VZCZCXYZ0011
RR RUEHWEB

DE RUEHRB #0681/01 1081823
ZNR UUUUU ZZH
R 181823Z APR 07
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 6347
INFO RUEHAS/AMEMBASSY ALGIERS 4384
RUEHMD/AMEMBASSY MADRID 5696
RUEHCL/AMCONSUL CASABLANCA 2930
RHMFIUU/DEPT OF ENERGY WASHINGTON DC

UNCLAS RABAT 000681 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECIN EIND ENRG MO
SUBJECT: GOM DENIES RUMORS OF FUTURE ELECTRICITY SHORTAGES 
 
Sensitive but unclassified -- protect accordingly. 
 
¶1.  (SBU) Summary.  Ministry of Energy (MOE) officials deny 
recent press allegations, appearing in the "L'Economiste" 
newspaper and attributed to National Electricity Office (ONE) 
sources, that Morocco will face a shortage of electricity 
starting in 2008.  They concede that demand for electricity 
in Morocco is rising rapidly, up an average of eight percent 
annually since 2002, a rate they expect to continue as a 
result of rapid infrastructure development, rural 
electrification programs and strong economic growth.  They 
insist, however, that sufficient generating capacity will 
come on line in the next few years to meet the increase in 
demand, and that in any case Morocco can also import 
electricity from either Spain or Algeria at attractive rates. 
 Ministry sources attribute the "L'Economiste" article, in 
which anonymous ONE sources blamed the government for failing 
to plan to build sufficient new plants, to the new Director 
at ONE who feels he inherited a bad situation at the electric 
utility.  End summary. 
 
¶2.  (U) The business daily L'Economiste recently alleged that 
an electricity crisis looms on the horizon for Morocco and 
could result in power shortages by 2008.  The report cited 
anonymous officials in ONE as its source.  Other papers 
subsequently picked up the story, and pointed to ONE's 
failure to issue an official denial as implicit confirmation 
of its accuracy.  Questions were subsequently directed to the 
government, with papers reporting that Prime Minister Jettou 
had convoked Minister of Energy Boutaleb and ordered him to 
review the situation. 
 
¶3. (SBU) In a meeting we sought to pursue the issue, the 
MOE's Director for Electricity and Renewable Energy, 
Abderrahim El Hafidi, told Econoff that the press reports 
were exaggerated.  He argued that the GOM had the situation 
well in hand and that while electricity demand could climb 
close to the limit of supply in 2008, it would not exceed it. 
 He suggested that the new Directorof ONE had leaked the 
story in an effort to show that he had inherited a bad 
situation at the electric utility, so that if problems 
occurred in future he would not be held responsible.  He 
confirmed that the Prime Minister had convoked the Minister 
of Energy to explain the situation and the Minister in turn 
called El Hafidi for the details.  El Hafidi said both 
ministers were now comfortable with the country's electrical 
output situation, notwithstanding ONE's apparent decision 
last month to cancel a planned coal-burning generating 
station at Cap Ghir in Southern Morocco, which would have 
come on line in 2011 and provided 1,320 MW of power.  (Note: 
The plant had generated strong opposition from regional 
lawmakers out of concern about its environmental impact, 
particularly given planned tourist developments nearby.  End 
Note.) 
 
¶4.  (SBU) El Hafidi indicated that Morocco's electrical 
consumption has increased eight percent per year since 2002 
and should rise 8.1 percent in 2007 to 23,975 GWh, an 
increase of 47.8 percent since 2002.  Still, he said the 
country has excess capacity in the form of a 50 MW diesel 
turbine and several fuel oil powered turbines totaling 615 
MW.  He added that since fuel oil is expensive, it was 
usually more practical for ONE to import electricity from 
Spain via the countries' interconnected electrical grids -- 
developed to help avoid potential energy shortages.  If peak 
electrical use requires more power than Spain, or Algeria, 
Morocco's other interconnected electrical grid partner, can 
supply, the fuel oil burning turbines can be activated.  El 
Hafidi said he had recently met with Spanish officials who 
confirmed that Spain had abundant capacity to export 
electricity to Morocco. 
 
¶5.  (SBU) Currently, Morocco's produces 59 percent of its 
electricity from coal, 12 percent from fuel oil, 11.5 percent 
from natural gas, 5.5 percent from renewable energy (mostly 
hydraulic), and 3 percent from pumping stations.  Nine 
percent is imported from Spain.  The GOM foresees spending 
over $1.1 billion per year over the next five years on new 
electricity generating plants, and will need to increase 
capacity by 400 MW per year just to keep up with demand.  In 
the next few years, the GOM expects to put into service the 
following power plants: 
     2007 - 60 MW wind plant in Essaouira, 
     2008 - 100 MW gas turbine in Tan Tan, 
     2009 - 140 MW wind plant in Tangier 
          - upgrading the current 230 MW gas turbine to 450 
MW in Ain Beni Mathar 
          - 300 MW gas/fuel oil turbine in Mohammedia 
In addition, the GOM plans to replicate an existing 1,320 MW 
coal burning plant located in El Jadida that currently 
produces 50 percent of the country's electricity.  The new 
plant was originally planned for Cap Ghir, but we recently 
confirmed press reports that ONE has now abandoned that plan. 
 It will seek a new location and may also seek to co-locate 
the facility with the existing plant in El Jadida. 
 
¶6.  (SBU) The GOM has also liberalized laws for private 
companies that produce electricity.  The new rules raise the 
ceiling level of production for producers from 10 MW to 50 
MW.  Several oil exploration companies in Morocco report the 
strong possibility of making natural gas finds that might be 
too small to be commercially viable, but could instead be 
used to power small gas powered turbines for producing 
electricity that ONE would buy and transmit.  The MOE and ONE 
have energy conservation programs (septel) that could have an 
immediate impact on the demand for electricity.  For the 
long-term, the GOM is considering nuclear power as an 
alternative source of energy.  ONE has invited non-binding 
offers from several foreign companies, including Westinghouse. 
 
¶7.  (SBU) Comment.  Morocco's non-farm GDP growth has been 
strong for several years as has the level of new foreign 
investment into industry.  The GOM is actively promoting the 
expansion of the country's tourism sector, infrastructure, as 
well as conducting ambitious rural electrification programs. 
The rate of rural household electrification has increased 
from 55 percent in 2002 to 88 percent in 2006.  Combined, 
these factors have led to rapid growth in the demand for 
electricity that is likely to continue for several years. 
Post will continue to monitor this situation and the 
apparently rocky relationship between the MOE and ONE.  End 
Comment. 
****************************************** 
Visit Embassy Rabat's Classified Website; 
http://www.state.sgov.gov/p/nea/rabat 
****************************************** 
 
RILEY