Morocco - Issues and options in the energy sector

Report No. 4157-MOR Morocco: lIssues and Options in the Energy Sector PLE COPY March 1984 Report of the joint UNDP/Worki Bank Energy Sector Assessment Program This document has a restricted distribution. Its contents may not be disclosed without authorization from the Government, the UNDP or the World Bank.  JOINT UNDP/WORLD BANK ENERGY SECTOR ASSESSMENT PROGRAM REPORTS ALREADY ISSUED Country Date No. Indonesia November 1981 3543-IND Mauritius December 1981 3510-MAS Kenya May 1982 3800-KE Sri Lanka May 1982 3792-CE Zimbabwe June 1982 3765-ZIM Haiti June 1982 3672-HA Papua New Guinea June 1982 3882-PNG Burundi June 1982 3778-BU Rwanda June 1982 3779-RW Malawi August 1982 3903-MAL Bangladesh October 1982 3873-BD Zambia January 1983 4110-ZA Turkey February 1983 3877-TU Bolivia April 1983 4213-BO Fiji June 1983 4462-FIJ Solomon Islands June 1983 4404-SOL Senegal July 1983 4182-SE Sudan July 1983 4511-SU Uganda July 1983 4453-UG Nigeria August 1983 4440-UNI Nepal August 1983 4474-NEP Gambia November 1983 4743-GM Peru January 1984 4677-PE Costa Rica January 1984 4655-CR Lesotho January 1984 4676-LSO V Seychelles January 1984 4693-SEY S  FOR OFFICIAL USE ONLY Report No. 4157-MOR MOROCCO ISSUES AND OPTIONS IN THE ENERGY SECTOR March, 1984 This is one of a series of reports of the Joint UNDP/World Bank Energy Sector Assessment Program. Finance for this work has been provided, in part, by the UNDP Energy Account, and the work has been carried out by the World Bank. This report has a restricted distribution. Its contents may not be disclosed without authorization from the Government, the UNDP or the World Bank.   ABSTRACT Morocco faces a complex set of choices in the energy sector. While it currently is 85% dependent on imported oil for its commercial energy needs, it has important oil shale, hydropower, oil and gas, and uranium resources. In each case, there are questions of cost and/or risk that make the key decisions that must be taken difficult ones, and the fact that many of the decisions are inter-linked only complicates them further. The country's continuing economic difficulties force a reevalu- ation of investment priorities in the energy sector as elsewhere and this underscores the need to strengthen energy planning both at the enterprise and central government levels. Demand management and energy efficiency are subjects that need increased attention in pricing and tariff setting and in the management of large energy producing and consuming public enterprises and, again, calls for improved sector coordination and planning. Woodfuels are widely used in Morocco (accounting for about 35% of total energy consumption) and the rate at which wood is being har- vested exceeds that at which it grows back by a ratio of about three to one. Deforestation, of course, can have very serious implications and dealing with it requires very long lead times. The report provides an overview of Morocco's energy situation and prospects and a framework for understanding the relative magnitudes and interrelationships of the major decisions to be taken. It also makes a series of specific recommendations concerning investment priorities, pricing policies, and sector planning issues.   Abbreviations BF Boiler fuels (fuel oil, coal, natural gas, and oil shale burned directly) BRPM Bureau de Recherches et Participations Minieres (Bureau of Mineral Exploration and Participations) CDER Centre de Developpement des Energies Renouvelables (Renewable Energy Development Center) Charbonnages Charbonnages du Maroc (formerly Charbonnages Nord Africains) (Collieries of Morocco, formerly North African Collieries) CLF Clean liquid fuels (LPG, gasoline, kerosene, jet fuel, gas-oil) DAE Direction des Affaires Economiques (Economic Affairs Directorate) FNF Fonds National Forestier (National Forestry Fund) FO Fuel oil IAEA International Atomic Energy Agency IBRD International Bank for Reconstruction and Development (World Bank) LPG Liquified petroleum gases (butane and propane) MARA Ministere de l'Agriculture et de la Reforme Agraire (Ministry of Agriculture and Agrarian Reform) MCIT Ministere du Commerce, de l'Industrie, et du Tourisme (Ministry of Commerce, Industry, and Tourism) MEM Ministere de l'Energie et des Mines (Ministry of Energy and Mines) MEM/DE MEM/Direction de l'Energie (Energy Directorate) MIHUPE Ministere de l'Habitat, de l'Urbanisme et de la Protection de l'Environment(Ministry of Housing, Urban Planning and Environmental Protection) MI Ministere de l'Interieur (Interior Ministry) ONAREP Office National de Recherches et Exploitation Petrolieres(National Office for Petroleum Exploration and Development Authority) ONE Office National de l'Electricite (National Electricity Authority) Plan Ministere du Plan, de la Formation des Cadres et de la Formation Professionnelle (Ministry of Planning and Executive and Professional Training) SAMIR S.A. Marocaine de l'Industrie du Raffinage (Moroccan Refining Industry Corporation) SCP Societe Cherifienne des Petroles (Royal Moroccan Petroleum Company) SNPP Societe Nationale de Produits Petroliers (National Oil Products Company) SOCOCHARBO Societe de Commercialisation du Charbon (Coal Marketing Company), a subsidiary of Charbonnages Tpa Ton per annum UNICEF United Nations Children's Fund US-AID United States Agency for International Development  Currency Equivalents DH = dirham MDH = million dirham Quarter/Year DH/US$ US$/DH I/1978 4.31 .23 II/1978 4.27 .23 IiI/1978 4.12 .24 IV/1978 3.96 .25 I/1979 3.94 .25 II/1979 3.98 .25 III/1979 3.86 .26 IV/1979 3.82 .26 I/1980 3.83 .26 II/1980 3.89 .26 III/1980 3.84 .26 IV/1980 4.18 .24 I/1981 4.66 .21 TI/1981 5.17 .19 III/1981 5.54 .18 IV/1981 5.32 .19 1/1982 5.65 .18 TI/1982 5.92 .17 III/1982 6.19 .16 IV/1982 6.33 .16 PRICE INDICES (1980=100) DH US$ 'US$ Year (GDP Deflator) (MUV Index) (Crude Oil) 1970 47.4 30.8 5 1971 49.3 33.4 6 1972 51.1 36.7 7 1973 54.2 43.8 9 1974 67.1 54.3 34 1975 67.7 62.2 38 1976 71.1 63.2 40 1977 78.8 68.6 44 1978 85.4 81.3 45 1979 91.7 90.8 60 1980 100.0 100.0 100 1981 110.4 95.3 112 Notes: MUV Index measures the unit value of manufactured exports (SITC 5-8) from developed to developing countries on a cif basis. Crude oil price index based on average realized fob price of Arabian Light in US$ per barrel.  Weights, Measures, and Energy Conversion Factors 1 square kilometer (sq. km.) = 100 hectares (ha) = 0.3861 square miles 1 ton (T) = 1000 kilograms (kg) = 2,205 pounds (lb) 1 kilometer (kin) = 1000 meters (m) = 0.6214 miles (mi) 1 inch (in) = 2.54 centimeters (cm) 1 barrel (bbl) = 42 US Gallons = 159.0 liters 1 kilocalorie (kcal) = 3.968 British thermal units (Btu) = 4,187 Joules 1 MBD = 1,000 barrels per day (approximately 50 Tpa) 1 MCF = 1,000 standard (i.e. at 60