OBG talks to Ali Fassi-Fihri, Director-General, National Office of Electricity and Water Supply (ONEE)

Interview: Ali Fassi-Fihri

To what extent is the electricity grid ready to absorb the kingdom’s increasing demand for energy?

ALI FASSI-FIHRI: Electricity consumption in our country grows at an average rate of 7% per year. This trend is expected to continue in the future and directly reflects the social and economic dynamism of Morocco, which in turn results from increased access to basic social services. To satisfy this continually growing demand, ONEE has initiated a construction scheme in line with the new national energy strategy that puts energy security, the development of renewable sources and energy efficiency at its heart, and envisages the creation of additional capacity up to 5500 MW by 2016. This capacity includes coal power stations that are currently being built near Jorf Lasfar, Safi and Jerada, as well as renewable energy projects in solar and wind power. At the same time, an ambitious programme to improve the supply network is being undertaken, necessitating some Dh12bn (€1.06bn) of investments by 2016. Beyond 2016, the development of production capacity will be pursued further. In that regard, we aim to reinforce our natural gas production with combined cycle facilities. The different options for importing gas by way of a gas terminal and/or through the Maghreb-Europe Gas Pipeline are being examined at present. Finally, our most ambitious objectives relate to renewable energy. In this regard, a framework plan will be developed by ONEE over the course of 2013 to determine the technological and economic feasibility of developing renewable energy resources beyond the target level of 42% by 2020.

What is your strategy for readjusting the energy mix in terms of electricity generation?

FASSI-FIHRI: ONEE’s strategy, which reconsiders energy sources used for generating power, is a function of the available national capacity for renewable energy, the diversification of supply sources and the ability to employ the most cost-efficient sources for power generation. This will be done within the larger context of reducing dependence on hydrocarbons. The plan is to have almost half of all energy consumed to come from renewable sources by 2020, with solar, wind and hydroelectric power each contributing 14% of supply. At the same time, our efforts in the realm of energy efficiency should also have a significant impact on how we are able to manage our rising energy demands.

How can the new legislation on public-private partnerships (PPPs) help energy companies finance their infrastructural projects?

FASSI-FIHRI: The recently introduced legislation on PPPs was developed for specific needs of local communities and economic operators so they can benefit from quality infrastructure and public services. This will help to boost competitiveness and improve the welfare of the people. Once it has been adopted, the law will allow the country to employ an arsenal of modern legal means that can be monetised by attracting private investors. This allows local operators to enhance their innovative and financial capacities through risk-sharing, more specifically to divest risks to parties that are better able to carry it. In the area of energy provision, the implementation of a PPP requires an important investment on ONEE’s part.

To what extent can energy prices be increased so as to reduce compensation charges?

FASSI-FIHRI: Today’s energy markets are characterised by surging prices as well as volatility. These factors have a significant impact on the price of electricity. However, higher costs are not transferred to end-users due to a compensation system that subsidises fuel used for generating power. In cases where the authorities plan to undertake reforms aimed at reducing the costs of this compensation system by scrapping subsidies for fuel used for electricity generation, they will certainly also take measures so as to protect the purchasing power of the most vulnerable end-users as well as to ensure that our industrial sectors remain competitive.