's Policy on Loan On-lending.
6. RECOMMENDATIONS
Management recommends that the Board of Directors: (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 ADB loan of USD 240 million to MASEN; and (ii) a CTF loan of USD 25 million to MASEN by the Bank in its capacity as the executing entity of the CTF Trust Fund, with both loans guaranteed by the Kingdom of Morocco, for financing the Midelt Solar Complex Project - Phase I (NOORM I and NOORM II power plants), in accordance with the terms and conditions set out in this report.
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Appendix I: Comparative Socioeconomic Indicators of Morocco Morocco COMPARATIVE SOCIO-ECONOMIC INDICATORS
Develo- Develo- Year Morocco Africa ping ped Countries Countries Basic Indicators GNI Per Capita US $ Area ( '000 Km²) 2016 447 30 067 97 418 36 907 Total Population (millions) 2016 34,8 1 214,4 6 159,6 1 187,1 3500 Urban Population (% of Total) 2016 59,9 40,1 48,7 81,1 3000 Population Density (per Km²) 2016 78,0 41,3 65,1 33,8 2500 2000 GNI per Capita (US $) 2015 3040 2 153 4 509 41 932 1500 Labor Force Participation *- Total (%) 2016 49,3 65,7 63,5 60,0 1000 Labor Force Participation **- Female (%) 2016 25,5 55,7 48,9 52,1 500
Sex Ratio (per 100 female) 0
2010 2014 2005 2009 2011 2012 2013 2015 2016 97,9 100,1 106,0 105,0 2000 Human Dev elop. Index (Rank among 187 countries) 2015 123 ...... Popul. Liv ing Below $ 1.90 a Day (% of Population) 2006 3,1 ......
M or oc co A fri ca Demographic Indicators Population Grow th Rate - Total (%) 2016 1,3 2,5 1,3 0,6 Population Grow th Rate - Urban (%) 2016 2,1 3,6 2,4 0,8 Population < 15 y ears (%) 2016 27,2 40,9 27,9 16,8 Population Growth Rate (%) Population 15-24 y ears (%) 2016 17,2 19,3 16,9 12,1 3,0 Population >= 65 y ears (%) 2016 6,3 3,5 6,6 17,2 2,5 Dependency Ratio (%) 2016 50,3 79,9 54,3 52,0 Female Population 15-49 y ears (% of total population) 2016 27,0 24,0 25,7 22,8 2,0 Life Ex pectancy at Birth - Total (y ears) 2016 74,6 61,5 69,9 80,8 1,5 Life Ex pectancy at Birth - Female (y ears) 2016 75,6 63,0 72,0 83,5 1,0 Crude Birth Rate (per 1,000) 2016 19,9 34,4 20,7 10,9 0,5
Crude Death Rate (per 1,000) 2016 5,7 9,1 7,6 8,6 0,0
2000 2010 2012 2015 2009 2011 2013 2014 Infant Mortality Rate (per 1,000) 2015 23,7 52,2 34,6 4,6 2005 Child Mortality Rate (per 1,000) 2015 27,6 75,5 46,4 5,5 Total Fertility Rate (per w oman) 2016 2,5 4,5 2,6 1,7 M or occo A fric a Maternal Mortality Rate (per 100,000) 2015 121,0 476,0 237,0 10,0 Women Using Contraception (%) 2016 68,7 31,0 62,2 ...
