Morocco - Petroleum Exploration Project

Document of The World Bank FILE COPY FOR OFMFCIAL USE ONLY Report No. P-2756-MOR REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUITIVE DIRECTORS ON A PROPOSED LOAN TO BUREAU DE RECHERCHES ET DE PARTICIPATIONS MINIERES WITH THE GUARANTEE OF THE KINGDOM OF MOROCCO FOR A PETROLEUM EXPLORATION PROJECT March 27, 1980 T d" cmu e a rot= Iktd dtribus. mnd may be and by rmpients dy o the peomnnce of theiroffcha dute.. Is cotets maY o otherwie be clsd without World ank =ub.sdzados.  MOROCCO PETROLEUM EXPLORATION PROJECT CURRENCY EQUIVALENTS Currency Unit Moroccan Dirham (DH) US$1.00 DH 3.70 DH 1.00 US$0.27 FISCAL YEAR: JANUARY 1 - DECEMBER 31 WEIGHTS AND MEASURES 1 ton 2,200 pounds 1 kilometer (km) 2 0.6 miles 1 square kilometer (km ) 0.4 square miles 1 cubic meter (m3) 6.29 barrels (bbl) ABBREVIATIONS AND ACRONYMS BRPM Bureau de Recherches et de Participations Miniares Ministry of Energy and Mines ONE Office National de 1'Electricite  FOR OFFICIAL USE ONLY KINGDOM OF MOROCCO PETROLEUM EXPLORATION PROJECT Loan and Project Summary Borrower: Bureau de Recherches et de Participations Minieres (BRPM) Guarantor: The Kingdom of Morocco Amount: US$50 million Terms: Ten years, including four years of grace, at 8.25 percent interest per annum. It would be refinanced, in whole or in part, at the Bank's option, by any subsequent Bank loan for development or production of petroleum resources identified under the project. In the case that the Bank, BRPM and the Government agree by March 31, 1984 that the project has failed to identify petroleum resources whose exploitation is commercially feasible, the term of the loan would be extended to 17 years. Project Description: The proposed project will contribute to Morocco's efforts to accelerate the exploration and development of its petroleum potential. It will help BRPM (i) complete the exploration of producing areas, where marginal prospects still exist which may be developed economically, and (ii) assess the petroleum potential of basins yet unexplored and develop "leads" which could attract foreign invest- ments. The project will also provide technical assistance to BRPM in prospect evaluation, exploration management, accounting, evaluation of the results of exploration and the technical and economic analysis of any petroleum discoveries. It would also provide consultant assistance to BRPM for the evaluation of options for exploiting oil shale reserves. The average man-month cost of consultants is estimated at $10,000 including international travel and subsistence. The proposed exploration program would support existing BRPM staff and equipment to explore for oil and gas in up to five petroleum basins by a program involving 36 party-months of seismic survey, 100 rig-months to drill about 17 exploratory wells and related operations including site preparation, access roads, water supply, and equipment transportation, plus supporting specialized services and specific studies. The project will accel- erate Moroccan efforts to reduce dependency on imported petroleum, and would generate exploration leads which could be attractive for foreign oil companies. Risk will be monitored throughout project implementation by consultations among the Bank, BRPM, and consultants, drawing on successive exploration results. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Project Cost Estimates: US$ Millions Local Foreign Total Seismic Survcys (36 party months for 3,400 line kms) 6.0 9.0 15.0 Well Drilling (100 rig months for 17 wells totalling 50,000 meters) 24.5 29.5 54.0 Technical Assistance (including laboratory equipment) 5.0 5.0 10.0 Price contingencies 4.5 6.5 11.0 Total 40.0 50.0 90.0 Financing Plan: US$ Millions Local Foreign Total Bank loan - 50.0 50.0 BRPM 40.0 - 40.0 Total 40.0 50.0 90.0 Estimated Disbursements: US$ Millions FY80 FY81 FY82 FY83 Annual 8.0 14.3 13.4 14.3 Cumulative 8.0 22.3 35.7 50.0 Rate of Return: Not applicable. Staff Appraisal Report: Report No.2735a-MOR dated March 7, 1980  REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE BUREAU DE RECHERCHES ET DE PARTICIPATIONS MINIERES WITH THE GUARANTEE OF THE KINGDOM OF MOROCCO FOR A PETROLEUM EXPLORATION PROJECT 1. I submit the following report and recommendation on a proposed loan to the Bureau de Recherches et de Participations Minieres (BRPM), with the guarantee of the Kingdom of Morocco, for the equivalent of US$50 million to help finance a Petroleum Exploration Project. The loan would have a term of 10 years, including 4 years of grace, with interest at 8.25 percent per annum. It would be refinanLed, in whole or in part, at the Bank's option, by any sub- sequent Bank loan for development or production of petroleum resources identi- fied under the project. In the case that the Bank, BRPM and the Moroccan Government agree by March 31, 1984 that the project has failed to identify petroleum resources whose exploitation is commercially feasible, the term of the loan would be extended to 17 years. PART I - THE ECONOMY 1/ 2. A report entitled "Country Economic Memorandum on Morocco" (1473- MOR) was distributed to the Executive Directors in June 1977. An economic mission visited Morocco in February/March 1978, followed by a basic economic mission in November 1978, and updating missions in September and December 1979. A draft basic economic report was discussed with the Government at the end of 1979, and is due to be issued in mid-1980. Preliminary findings and conclusions of this report and the missions are reflected in the following paragraphs. Country Data Sheets are attached as Annex I. Recent Developments 3. In 1977, Morocco's political system moved in the direction of a constitutional monarchy. Having marshalled a strong national consensus over the Western Sahara issue, King Hassan II called municipal, provincial and national elections between November 1976 and April 1977. Opposition parties with platforms stressing social reform scored strongly in municipal elections in the larger cities, while at the provincial level, rural constituents supported Government candidates, who eventually obtained a majority of 141 seats out of 264 in the National Assembly. With the Government formed in October 1977, both the Istiqlal party which had been in the opposition since 1963, and the Mouvement Populaire whose main support is in the Berber popula- tion returned to power. The Cabinet was appointed with the mandate to prepare and implement economic austerity measures, the first of which were introduced in the 1978 Budget Law, and to pursue the social development objectives set out in the 1973-77 Development Plan. A new Cabinet formed in March 1979 is pursuing the same policies. 4. Morocco's economic and financial situation became increasingly unbal- anced towards the end of the 1973-77 Plan. The rapid growth of investments and imports which occurred in 1974-75 when phosphate export revenues had reached 1/ This Part updates paragraphs 2 to 17 of the President's Report No. P-2618-MOR on a Loan for a Vegetable Production and Marketing Project, dated August 22, 1979, approved on September 11, 1979.  - 2 - an all-time high, continued in 1976-77, while the world demand for Morocco's main exports, especially phosphate, weakened. At the same time, efforts to increase budgetary savings were insufficient to meet the continued increase in investment and military expenditures. As a result, in 1977 Morocco faced a large resource gap (22 percent of GDP) and overall budget deficit (17 percent of GDP). These imbalances have since been reduced, but continue to be substan- tial (12 and 8 percent of GDP, respectively, in 1979). During this period, Morocco resorted to external borrowing on a large scale. Gross disbursements on public medium and long term loans rose to about $1.3 billion in 1977, as compared to $600-$700 million annually in 1975-76, and less than $300 million a year in the early 1970s. This substantial increase was achieved mainly through increases in borrowing from Arab and commercial sources. Since then, the level of external public borrowing, in particular from commercial banks, has been curtailed to about $1 billion annually in an effort to moderate the growth of debt service payments. On the domestic side, monetary expansion, though it remained rapid, abated somewhat in 1979, reflecting reduced Treasury borrowing in that year. Consumer prices rose 9.7 percent in 1978 and 8.3 percent in 1979. 5. The Government has now succeeded in regaining a measure of control over the excessive increases in investment and external borrowing experienced towards the end of the 1973-77 Plan. This was achieved through budgetary austerity, including severe cuts in public investment, restraint in current spending and some tax increases. Public investment was reduced by nearly 40 percent in 1978 and continued to be severely restrained in 1979. In addition, in 1979, government revenue increased nearly 20 percent with a set of emergency tax measures adopted at midyear. Finally, import restrictions and controls on private credit were applied in 1978 and intensified in 1979. The impact of these policies was a significant deceleration of growth. In 1978, a good agricultural crop helped sustain growth, despite a sharp decline in industry and construction largely resulting from the public investment cuts. In 1979, there was some recovery of activity in the secondary sector, particularly mining. Overall, GDP grew by about 3 percent a year in 1978 and 1979, against 7 percent in 1973-77. 6. The Government will have to pursue austerity policies for a while, considering the continued excessive resource gap and low exports and savings which cannot be increased quickly for reasons largely beyond the Government's control. Instead of the 1978-82 Plan, the Government introduced a three- year interim plan (1978-80) which was approved by Parliament in December 1978, together with the 1979 Budget Law. Its main objectives were to reduce the budget and current balance of payments deficits and to concentrate avail- able resources (after meeting defense requirements) on productive projects, education and health, especially insofar as these benefit the neediest popu- lation groups. Implementation of major public projects not meeting these criteria was to be postponed, while the measures designed to preserve growth in the private sector were to be strengthened. 7. The financial stringency required to rebalance the economy has limited the scope for stepping up social programs in the past two years and the Government is anxious to resume the more dynamic social policy stance  - 3 - which characterized Moroccan development during the 1973-77 Plan. Preparation of the 1981-85 Plan has begun and attention is being given to long-term reforms which are needed if a resumption of more rapid economic and social progress is to be achieved. Economic Development Issues and Prospects 8. Bank projections summarized in Annex I assume sharp structural adjustments to keep the economy on a financially viable growth path over the long run, and also reflect the desire to maintain adequate GDP and employment growth during the stabilization period, and to achieve further progress to- wards the country's social objectives. The projections suggest that invest- ment would have to be restrained and GDP growth would remain modest for the next several years. During this period, Morocco will need substantial capital transfers from abroad on terms as favorable as possible to sustain project investment and GDP growth at 3 to 4 percent per year. After the required adjustment has been made, export prospects should enable Morocco to resume growth of investments, output and employment while progressively reducing the relative burden of debt and debt service. 9. Following the large windfalls in foreign exchange and domestic savings caused by high phosphate prices in 1974-75, the investment target was raised to meet cost increases, to permit some real expansion of original investment programs, and to undertake large capital-intensive projects geared to import substitution (in particular for sugar, chemicals, shipping and steel). Thus the GDP growth target for 1973-77 was nearly met, and investment rose to nearly 32 percent of GDP in 1977 from less than 14 percent in 1972. In the process, Morocco built up its capacity to prepare and implement projects not only in traditional sectors such as irrigation, import-substitution industries and physical infrastructure, but also in new and more difficult sectors such as rainfed and small-scale agriculture, export industries, and socially-oriented programs. There is little doubt that Morocco can achieve the investment levels assumed in the Bank projections, the main constraints being domestic savings and foreign exchange availability. 10. Domestic savings have been falling in relation to GDP after the brief increase during the phosphate windfall years, mainly due to low public savings. Successful efforts to raise public revenues were offset by increases in current government spending, particularly for education and health, as well as for price subsidies and defense. Tax reform measures and unpopular price policy decisions, such as reduction of subsidies to urban consumers, farmers and industrial investors, will be required to increase public savings. Interest rate adjustments to reflect changes in the rate of domestic price inflation would also be called for. 11. During the 1973-77 Plan period, exports rose by less than 4 percent p.a. in real terms (the Plan target was 10 percent). This lackluster per- formance was largely due to weak external demand for Morocco's main export products since 1974, especially phosphate, other minerals and agricultural products. Moreover, with some exceptions such as textiles, export production and marketing efforts were not sufficient, and new markets were not aggres- sively sought. Morocco continued to depend on demand from the EEC, especially  - 4 - France. Morocco would have considerable export potential if only products and markets were diversified. Programs designed to boost foreign exchange earn- ings are now under preparation particularly for phosphate and its derivatives, fresh and processed foodstuffs, and tourism. 