VZCZCXYZ0000
PP RUEHWEB

DE RUEHRB #0732/01 1111054
ZNR UUUUU ZZH
P 211054Z APR 06
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 3482
INFO RUEHAS/AMEMBASSY ALGIERS PRIORITY 3940
RUEHMD/AMEMBASSY MADRID PRIORITY 5475
RUEHNK/AMEMBASSY NOUAKCHOTT PRIORITY 3142
RUEHTU/AMEMBASSY TUNIS PRIORITY 8822
RUEHCL/AMCONSUL CASABLANCA PRIORITY 1609
RUEHUNV/USMISSION UNVIE VIENNA PRIORITY 0028
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY

UNCLAS RABAT 000732 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB/ESC AND NEA/MAG 
USDOE FOR GINA ERICKSON AND YOUNES MASIKY 
USDOE ALSO FOR NNSA 
UNVIE FOR IAEA 
USDOC FOR ITA/MAC NATE MASON AND ITA/BI AARON BRINKMAN 
USDOC PLEASE PASS TO USTDA 
 
E.O. 12958: N/A 
TAGS: ENRG ETTC ECON SENV KNNP MO
SUBJECT: ELECTRICITY (IS) NOT STATIC 
 
REF: A. RABAT 151 
     ¶B. 05 RABAT 2311 
     ¶C. 05 RABAT 1636 
 
(U)  This message is Sensitive but Unclassified, please 
protect accordingly. 
 
¶1. (U) SUMMARY:  Director of Moroccan state electricity 
company Younes Maamar described to Ambassador on April 18 the 
government's plans to deregulate the electricity sector, 
stressing the GOM's urgency to diversify its energy sources 
and his personal preference that Morocco move forward with 
nuclear power.  Maamar estimated the sector will need $5 
billion in private investment over the next five years to 
satisfy electricity demand.  Ambassador announced the 
approval of an $820,000 grant from the U.S. Trade and 
Development Agency (USTDA), with which Maamar was very 
pleased.  END SUMMARY. 
 
--------------- 
"Energy Hungry" 
--------------- 
 
¶2. (U) Newly-appointed National Electricity Office (ONE) 
director Younes Maamar described the power sector as the most 
"critical piece" in the country's quest for lasting economic 
development.  Calling Morocco an "energy hungry country," 
Maamar said the state alone cannot provide the capital 
investment the sector needs to keep up with demand - growing 
an average of eight percent over the past several years - and 
said if private investment is not found the sector will 
become a bottleneck on economic progress.  Maamar's goal as 
ONE director is to guide the organization through a 
restructuring process that will open the sector to private 
firms and bring in the estimated $5 billion the sector will 
need over the next five years to keep up with demand. 
Ambassador agreed the state cannot provide this kind of 
capital and reiterated the importance of maintaining an 
appropriate balance of cost and supply of electricity to a 
developing economy like Morocco. 
 
¶3. (U) Maamar said that while liberalization is needed, the 
GOM will be careful to maintain adequate regulation. 
Ambassador agreed, describing the problems faced in 
California after an excessive deregulation left the sector in 
shambles, to which Maamar spontaneously blurted "AES (his 
former employer) should have taken out political risk 
insurance in California!" citing the heavy losses the company 
suffered there.  Maamar acknowledged that relying entirely on 
market forces in the power sector is not possible, and said 
power plants must be allowed to sign long-term guaranteed 
purchasing agreements. 
 
---------- 
Wind Power 
---------- 
 
¶4. (U) Ambassador noted that the astronomical growth of 
demand for electricity in Morocco and current high 
international prices of fossil fuels make diversification of 
energy sources and the development of renewable energy 
crucial for Morocco.  Maamar said the country has some of the 
best wind energy potential in the world (Ref B), and that ONE 
will soon issue a request for proposals to develop a 50 
megawatt windfarm in the north of the country on a 
Build-Operate-Transfer basis.  He said Morocco will resist 
the temptation to develop wind energy through tax incentives 
as was done in the United States, but will instead rely on 
incentives to capital investment or debt concessions (where a 
portion of the commercial operator's debt is subsidized by 
the state), as was done in Europe.  The GOM will also 
continue to sign guaranteed purchase contracts to mitigate 
the risk associated with high capital start up costs for the 
wind sector. 
 
-------------- 
Going Nuclear? 
-------------- 
 
¶5. (U) Maamar noted the GOM is looking into nuclear power as 
part of its drive to diversify its energy sources, and said 
while no decision has been made, he personally strongly 
supports the idea.  He said the GOM is working with the IAEA 
on feasibility studies and he would like GOM officials to 
visit the United States to learn from its experience with 
nuclear power.  Maamar took pains to emphasize that should 
the country pursue a nuclear program, it would do so within a 
legal/regulatory framework that the United States and other 
allies are comfortable with.  Maamar made clear his desire 
for "help from our American friends" in developing nuclear 
capability.  Ambassador said he had recently visited the 
Center for Energy, Science and Nuclear Techniques (CNESTEN), 
where U.S. firm General Atomics is completing a small 
research reactor (Ref C), and was very impressed with the 
agency's activities. 
 
----------- 
USTDA Grant 
----------- 
 
¶6. (U) Ambassador informed Maamar of the official approval of 
a USTDA grant of $820,000 to provide technical assistance for 
ONE's proposed reorganization.  Maamar was pleased with the 
grant announcement and said he had very favorable experiences 
working with USTDA in previous jobs. 
 
-------------------------------- 
Office National de l'Electricite 
-------------------------------- 
 
¶7. (U) The National Electricity Office is Morocco's 
state-owned electricity transporter/distributor and has 
nearly 9,000 employees.  ONE is not a policy-making body; the 
Ministry of Energy sets policy and ONE carries it out.  The 
organization will undergo a dramatic restructuring next year 
through a reform bill to be presented to parliament this year 
(Ref A) that will liberalize the sector and correct what 
Maamar called the "schizophrenic situation" of ONE being both 
a regulator and a competitor in the electricity market. 
 
¶8. (SBU) Maamar said he hopes the liberalization will "open 
the sector to the Anglo-Saxon world" and its important 
experience with energy policy.  Noting that the next ONE 
Request for Proposals will come out in English, "the language 
of business," Maamar said "while Mr. Chirac has the 
prerogative to protect his language, I have the prerogative 
to bring investment to my sector." 
 
¶9. (SBU) BIO NOTE:  Maamar worked for the World Bank's 
International Finance Corporation for six years in 
Washington, and then for the Arlington-based AES Corporation 
at the company's London officQ  He looks to be in his 
mid-40's and speaks perfect English.  Maamar's wife is 
American, daughter of a former U.S. ambassador.  Maamar is a 
reformer with a modern, private sector outlook.  Clearly more 
comfortable with the American style of doing business than 
the French model, at one point in the conversation Maamar 
said he considers himself "almost American." 
 
****************************************** 
Visit Embassy Rabat's Classified Website; 
http://www.state.sgov.gov/p/nea/rabat 
****************************************** 
 
Riley