VZCZCXYZ0003
RR RUEHWEB

DE RUEHRB #0250/01 0791127
ZNR UUUUU ZZH
R 191127Z MAR 08
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 8282
INFO RUEHCL/AMCONSUL CASABLANCA 3967
RUEHDK/AMEMBASSY DAKAR 0452
RUEHNK/AMEMBASSY NOUAKCHOTT 3688
RUEHFN/AMEMBASSY FREETOWN 0026

UNCLAS RABAT 000250 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG ECON SOCI MO
SUBJECT: POWER TO THE PEOPLE - RURAL ELECTRIFICATION 
 
¶1.  Summary.  The Government of Morocco's (GOM) ambitious program to 
expand rural electrification throughout the country is nearing 
completion - two years ahead of schedule.  By the end of 2008, the 
Programme d'Electrification Rurale Global (PERG) will reportedly 
bring electricity to every village in the country.  At a cost of $3 
billion, the program has not been cost effective in energy terms, 
but its goal is to help reduce the disparity in living standards 
faced by Morocco's 12 million rural inhabitants (40 percent of the 
population) and offer them greater economic and educational 
opportunities.  Morocco plans to export its expertise in rural 
electrification to other countries in Africa and has already won a 
contract in Senegal over competition from Electricite de France. 
End Summary. 
 
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LET THERE BE LIGHT 
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¶2.  In 1995, the GOM announced PERG with an ambitious goal of 
increasing Morocco's then 18 percent rural electrification rate to 
100 percent by 2010.  The program was launched in 1996 and through 
2004 it added approximately 44,000 miles of medium and low voltage 
power lines in Morocco (latest data available).  According to 
Mohammed Hajroun, Director of Electrical Equipment and Rural 
Electrification at the Ministry of Energy, the rate of rural 
electrification reached 93 percent by the end of 2007 and the Office 
National d'Electricite (ONE) now expects to reach its goal of 100 
percent in 2008.  Like many developing countries, Morocco has been 
somewhat remiss in the timely implementation of other development 
projects, so for PERG to be two years ahead of schedule is a major 
accomplishment. 
 
¶3.  The object of the program is to provide electricity to essential 
public services such as schools and medical clinics, small 
enterprises to help boost local economies, and to households.  Upon 
completion, PERG should bring electricity to more than 35,000 
villages, 1.9 million households and 12 million people who 
previously did not have access to it.  Approximately 93 percent of 
the villages will receive electricity through connection to the 
existing electrical grid and the remaining seven percent of 
villages, the most remote, will use photovoltaic cells to produce 
electricity. 
 
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SHARING THE COST 
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¶4.  Part of PERG's success is due to cost rationalization - it 
targeted villages with the lowest average cost of electrification 
per household and gradually moved to villages with higher average 
costs.  The program's ability to bring electricity to large numbers 
of people early in the process encouraged the GOM to accelerate the 
pace of the program and be on target to finish two years ahead of 
schedule.  From 1996 to 2001 PERG spent an average of less than 
10,000 dirham ($1,300) per household to bring electricity to rural 
villages.  From 2006 to 2007, this price had increased to almost 
27,000 dirham ($3,600) per household.  Electricity produced from 
photovoltaic cells is the most expensive part of the program and 
costs more than $3,600 per household. 
 
¶5.  The high cost of rural electrification is shared by three main 
partners.  Local authorities contribute either a one-time payment of 
2,080 dirham ($277) per household, or 500 dirham ($67) per household 
per year for five years.  In addition, individual households pay 
either 2,500 dirham ($335) in advance, or 40 dirham ($5) per month 
for seven years.  The final partner is ONE, which covers all 
additional costs.  In total, ONE has contributed approximately 55 
percent of the total cost of the program.  The European Investment 
Bank has underwritten 780 million euros ($1.17 billion) in 
electrical projects in Morocco since 1984, including many for PERG. 
 
 
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NEXT STEPS 
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¶6.  ONE is seeking to capitalize on the success of PERG by marketing 
its expertise in rural electrification to other African countries. 
It has already beaten out Electricite de France for a $16.3 million 
rural electrification contract in Senegal where it will manage a 
25-year contract to electrify 550 villages.  In addition, ONE has 
installed a generator in Mauritania, and is upgrading one power 
station and building another in Sierra Leone.  The continent of 
Africa has a rate of electrification of a mere 24 percent and it 
therefore represents a market with great potential for ONE's 
services. 
 
¶7.  As the completion of PERG draws near, the GOM has started a new 
program, Valorisation de l'Electrification Rurale (VER), to help 
increase the economic benefits of PERG.  Thus far, PERG has created 
14,000 jobs and the goal of VER is to use the advent of 
electrification to increase economic, human and social development 
on a broader scale.  Through VER, representatives from ONE will 
consult with villagers, local associations and regional authorities 
to identify small projects that can use electrical power to 
stimulate economic activity.  VER has already supplied machinery to 
assist local industries and motors to pump water, and envisions 
numerous small modernization projects to benefit rural Moroccans. 
VER will work in conjunction with the palace's National Initiative 
for Human Development (INDH) to promote social development and will 
be paid for predominately by ONE and local beneficiaries. 
 
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COMMENT 
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¶8.  Comment:  Since 2002, growth in demand for electricity in 
Morocco has grown at an annual rate of 8 percent and PERG has 
contributed to this rise.  Although it is poor in terms of energy 
resources, Morocco's ability to export its expertise in rural 
electrification highlights its technical savvy in the field.  The 
project has certainly been expensive and ambitious, but should do 
more to ease the rural/urban divide and offer rural inhabitants new 
economic opportunities. 
RILEY