Health & Nutrition Indicators Phy sicians (per 100,000 people) 2005-2015 61,8 41,6 125,7 292,2 Life Expectancy at Birth Nurses and midw iv es (per 100,000 people) 2005-2015 87,2 120,9 220,0 859,4 (years) Births attended by Trained Health Personnel (%) 2010-2015 73,6 53,2 69,1 ... 80 Access to Safe Water (% of Population) 2015 85,4 71,6 89,4 99,5 70 60 Access to Sanitation (% of Population) 2015 76,7 39,4 61,5 99,4 50 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 40 2015 0,1 3,4 ...... 30 Incidence of Tuberculosis (per 100,000) 2015 107,0 240,6 166,0 12,0 20 Child Immunization Against Tuberculosis (%) 10
2015 99,0 81,8 ...... 0
2010 2014 2005 2009 2011 2012 2013 2015 Child Immunization Against Measles (%) 2015 99,0 75,7 83,9 93,9 2000 Underw eight Children (% of children under 5 y ears) 2010-2015 3,1 18,1 15,3 0,9 Prev alence of stunding 2010-2014 14,9 33,3 25,0 2,5 M or oc co A fri ca Prev alence of undernourishment (% of pop.) 2015-2016 5,0 16,2 12,7 ... Public Ex penditure on Health (as % of GDP) 2014 2,0 2,6 3,0 7,7
Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2010-2016 114,7 101,2 104,9 102,4 Primary School - Female 2010-2016 111,6 98,4 104,4 102,2 Infant Mortality Rate Secondary School - Total 2010-2016 69,1 52,6 71,1 106,3 ( Per 1000 ) Secondary School - Female 2010-2016 63,5 50,2 70,5 106,1 100 90 Primary School Female Teaching Staff (% of Total) 2010-2016 55,3 47,1 59,8 81,0 80 Adult literacy Rate - Total (%) 2010-2015 71,7 66,8 82,3 ... 70 60 Adult literacy Rate - Male (%) 2010-2015 81,9 74,3 87,1 ... 50 Adult literacy Rate - Female (%) 2010-2015 62,0 59,4 77,6 ... 40 30 Percentage of GDP Spent on Education 2010-2015 ... 5,0 4,0 5,0 20 10
0
2000 2005 2011 2015 2010 2012 2013 2014 Environmental Indicators 2009 Land Use (Arable Land as % of Total Land Area) 2014 18,2 8,7 11,2 10,3 Agricultural Land (as % of land area) 2014 68,5 41,7 37,9 36,4 Forest (As % of Land Area) 2014 12,6 23,2 31,4 28,8 M or oc co A fri ca Per Capita CO2 Emissions (metric tons) 2014 1,5 1,1 3,5 11,0
Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update : June 2017 UNAIDS; UNSD; WHO, UNICEF, UNDP; Country Reports. Note : n.a. : Not Applicable ; … : Data Not Available. * Labor force participation rate, total (% of total population ages 15+) ** Labor force participation rate, female (% of female population ages 15+)
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Appendix II: Table of Bank Portfolio in Morocco (July 2017)
8/8/2017 MOROCCO - PORTFOLIO OF ON-GOING OPERATIONS D D A Cumulative ag é Approved Amount Cumulative Disbursement Rate te c Undisbursed Disbursement (in %) Share erEffectiveness a Cancellation Amount in Loan Date de Effectivene d Loan e in Loan in the No. Project Name Approval Date Closing Date ée Timeframe n in Loan Currency by signature ss Date Currency in Loan Currency Currency by Portfoli cl (months) in Units of U Currency Project /in EUR Project. (total by sect. in Project / in Current o a Account by Sector 2017 EUR) EUR by Sector t i AGRICULTURAL SECTOR 5.6 199,000,738 253,841,870 168,116,360 5,593,640 66.2% 65.9% 11.5% Nat. Prog. for Irrig Water Conserv. Supp. 1 14-Dec-09 1-May-14 30-Jan-00 30-Nov-17 6.7 EUR 44,679,184 53,590,000 47,996,360 5,593,640 89.6% 93.0% Project (PAPNEI) Nat. Prog. for Irrig Water Conserv. Supp. 2 13-Dec-16 20-Jun-17 4-Aug-17 31-Dec-23 7.8 USD 63,287,072 88,057,000 0 88,057,000 0.0% Project (PAPNEI II) 3 PAPMV II 14-Oct-15 15-Dec-15 22-Dec-15 30-Jun-17 2.3 USD 91,034,482 132,000,000 132,000,000 0 100.0% 100.0% TRANSPORT SECTOR 6.5 420,116,721 515,053,000 267,699,541 251,407,372 52.0% 49.2% 