12. While the emphasis on completion of high-return projects will have to continue, Morocco should delay or shift away from highly capital-intensive, import substitution investments, as well as from some ambitious programs for physical infrastructure. A changed investment pattern should reduce the external resource gap, and also contribute to higher growth and employment at lower investment and import costs than in recent years. This would call for improvements in policy planning and investment programming. The 1978-80 Plan started implementing a new industrial investment strategy, which should facilitate better investment selection. Social Development Strategy 13. Comparatively slow economic growth and employment creation up to the early 1970s were accompanied by widening income disparities and a decline in real consumption by the weaker sections of Morocco's population. As a major objective, the 1973-77 Plan set out to reverse these trends. The Government's strategy since 1973 has emphasized: (i) acceleration of employment creation; (ii) measures aimed at reducing income disparities; and (iii) specific invest- ment programs to benefit the least favored population groups. 14. Some progress has been made towards these objectives, as witnessed by increased expenditures for social sectors (from 5 percent of GDP in 1972 to 8 percent in 1977). However, the institutions created to meet social sector objectives are in many cases still fragile. Understaffing, weak policy analysis and inadequate program formulation are common. As a result, public programs to improve productivity, collective amenities and social services are reaching relatively small proportions of the population, especially in rural areas. In addition, during the period of financial stringency ahead, Morocco may not be able to sustain the current level of expenditures in socially-oriented sectors; some cuts were made in 1978 as part of the measures to re-balance the economy. External Debt and Debt Service 15. Morocco sharply increased external borrowings after 1974 (para. 4). Nearly all of the increase came from Arab and commercial sources. With a hardening of terms on new commitments, average maturity dropped from 18 to 11 years and average interest rose from 5.2 to 7.7 percent between 1974 and 1978. Morocco also drew on the IMF automatic credit facilities in early 1976, and obtained about $70 million in IMF compensatory financing in August 1978. From the low levels of 1974-75, Morocco's external debt rose rapidly to an esti- mated $5.2 billion (disbursed only) by December 1979. 1/ In 1979 debt service 1/ A recent debt mission has revised this estimate to about $6 billion. The new estimate for debt service in 1979 has been increased to about $800 million.  amounted to $750 million (nearly 22 percent of total exports of goods and services, including workers' remittances). As a result of recent and pro- jected borrowings, debt and debt service may be expected to increase further in the years immediately ahead, with the debt service ratio reaching 24 to 25 percent in 1980-85, but declining progressively thereafter. The country's net foreign assets would remain at a relatively low level. Because of the growing burden of debt service, external debt management has become more restrictive and selective since 1978. If debt service is to stay manageable, Morocco will have to continue this policy over the next few years. Additional commercial borrowing should be limited, and efforts should be continued to seek loans on softer terms. Overall, external borrowing needs would remain sizeable in 1980-85, ranging between $1 and 1.5 billion. However, in view of the deter- mined effort being made by the Government to regain control of domestic demand and with good long term prospects for exports and, in particular, assured sales of phosphate rock and derivatives, Morocco continues to be creditworthy for further Bank lending. 16. Loan commitments from multilateral and bilateral official sources to Morocco rose from $286 million in 1975 to $296 million in 1976, and to $862 million in 1977, dropping to $434 million in 1978. Major sources of aid were France, Saudi Arabia, the UAE, the U.S., Germany and the Bank Group. At the end of 1978, the Bank Group's share in Morocco's outstanding and disbursed external public debt was 8.4 percent. The share of the Bank Group in debt service was 24 percent in 1976 and declined to 18 percent in 1977, and 10 percent in 1978. By 1985 the Bank Group's shares in debt outstanding and in debt service are expected to be about 17 percent and 14 percent respectively. PART II - BANK GROUP OPERATIONS IN MOROCCO 17. Bank and IDA lending to Morocco has supported 44 projects, financing a total of $1,325.9 million (net of cancellations), of which $840 million has been lent since the beginning of FY1975. IDA credits, totalling $50 million, have been made available for five projects. A Third Window loan for $25 million for the third education project was approved in March 1976. IFC investments have amounted to $42.9 million ($40.8 million after cancellations, terminations, repayments and sales). Annex II contains a summary statement of Bank loans, IDA credits and IFC investments as of January 31, 1980, and notes on the execution of ongoing projects. In some cases, delays in project implementation have been caused by management difficulties; however, overall performance in project execution has been improving and remains satisfactory. Total disbursements as of December 31, 1979, amounted to 70 percent of original appraisal forecasts, and 73 percent of revised forecasts. 18. Past Bank Group lending has been concentrated in the agricultural and industrial sectors, which have accounted for 38 and 27 percent respec- tively of total commitments; the balance is represented by utilities (13 percent), education (12 percent), tourism (5 percent), roads (3 percent),  - 6 - and urban development (1 percent). While limited as regards the transfer of resources to Morocco (Bank Group gross disbursements amounted to 3.2 percent of total fixed investment during the 1973-77 Plan period), the main objectives of Bank lending in the early years of Bank operations in Morocco were to foster and strengthen development institutions, provide technical assistance especially for project preparation, and increase productive capacity, in order to improve the balance of payments. 19. While these objectives remain, over the last few years, greater emphasis has been given to preparing projects that support the Government's policy of fostering social development and improving income distribution. An increasing share of Bank Group lending is being devoted to projects directly or indirectly developing the productive capacity of the lowest urban and rural income groups and meeting their basic needs. 20. Past lending for agriculture has supported irrigation development, credit, agroindustries and, starting in FY1975, improvement in the produc- tivity of rainfed farming. Continued selective lending for irrigation is envisaged but emphasis will be increasingly given to supporting small farmers and shepherds and the development of rainfed areas. The Fes-Karia-Tissa Agriculture Project, approved in June 1978, directly addresses these objec- tives in the favorable cereal producing zone. An agricultural development and erosion control project in the Loukkos area will be submitted to the Executive Directors shortly. It would address major issues in developing Morocco's relatively densely populated but poorly endowed mountainous regions, and is expected to have a significant poverty impact. An extensive livestock project in central Morocco and an integrated rural development project in the Khemisset province are also under preparation. A fourth line of credit to the National Agricultural Credit Bank (CNCA) and a loan providing investment and credit for vegetable production and marketing, particularly for export, were approved in FY1979 and FY1980, respectively. 21. In the transportation sector, a proposed Third Highways Project is being submitted to the consideration of the Executive Directors. The project would help the Government protect its past investments in the road network by bringing into operation a rational system of road maintenance and by initiat- ing a long-term program of pavement resurfacing and strengthening. 22. Projects in industry and tourism have had as key objectives increased foreign exchange earnings or savings and the improvement of sectoral policies, which have taken on increased importance in view of the country's short-term resource constraints. The eighth loan to Banque Nationale pour le Developpe- ment Economique (BNDE) which was approved in 1977, included a pilot small- scale industry component to promote labor intensive investments. This pilot effort led to the recently approved Integrated Project for Small Scale Industry Development. The loan to Maroc Phosphore made in 1978 will help increase Morocco's foreign exchange earnings. Continued lending for industry through the BNDE is contemplated as well as lending for industrial estates, and further lending to the Credit Immobilier et Hotelier (CIH) for tourism development. 23. Previous lending for utilities has consisted of two loans for water supply, two loans for power generation, a loan for village electrification  - 7 - and an engineering loan for the preparation of a sewerage project for Casa- blanca. A third water supply project, designed to provide access to safe water for small towns and semi-rural areas as well as for low-income population in the larger cities, is under preparation. 24. Education continues to need attention to ensure Morocco's manpower development. Two credits and a loan have been made to develop secondary education and teacher training, to improve technical and vocational training, and to expand facilities in rural areas. A fourth project with emphasis on technical education was approved in FY1979 and preparation has begun on a fifth project focusing on technical training and research, teacher training and rural primary school facilities. 25. The Rabat Urban Project (FY1978) was the first Bank-financed project in the urban sector. Preparation of a follow up project is nearing completion and would support the Government's program for slum upgrading and urban devel- opment through the provision of basic infrastructure, housing and social services and the creation of employment opportunities in Meknes and Kenitra. 26. A family health project is under preparation with the Ministry of Public Health as a first phase of the Government's program to extend basic health services, particularly in rural areas, including improvements in nutrition, environmental sanitation and family planning programs, as well as providing support to the Ministry of Public Health in planning and administering its programs. PART III - THE ENERGY SECTOR Morocco's Energy Balance 27. Oil provides a large and growing portion of Morocco's total energy needs, rising from 64 percent in 1961 to 79 percent in 1978, and is projected to provide nearly 90 percent of Morocco's energy by 1990. The country's annual oil import bill was DH 1.8 million ($450 million) in 1978 and may reach DH 2.7 billion by 1980, overtaking export earnings from phosphates and derivatives and approaching 18 percent of total imports. Known oil deposits are nearly depleted, and proven gas reserves are small, although there are indications for additional reserves. Large deposits of oil shale exist, but their development has yet to be justified economically. Coal and hydropower, the most significant domestic energy sources, have limited growth prospects. Indeed, the contribution of hydropower has dropped from 18 percent of the total energy supply in 1964 to below 9 percent in 1978. Because alternative sources of energy do not have immediate promise, it is essential for the Moroccan Government to promote further petroleum exploration to try to reduce the impact of the oil import burden on the economy, particularly if Morocco's development efforts to industrialize, mechanize agriculture, and improve rural access to energy are not to be jeopardized by excessive energy costs or fuel shortages. Domestic Energy Sources 28. Anthracite coal at Jerada is the primary fossil fuel resource, and no other economic deposits of coal have been discovered. About 90 percent of  - 8 - Jerada's production is used for electric power generation. Its production of 830,000 tons in 1978 supplied about 10 percent of domestic demand for primary energy. Plans call for production of one million tons by 1981. 29. There al. three main hydroelectric power basins (Moulouya, Sebou, and Oum R'Bia rivers). Future hydroelectric power development is limited by short rainy seasons and priority irrigation projects which compete for water, although plans call for rapid exploitation of the remaining potential, doubl- ing the present average annual hydropower generation of about 1,470 GWh by 1990. 30. Domestic petroleum has made a small contribution to Morocco's energy balance. Production so far, mainly from the Rharb field, has amounted to 3 million tons of oil equivalent. However, known oil fields are almost depleted, and oil production is down from 3,000 barrels per day in 1963 (15 percent of needs) to 486 barrels per day in 1978, less than 1 percent of needs. Annual gas production of 81 million cubic meters presently meets only 1.3 percent of total energy demand. Estimated recoverable petroleum reserves are at present only in the range of 10 to 30 million tons of oil equivalent. It is this bleak picture which the proposed project is designed to address. 