23.4% Tangier-Marrakech Railway Cap. Expansion 4 17-Dec-10 17-Mar-11 30-Jun-11 31-Dec-16 6.5 EUR 250,116,721 300,000,000 189,944,581 110,055,419 63.3% 82.0% Project Tangier–Casablanca–Marrakesh Railway Exp. 5 27-Jan-16 8-Apr-16 7-Jun-16 31-Dec-20 4.4 USD 81,040,000 112,300,000 67,256,527 45,043,473 59.9% Project Nador West Med Port Complex Construction 6 16-Sep-15 9-Mar-16 1-Jun-16 31-Dec-22 8.6 EUR 88,960,000 112,860,000 16,551,520 96,308,480 14.7% 18.0% Project ENERGY SECTOR 3.1 631,137,859 790,860,000 400,385,261 13,000,000 377,474,739 51.5% 52.9% 35.3% 7 Elect. Trans. and Distr. Networks Devt. Prog. 2-Dec-09 11-Dec-09 29-Apr-10 31-Dec-18 4.9 EUR 91,559,394 109,820,000 66,891,494 13,000,000 29,928,506 69.1% 64.0% NOOR Ouarzazate Solar Complex - Phase II 8 3-Dec-14 19-Dec-14 19-Dec-14 31-Dec-19 0.5 EUR 56,455,533 72,000,000 53,393,673 18,606,327 74.2% 50.0% (CTF) Complexe Solaire Ouarzazate NOORo II (CTF) 3-Dec-14 19-Dec-14 19-Dec-14 31-Dec-19 0.5 USD 51,326,683 69,000,000 69,000,000 0 100.0% 100.0%
NOOR Ouarzazate Solar Complex - Phase III 3-Dec-14 19-Dec-14 19-Dec-14 31-Dec-19 0.5 EUR 23,775,962 28,000,000 21,909,367 6,090,633 78.2% 50.0% NOOR Ouarzazate Solar Complex - Phase III 3-Dec-14 19-Dec-14 19-Dec-14 31-Dec-19 0.5 USD 34,325,571 50,000,000 50,000,000 0 100.0% 100.0% (CTF) PERG 13-Jun-12 19-Dec-12 19-Dec-12 31-Dec-21 6.3 EUR 105,854,125 135,000,000 112,468,091 22,531,909 83.3% 95.0% AL KOUDIA AL BAIDA Wind Farm 13-Jun-12 19-Dec-12 19-Dec-12 31-Dec-21 6.3 EUR 39,205,231 50,000,000 18,962,739 31,037,261 37.9% 54.0% M'Dez El Menzel Hydro-Power Complex 13-Jun-12 19-Dec-12 19-Dec-12 31-Dec-21 6.3 EUR 58,023,742 74,000,000 74,000,000 0.0% 0.0% Tangier Wind Farm - Phase II (CTF) 13-Jun-12 19-Dec-12 19-Dec-12 31-Dec-21 6.3 EUR 33,348,896 40,000,000 40,000,000 0.0% 20.0% 9 Step Abdel Moumen 13-Jun-12 19-Dec-12 19-Dec-12 31-Dec-21 6.3 EUR 47,046,277 60,000,000 60,000,000 0.0% 0.0% Parc Eolien AL KOUDIA AL BAIDA (FTP) 13-Jun-12 19-Dec-12 19-Dec-12 31-Dec-21 6.3 USD 25,291,409 34,000,000 20,296,590 13,703,410 59.7% 46.0% M'Dez El Menzel Hydro-Power Compl (CTF) 13-Jun-12 19-Dec-12 19-Dec-12 31-Dec-21 6.3 USD 22,315,949 30,000,000 30,000,000 0.0% 0.0% Tangier Wind Farm - Phase II (CTF) 13-Jun-12 19-Dec-12 19-Dec-12 31-Dec-21 6.3 USD 20,293,138 31,000,000 31,000,000 0.0% 20.0% Abdel Moumen STEP (CTF) 13-Jun-12 19-Dec-12 19-Dec-12 31-Dec-21 6.3 USD 22,315,949 30,000,000 30,000,000 0.0% 0.0%
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SOCIAL SECTOR 3.2 96,553,400 124,150,342 123,702,630 1,114,879 99.6% 1.0% 5.6% 10 Health Map Information System - MIC Grant 30-Jul-13 30-Dec-13 30-Dec-13 31-Dec-16 5.1 UC 380,800 380,800 380,800 380,800 100.0% 100.0% 11 e-University UIR - MIC Grant 10-Oct-13 27-Feb-14 27-Feb-14 31-Dec-17 4.7 UC 774,600 774,600 709,366 243,379 91.6% 31.8% 12 Social Protection (PAGPS) 22-Jun-16 24-Jun-16 28-Jun-16 31-Dec-17 0.2 USD 95,000,000 134,500,000 134,500,000 0 100.0% 13 UEFM Support - MIC Grant 29-Jan-16 28-Apr-16 28-Apr-16 31-Dec-17 3.0 UC 398,000 398,000 35,560 362,440 8.9% WATER AND SANITATION SECTOR 4.6 360,147,527 455,749,600 152,966,891 88,739,600 214,043,109 41.7% 33.4% 16.7% Rabat-Casablanca 11th DWS Project 12-May-10 19-Aug-10 13-Jan-11 31-Dec-17 8.2 EUR 127,268,022 162,310,000 67,127,283 69,120,000 26,062,717 72.0% 74.2% 14 Rabat-Casablanca 11th DWS Project 12-May-10 19-Aug-10 13-Jan-11 31-Dec-17 8.2 USD 40,957,205 55,060,000 31,452,141 21,560,000 2,047,859 93.9% 89.8% 15 Marrakesh 12th DWS Project 7-Nov-12 19-Dec-12 19-Dec-12 31-Dec-18 1.4 EUR 94,092,555 120,000,000 36,911,615 83,088,385 30.8% 14.1% Douzième projet d'AEP de