31. The country's large undeveloped oil shale resources promise a crude oil equivalent of perhaps more than 1 billion tons if economic production can be developed. In Timahdit in the Atlas mountains, proven reserves total 1.7 billion tons of shale yielding 100 liters per ton, plus probable reserves up to 10 billion tons yielding 74 liters per ton. The Tarfaya reserves on the southern Atlantic coast, yielding 80 liters per ton, are of the same order of magnitude. There are four development alternatives under active study: (i) direct burning in a power plant to be built in Timahdit with Soviet technical assistance; (ii) extraction and distillation in a pilot plant being prepared with the U.S. Department of Energy; (iii) in situ distillation underground under contract with Occidental Petroleum; and (iv) a labor-intensive scheme for surface extraction and distillation in artisanal retorts, usable even for small reserves. Under the proposed project, the Bank would provide technical assistance to assess the last approach, and compare it with the other proposed methods. 32. Alternative energy sources are not promising. The uranium content of Moroccan phosphate appears presently uneconomic for use as fuel. The USAID-supported Institute for Solar Energy Studies at Marrakech is studving possible solar energy technology; wind energy development seems likely only on a small scale, and known geothermal energy has very limited potential. Energy Consumption 33. Despite annual increases averaging 8 percent per capita in energy consumption over the period 1961-78, Morocco's consumption remains at the low end of the international scale (0.18 tons of oil equivalent/capita in 1976 compared to an international average of 1.31). Oil is mainly imported as crude for two refineries with a combined capacity of 5 million tons per year in 1978. Half of oil consumption is accounted for by motor fuels; the balance  - 9 - is used for fuel oil (43 percent) and for kerosene and liquid petroleum gas (7 percent). Three-quarters of the fuel oil goes to four industries: electric power (25 percent), cement (20 percent), phosphates (18 percent), and sugar (12 percent). Energy, Pricing and Policy 34. Energy prices are fixed by the Government and generally reflect international prices. Subsidies have recently been removed on petroleum products except for liquid petroleum gas which increasingly substitutes for kerosene for domestic use. In the power subsector, the Government also plans to eliminate existing subsidies and has agreed to review with the Bank all future changes in the electricity tariff structure (Loan 1695-MOR). 35. In order to decrease the country's dependence on imported oil and assure a minimum supply of energy for future needs, the Government continues to give priority to (i) accelerating exploration for oil and gas, (ii) acquir- ing technology for development of oil shale deposits, and (iii) promoting conservation in energy consumption by maintaining prices of energy resources in line with their opportunity cost to the economy. During the 1973-77 Plan, total investment in the energy sector was three times that of the previous period, reaching DH 3.2 billion, of which 16 percent was spent on exploration for oil and gas. Subsequently, austerity requirements led to substantial cuts in all public energy sector investments, and to increased Government efforts to obtain foreign investment for future exploration. Sector Organization 36. The Ministry of Energy and Mines (MEM) is responsible for overall planning and policy making in the energy sector. It was created in 1977 to consolidate Government activities in several subsectors. The Ministry has two main operating departments - Energy and Mines. The Energy Department has three divisions - Oil, Electric Power, and New Sources of Energy. In addi- tion, the Ministry oversees several public enterprises which manage key energy sector activities: (i) the Bureau de Recherches et de Participations Minieres (BRPM) in oil and gas exploration and production, (ii) the Societe Anonyme Marocaine de l'Industrie du Raffinage (SAMIR) and the 50 percent BRPM-owned Societe Cherifienne des Petroles (SCP) in oil refining, (iii) the Societe Nationale des Produits Petroliers (SNPP) in the distribution of petroleum products, and (iv) the 100 percent BRPM-owned Charbonnages Nord-Africains (CNA), operator of the Jerada coal mine. The Ministry also has administrative control over the Office National de l'Electricite (ONE). 37. Morocco's largest refinery at the port of Mohammedia is 100 percent government-owned (SAMIR). Its refining capacity is being expanded to 5.7 million tons per annum. A second smaller, inland refinery at Sidi Kacem is operated by the 50 percent BRPM-owned SCP and has a 0.8 million ton annual capacity. Distribution of oil products, either imported or locally refined, is carried out by joint affiliates of international oil companies and SNPP.  - 10 - 38. In the power subsector, ONE generates 90 percent of electric power in the country, transmits it to load centers, and distributes about 40 percent of its production outside the large cities. Distribution of power in large urban areas is handled by thirteen Regies, autonomous public enterprises under the Ministry of the Interior, which also helps plan development of infrastruc- tural facilities in rural areas, including a Bank-supported village electrifi- cation program being implemented by ONE. Bureau de Recherches et de Participations Minieres (BRPM) 39. BRPM is responsible for (i) exploration of oil and gas, either on its own or through joint ventures with foreign companies, (ii) production of small gas fields on its permits, (iii) prospection and production of all mineral sources except phosphates, and (iv) management of Government port- folios in about two dozen firms in the energy and minerals sectors. It was created in 1928 as a State mining enterprise. In 1958, petroleum exploration was added to its responsibilities. It has holdings in mineral operations throughout Morocco, and participation agreements with several foreign investors for petroleum exploration. The Minister of Energy and Mines is Vice-President of BRPM's Board of Directors, which is headed by the Prime Minister and includes the Ministers of Finance, Interior, Labor, and Public Works, the Heads of the Planning and Economic Affairs authorities, and MEM's Director of Energy and Mines. BRPM's General Manager is assisted by a Secretary General and seven division heads, who led BRPM through unprecedented expansion in all areas during the 1973-77 Plan period. 40. BRPM's divisions are organized along functional lines as described below: (i) The Petroleum Exploration Division plans and supervises BRPM's petroleum exploration activity. This division, which would manage the implementation of the project, has undertaken investment in these activities amounting to about $83 million in the 1973-1977 Plan period. It is, at present, staffed with trained geologists and geophysicists, and has country-wide data drawn from both its own past experience and the activity of BRPM's foreign partners. The division has played a critical role in the negotiations of more than fifty participation agreements with foreign oil groups. It has had regular access to foreign technical expertise and services for work related to its drilling and seismic operations. (ii) The Mineral Exploration Division plans and supervises BRPM's own activity in this field. This division, which is presently staffed with mineral geologists and geophysicists, has managed an investment program in mineral exploration of about $44 million in the 1973-1977 Plan period. (iii) The Technical Division is responsible for the physical execution of BRPM's exploration work, both in the petroleum and mineral sub- sectors. It is also in charge of BRPM's overall plant, equipment  - 11 - maintenance and procurement and storage of its materials and consum- ables. The division would be responsible for the execution of the seismic and drilling work included in the proposed project, and for the procurement of all necessary goods. (iv) The Mineral Valuation and Research Division manages extensive laboratories for mineral analysis and undertakes technical and economic feasibility studies for mineral development. (v) The Marketing and Participations Division supervises BRPM's petroleum and mineral interests in fully or partially owned affiliates and in joint ventures, and assists the mineral companies in the marketing of their products. (vi) The Administrative and Financial Divisions maintain overall responsibility for personnel, training, financial and accounting matters. Petroleum Exploration and Prospects 41. Morocco has numerous, large geological prospects for petroleum. A dozen structurally distinct sediment basins, with characteristics which normally provide opportunities for hydrocarbon generation and accumulation, extend over 400,000 sq. km. of which 55,000 sq. km. are off-shore in water less than 200 meters deep. Oil and gas exploration has been conducted in Morocco for fifty years and Morocco's sedimentary basins have earned the interest of foreign oil investors. Before Independence, a series of small oil fields were discovered in the Rharb basin (paragraph 30 above). A 1958 Petroleum Code led to the expansion of exploration, but at a somewhat uneven pace. The Code provides incentives to foreign investors who offer BRPM or any other public agency a participation in an exploration/development venture of at least 34 percent. Most exploration during the past twenty years has taken the form of joint ventures, with foreign partners liable for all exploration expenditure, half the development costs, royalties and income taxes. After taxes, this would result in about 80 percent of profits from production accru- ing to the State, with the return to the investor quite small in instances of relatively small finds. Onshore permits were issued for BRPM joint ventures with AGIP, Petrofina, and Elf Aquitaine among others, and off-shore explora- tion started in 1967 with award to Esso of the Tarfaya Maritime permit and extended in the early 1970s over almost all explorable Atlantic and Mediter- ranean off-shore areas. Between 1958 and 1972, about $80 million was spent for 123 wells averaging 1,750 meters deep onshore and 10 wells averaging 3,300 meters off-shore. 42. However, in the early 1970s foreign investment in oil exploration in Morocco suffered a setback. A discovery of a large deposit of heavy oil on the Tarfaya off-shore permit was judged to be uneconomic. Even increasing crude oil prices failed to revive foreign investor interest, due to a number of factors, including the existence of more attractive prospects elsewhere (North Sea, Indonesia) compared to the need in Morocco for new rounds of intensive research particularly in deeper horizons and difficult areas, for  - 12 - which techniques, especially for seismic survey, were not yet adequate. Foreign exploration investment fell below target during the 1973-77 Plan period by about 50 percent; on the other hand, BRPM exceeded its planned minor share by some 30 percent (rising from an annual $5 million to $28 millioti and doubling for the period the investment level of the private sector), expanded its seismic and drilling capacity, and discovered the Toukimt and N'Dark fields in the Essaouira basin. 43. This rather successful exploration activity at first encouraged BRPM to propose an ambitious 1978-82 petroleum exploration plan, mostly onshore, to cost $340 million, of which $250 million was to be financed by the Government and the balance by foreign investors. The country's serious economic problems, however, led to reduction of this plan by about two thirds. This severe curtailment of BRPM activity coincided with sharp oil import price rises; as a result, Morocco urgently sought to increase foreign financing to re-establish exploration efforts at a level appropriate to petroleum prospects and to the country's need to reduce its growing primary energy gap. These efforts have met with only moderate success, notably 1978 and 1979 agreements with Phillips and SNEA respectively to explore northern Morocco prospects. 44. Prospects. The Bank has, therefore, with the assistance of consul- tants, appraised the opportunities offered by Morocco's geological prospects for further discoveries of oil and gas accumulations. This appraisal concluded that the exploration done in the 1960s and early 1970s was mostly directed to shallower objectives easy to survey and drill, while available techniques and crude oil prices discouraged systematic exploration of deeper and riskier prospects of possibly large potential. As a result, exploration permits covered only one-third of total sedimentary basin surfaces, and less than half of the best prospective areas are under active exploration permits. Much of the exploratory drilling in this period was at an average density of less than one well per 2,000 sq. km., so that three out of four structures delineated by seismic survey remained unexplored. Furthermore, on the basis of later techniques, numerous wells are now recognized to have been drilled either in suboptimal locations or terminated above potentially promising horizons. Several exploration programs were terminated despite alternative "leads" for new rounds of exploration work. Estimates of eventual recoverable reserves are therefore probably substantially understated, and the country is well justified in undertaking further exploration. PART IV - THE PROJECT 45. In October 1978, at the request of the Government, the Bank sent an identification mission to Morocco to determine whether it could be of assis- tance to the Government in its efforts to accelerate the exploration and development of the country's petroleum potential. Following this mission, it was agreed that BRPM would prepare the project with the assistance of consul- tants employed by the Bank. The project was appraised in March/April 1979. Negotiations were held in Washington in January/February, 1980 with a Moroccan delegation led by Mr. Hassan Belkoura of the Prime Minister's Office. A staff  - 13 - Appraisal Report entitled "Morocco-Petroleum Exploration Project" (2735a-MOR) is being distributed separately. Supplementary project data are provided in Annex III. Project Objectives and Description 46. The proposed loan will support Morocco's efforts to reduce its heavy dependency on imported petroleum products. The project would help BRPM to (i) complete the exploration of producing areas where marginally economic produc- tion prospects are likely to exist, and (ii) assess the petroleum potential of basins yet unexplored and develop "leads" which could attract private foreign investors to the development of Morocco's oil and gas reserves. It covers a three-and-a-half year slice of BRPM's on-shore exploration program. In addition, it provides for studies to help BRPM to assess several options regarding the development of the country's oil shale resources. The Exploration Program 47. A three and a half year indicative master program, agreed during negotiations, would provide the broad guidelines for BRPM's exploration acti- vities under the project, which would be carried out in several on-shore basins in successive steps, balancing low risk exploration in structures identified in the producing Jurassic prospects of the Essaouira basin with itexploratory" seismic survey and drilling in other potentially promising basins, including deeper horizons which have not yet been surveyed and tested. The master program, covering the Essaouira, Doukkala, Hauts Plateaux, Boudnib and Deep Rif basins, consists of (a) 36-party months of seismic survey total- ling about 3,400 line kilometers, (b) 100 rig-months for drilling about 17 wells for a cumulative depth of about 50,000 meters, (c) site preparation, access roads, water supply, equipment moving and other related operations, and (d) continuous monitoring, planning and follow-up, commissioning of external studies, and evaluation of prospects by BRPM and its consultants. These exploration activities would be carried out through annual work pro- grams, comprising studies, seismic surveys and drilling works (Loan Agreement, Schedule 2, Part A II). 48. The Initial Work Program. The first annual work program, agreed during negotiations, would (i) seek to prove the potential of the Essaouira basin where hydrocarbon accumulations are likely to exist -- first in shallow Jurassic structures, and second in deeper pre-Jurassic prospects which may yield larger reserves of gas and rich condensate, and (ii) initiate the first phase of exploration in other basins. For these purposes, three wells would be drilled successively on the most attractive of a dozen Essaouira Jurassic structures, two wells on the most promising of eight pre-Jurassic prospects, and seismic survey would complete mapping the Essaouira and Boudnib basins. In addition, studies would be carried out to support submission to the Bank for approval of future drilling prospects (paragraph 51) and existing drilling equipment belonging to BRPM would be reconditioned. 49. Subsequent Work Programs. Beyond the first year, the exploration program is more difficult to define, but two main alternatives or a combina- tion of the two could be considered, as warranted by the results of seismic  - 14 - survey, drilling works and studies made during the first period: (i) the exploration of Essaouira has produced results significant enough to justify further drilling of exploratory or appraisal wells in the Essaouira basin; (ii) no significant results have been obtained in Essaouira, in which case subsequent BRPM efforts would be applied to other basins. Taking into account results and new information which become available in the course of project execution, the annual work programs for the second and subsequent years would be established by BRPM. Drafts of these work programs, together with a report on the results of previous exploration, would be submitted to the Bank for comment not less than six months before the beginning of the period which they cover, and they would be finalized not less than three months before the beginning of that period (Loan Agreement, Schedule 2, Part A, paragraph 11(b)). The annual work programs would only include drilling work which has been declared by the Bank eligible for financing out of the proceeds of the loan (Loan Agreement, Schedule 1, paragraph 4a(B)), on the basis of a careful evaluation of the potential costs of and benefits from each well. Moreover, unless the Bank agrees otherwise, loan disbursements for the direct cost of seismic surveys and well drilling would be reasonably equally divided amongst the sedimentary basins covered by the project (Loan Agreement, Schedule 1, paragraph 4(c)). 50. The results of exploration under the project would be carefully evaluated, and in the case that significant indications of oil or gas accumu- lation emerge, studies would be carried out to assess the technical and economic feasibility of the development and production of such accumulations. These evaluations and studies would be submitted to the Government and the Bank for review and comment (Loan Agreement, Section 3.05(a)). When the results of exploration under the project warrant it, BRPM would exchange views with the Government and the Bank on the appropriate arrangements to attract investments for further exploration and development (Loan Agreement, Section 3.05(b)). Evaluation of Oil Shale Potential 51. Under the project, BRPM would assess Morocco's options for the development of oil shale resources, including, in particular, the use of a labor-intensive scheme of surface extraction and distillation (see paragraph 31 above). Project Implementation 52. The project will be implemented by BRPM with the support of special- ized firms and the assistance of consultants. BRPM's Petroleum Exploration Division will supervise execution of the exploration program. Drilling works and seismic surveys will be carried out by BRPM's Technical Division on force account. The Mineral Valuation and Research Division of BRPM will be respon- sible for the evaluation of oil shale potential. 53. Technical Assistance. Although BRPM is capable and adequately staffed to implement the project, specific improvements in exploration manage- ment as well as external expertise in specialized techniques are required. To  - 15 - help improve exploration management, BRPM would engage consultants by May 31, 1980, on terms and conditions satisfactory to the Bank, and for a total of about :L25 man-months, to help BRPM (i) improve the methods used to assess drilling prospects and for the design of exploration programs, (ii) improve drilling management procedures, and (iii) develop accounting procedures to identify expenditures for petroleum exploration activities under the project (Loan Agreement, Schedule 2, Part B(a)). In addition, BRPM would employ consultants, as and when required, and for a total of about 200 man-months, to help plan seismic and drilling work, evaluate the results of exploration, and carry out technical and economic studies for the development of discoveries under the project (Loan Agreement, Schedule 2, Part A Iltd)(iii)). To assist in well drilling, BRPM would continue to use the services of specialized firms for seismic surveys, well mud control, well logging and well completion techniques. Finally, BRPM would engage consultants by June 30, 1980, on terms and conditions satisfactory to the Bank, and for a total of about 100 man- months, to help execute the studies for the development of shale oil (Loan Agreement, Schedule 2, Part C II). 