Marrakech 7-Nov-12 19-Dec-12 19-Dec-12 31-Dec-18 1.4 USD 27,523,004 37,000,000 17,680,978 19,319,022 47.8% 27.6% Project to Improve Water Quality and the 16 8-Jun-16 14-Jul-16 16-Aug-16 31-Dec-18 2.3 EUR 69,667,696 88,850,000 3,809,255 85,040,745 4.3% Performance of DWS Systems (13th DWS) Sub-Contracting of the RWS Network 17 15-Apr-16 7-Jun-16 21-Oct-16 31-Dec-19 6.3 EUR 639,045 815,000 407,600 407,400 50.0% Management - AWF Grant MULTI-SECTOR 2.7 122,393,399 149,205,457 144,462,247 186,743,210 96.8% 0.9% 6.8% Support for the Modernization of the Debt 18 Management Organizational Framework - MIC 27-Feb-13 31-May-13 31-May-13 31-Dec-17 3.1 UA 536,976 536,976 79,705 457,271 14.8% 30.0% Grant Study on Growth and Employment in Moroccco - 19 27-Jun-12 7-Sep-12 7-Sep-12 30-Jun-18 2.4 UA 587,200 587,200 587,200 0 100.0% 100.0% MIC Grant Support for the Preparation of the Moroccan 20 20-Sep-12 19-Dec-12 19-Dec-12 29-Dec-17 3.0 UA 489,258 489,258 312,422 176,836 63.9% 60.0% Monetary and Financial Code - MIC Grant
21 PARSIF 13-Jul-16 14-Jul-16 16-Aug-16 31-Dec-18 1.1 USD 116,786,800 157,000,000 157,000,000 0 100.0%
22 DTFE Strategic Study - MIC Grant 21-May-15 28-Jul-15 28-Jul-15 31-Dec-17 2.3 UC 797,600 797,600 0 797,600 0.0%
23 Support to Head of Government - MIC Grant 14-Jul-15 28-Jul-15 28-Jul-15 31-Dec-21 0.5 UA 799,200 799,200 15,729 783,471 2.0%
24 Maroc Export - DON PRI 2-Jul-16 3-Oct-16 5-Oct-16 31-Dec-18 3.2 UA 630,000 630,000 10,000 620,000 1.6%
25 TA Court of Auditors - MIC Grant 25-Nov-15 7-Jun-16 19-Aug-16 31-Dec-18 8.9 UA 792,000 792,000 208,214 583,786 26.3%
26 PAAIM I 14-Jul-17 14-Jul-17 28-Jul-17 31-Dec-18 0.5 USD 147,400,228 200,000,000 0 200,000,000
27 TA CAFRAD (MIC Grant) 23-Mar-17 30-Jun-17 30-Jun-17 30-Jun-19 3.3 UA 479,000 479,000 0 479,000
28 UMA Institutional Support - Phase II - MIC Grant 8-May-15 2-Jul-15 2-Jul-15 30-Jun-19 1.8 UA 495,365 495,365 195,798 299,567 39.5% PRIVATE SECTOR 5.1 13,479,000 15,000,000 8,400,000 6,600,000 56.0% 0.7% 29 Argan Infrastructure Fund 17-Feb-10 21-Jul-10 21-Jul-10 31-Dec-18 5.1 EUR 13,479,000 15,000,000 8,400,000 6,600,000 56.0%
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TOTAL Summary: Sector Distribution of Operations Portfolio Amount Total % In Units of Account 1,727,862,896 100.0% Loans (16 projects) 1,720,542,852 99.6% Grants (13 projects) 7,320,044 0.4% 5.6% Social Agric; In EUR 2,202,120,669 11.5% 6.8% Current Proj. 2017 Multisect. Total disbursed amount in Euros 1,265,732,930 886,516,903 Loans 1,262,461,013 23.4% Transp. Grants 3,271,917 16.7% Overall disbursement rate 57.48% 38.47% Water/sanit. Loans 57.57% Grants 40.20% Private Sector Average amount by loan (in UA) 107,533,928 0.7% Effectiveness timeframe (months) 4.8 Loans 4.0 35.3% Energ. Grants 3.7 Relative portfolio age (year) *** 0.8 Average portfolio age (year) 2.8 Loans 3.1 Grants 2.5
Note: The shaded areas correspond to operations that are not yet effective ( ψ): Projects that are not yet effective and therefore not included in the determination of the overall portfolio disbursement rate * PRI: Pays à revenu intermédiaire ** AWF: African Water Facility *** Relative age (ratio ≤ 1): Age of the project since its effectiveness in relation to the period between effectiveness date and closing date as provided for at project appraisal
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Appendix III: Major On-going Related Projects in Morocco Financed by the Bank and Other Development Partners
Donors Amount Currency Projects Status AFD AfDB EIB NOOR Ouarzazate Solar Complex Project - Phase I - NOORo I Completed (commissioned end -2015 and WB 634 000 000 EUR Power Plant (160 MW CSP) inaugurated in February 2016) CTF KfW EU/NIF AfDB EIB WB NOOR Ouarzazate Solar Complex Project - Phase II - NOORo II 827 000 000 EUR On-going CTF Power Plant Power Plant (200 MW CSP) KfW EU/NIF AFD AfDB EIB NOOR Ouarzazate Solar Complex Project - Phase II - NOORo III WB 644 000 000 EUR On-going Power Plant (150 MW CSP) CTF KfW EU/NIF High Voltage and Medium Voltage Network Extension Programme AFD 57 000 000 EUR On-going in Morocco
Electricity Transmission and Distribution Network Development AfDB 96 820 000 EUR On-going Project AfDB 359 000 000 EUR Integrated Wind/Hydro and Rural Electrification Programme On-going CTFP 125 000 000 USD Integrated Wind/Hydro and Rural Electrification Programme On-going EIB 152 000 000 EUR Electrical Networks II On-going EIB 180 000 000 EUR Electrical Networks III On-going EIB 150 000 000 EUR Hydroelectric II (STEP Abdelmoumen) Starting up EIB 200 000 000 EUR 850 MW Integrated Wind Programme On-going EBRD 60 000 000 EUR PERG last tranche On-going
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EBRD 35 000 000 EUR Hydropower Plant Rehabilitation On-going IsDB 99 850 000 EUR Jorf Lasfar Wharf Extension On-going IsDB 220 000 000 USD Transmission and Distribution Network On-going IBRD 125 000 000 USD Clean Energy and Energy Efficiency On-going CTF 23 950 000 USD Clean Energy and Energy Efficiency On-going BNP 26 384 770,62 EUR Dakhla Power Plant Extension On-going China Exim 299 850 000 USD Jerada Coal Plant On-going Bank KFAED 20 000 000 KWD South Network Development On-going High Voltage and Medium Voltage Network Extension Programme KFW 100 000 000 EUR On-going in Morocco KfW 20 000 000 EUR Low-energy light bulbs On-going KfW 130 000 000 EUR 850 MW Integrated Wind Programme On-going KfW 50 000 000 EUR Taza wind farm On-going OFID 70 000 000 USD PERG last tranche II On-going OFID 60 000 000 USD PERG last tranche On-going
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Appendix IV: Map of the Project Area
Figure 1: Map of Project Location in MIDELT Province
Figure 2: Map of Project Location on the Topographic Map (Scale: 1/50 000)
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Appendix V: Note on the Moroccan Solar Programme and its Deployment
Morocco's Solar Programme, also known as the NOOR Programme, was officially launched on 2 November 2009 in Ouarzazate by His Majesty King Mohamed VI. It aims to develop integrated solar power generation projects with a total capacity of at least 2 000 MW by 2020, including: (i) solar power plants; (ii) ancillary deliverables and activities contributing to the development of the areas hosting the plants and the country at large. The solar programme is part of the implementation of the new National Energy Strategy (2010-2030), adopted in March 2009. Its purpose is to develop, by 2020, installed capacity of electricity generation from wind, hydropower and solar sources amounting to 2 000 MW each, representing a total of 6 000 MW of power generated from renewable sources. The goal of the Kingdom is to increase the share of renewable energy in its energy mix. The share of renewables in the national power generation capacity is expected to reach 42% by 2020 and 52% by 2030. Thanks to the country’s renewable energy programme, the share of renewables increased from 28% in 2009 to 33.4% in 2015. The total investment cost of Morocco's solar programme projects has been estimated at more than USD 9 billion. The full rollout of this programme will help avoid annual greenhouse gas emissions equivalent to 3.7 million tonnes of CO2.
The implementation of Morocco’s Solar Programme was entrusted to MASEN, a public limited liability company, established in March 2010, and jointly-owned with equal shareholding by the Moroccan State, the Hassan II Fund for Economic and Social Development, the National Electricity and Water Authority (ONEE) and the Energy Investment Company (SIE). Its corporate objective - as defined under Law No. 57-09 (enacted on 11 February 2010) establishing the company under the name "Moroccan Agency for Solar Energy" - is to develop an integrated solar-based power generation project programme, with a total capacity of at least 2 000 MW by 2020, comprising: (i) solar power plants; and (ii) ancillary deliverables and activities aimed at contributing to the development of the areas hosting the plants and the country at large. MASEN’s scope was recently expanded, in 2016, to cover all renewable energies, pursuant to Law No. 37-16 (enacted on 25 August 2016). It is now known as the "Moroccan Agency for Sustainable Energy" and aims to implement, under the above-mentioned law, a programme of integrated power generation projects with an additional minimum capacity totalling 3 000 MW by 2020 and 6 000 MW by 2030, under an agreement concluded with the State.
Morocco’s Solar Programme is planned to be rolled out at various identified sites (Ouarzazate, Midelt, Tata, Jerrada, Laayoune, Boujdour, etc.).
Its first achievement concerned the Ouarzazate site - "NOOR Ouarzazate (NOORo)" - with a total targeted capacity of 580 MW, rolled out in three phases. In the first phase, a first plant known as NOORo I, using the concentrated solar power (CSP) parabolic trough technology and having a gross capacity of 160 MW, was commissioned in January 2016 with an industrial integration rate of close to 35%. It has a thermal power storage mechanism (using molten salt) that enables it to operate at full capacity for three (3) hours after sunset, hence its contribution to the coverage of the power supply of the interconnected network at peak hours (5.pm. to 8 p.m. in winter and 6 p.m. to 11 p.m. in summer). During its first year of operation (2016), the NOORo I plant generated 400 GWh of power and thus helped to prevent the release into the atmosphere of the equivalent of 209 174 tonnes of CO2. Under the second phase, two new CSP plants are in the construction phase: 200 MW NOORo II (with parabolic troughs) and NOORo III (solar tower), with an output of 150 MW. These plants will each have a thermal energy storage device that can allow them to operate for about 7 hours without sunlight. The NOORo II and NOORo III plants are at a very advanced stage (with an implementation rate of almost 90% in June 2017) and should be commissioned by the first half of 2018.
As part of the launching of the first photovoltaic phase of the NOOR Programme, known as the "NOOR PV I Programme", three PV plants with a total capacity of 170 MW are being developed, including NOORo IV (70 MW) for the third and final phase of deployment of the NOOR Ouarzazate Solar Complex.
Therefore, 680 MW of solar capacity is either in operation or under construction. Taking into account this project (the NOOR Midelt Solar Complex - Phase I), which involves the construction of two CSP-PV hybrid power plants with a capacity of more than 400 MW each and 800 MW in total, the solar power-generating capacity launched under Morocco’s Solar Programme (NOOR) amounts to about 1 500 MW.
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