54. In addition to the statements of work carried out under an ongoing annual work program (paragraph 49), BRPM would keep the Bank informed of progress in project execution through monthly progress reports (Loan Agree- ment, Section 3.03(b)(iii)). 55. Subject to its timely execution of the three and one half year master program, BRPM would be free to use its exploration equipment, including equipment procured under the project, to carry out exploration either on its own account or on account of foreign companies. However, in this case, BRPM would set aside necessary funds for the rehabilitation of such equipment arising from its use outside the project (Loan Agreement, Section 5.05). Project Costs and Financing 56. Tables showing project costs and financing are presented in the Loan and Project Summary. Total project cost is estimated at $90 million excluding taxes, of which $50 million is in foreign exchange. These estimates are based on end-1979 prices, plus price contingencies averaging about 8 percent per year. For consultants, the estimated man-months cost is $10,000, including international travel and subsistence. BRPM would finance the project local costs amounting to $40 million equivalent. To the extent necessary, the funds required will be provided to BRPM by the Government through annual budget allocations (Guarantee Agreement, Section 2.02(i)). The proposed Bank loan would finance the full foreign exchange cost of: (i) initial rehabilitation of drilling equipment already owned by BRPM ($3 million), (ii) replacement of parts for drilling rigs in the course of operations ($6.5 million), (iii) materials and consumables used by BRPM to carry out exploration work ($20.5 million), (iv) specialized seismic and well drilling services ($15 million), and (v) technical assistance including laboratory equipment ($5 million). The loan would be made to BRPM for a period of ten years, with a grace period of four years. It would be refinanced, in whole or in part, at the Bank's option, by any subsequent Bank loan for oil development or production. In the case that the Bank, BRPM and the Moroccan Government agree by March 31, 1984 that the project has failed to identify petroleum resources whose exploitation  - 16 - is commercially feasible, the term of the loan would be extended to 17 years (Loan Agreement, Section 2.08). The loan would be guaranteed by the Govern- ment. In view of BRPM's uncertain future financial position (paragraphs 59-60), the Government would ensure that BRPM has adequate funds to ensure the due and punctual payment of the principal, and interest and other charges on the loan (Guarantee Agreement, Section 2.02(ii)). BRPM's Financial Position 57. At the end of 1978, BRPM's net assets of DH 909 million ($227 mil- lion) consisted of the estimated value of petroleum exploration work on hand (24 percent), the estimated value of mineral exploration work on hand (12 per- cent), plant and working capital (18 percent) and shareholdings in affiliates, mostly in the mineral production sector (46 percent). Ninety-seven percent of assets were represented by Government equity. 58. Returns on capital have been extremely low (2-4 percent), reflect- ing the nature of the exploration operations, the lack of any significant petroleum production, and low dividend income from affiliates resulting from fluctuations in international mineral prices, low domestic coal prices, and the need of some subsidiaries to reinvest profits. Between 1974 and 1977, BRPM mainly covered its plant, working capital, debt service and other related requirements through internally generated funds. Since funds from internal sources have been small, the Government, in line with its policy to accelerate exploration (see paragraph 44), provided the funds to cover the cost of expanding programs in exploration and in BRPM investments in affiliates. By 1977, supported by budgeted appropriations, BRPM reached an annual level of investment of about $31 million on petroleum exploration and about $12 million on exploration equipment and related materials. However, under the Govern- ment's 1978-1980 Austerity Plan, a reduction in Government funding in 1978 to about a third of its 1977 level resulted in a drastic cutdown in the size of BRPM's exploration plans. With the view to keeping to a minimum the amount of idle equipment and manpower, BRPM has had to reduce working capital to fund a proportion of the work done. 59. Any significant improvement in BRPM's future finances depends essen- tially on the completion of successful exploration and subsequently profitable development. During the period of project implementation, the proposed loan would, in conjunction with Government funds, allow BRPM to return to pre-1978 level of petroleum exploration expenditure. If as expected the project is successful, the results should prove at least small fields which could be produced without long delays by BRPM on its own and should help to enlist new foreign partners in additional exploration. BRPM is potentially in a position to benefit considerably from any significantly successful investment by foreign partners under its joint venture exploration agreements. However, in the event of a discovery, BRPM would have to share equally in the cost of field appraisal and development, and for several years before any generation of revenue can be expected, would be in need of possibly large amounts of funds.  - 17 - 60. Given the risk element in exploration, it is impossible to forecast BRPM's financial future with any degree of accuracy. Whatever the outcome of the proposed project, and of the exploration covered by BRPM's current and future joint-ventures, the enterprise will remain for a period of presently undeterminable dura.ion dependent on the Government or on borrowing for the financing of the major share of its requirements for funds. Nevertheless, a major improvement in its financial position can be expected in the future should some of the projected exploration activity lead to any substantially profitable development. Procurement 61. BRPM will in general employ international competitive bidding in accordance with the Bank's Guidelines for Procurement to procure new equipment and parts as well as to purchase spare parts, materials and consumables for the replacement of inventories used by BRPM's Technical Division to carry out seismic surveys and well drilling under the project. However, within the total estimated cost of such equipment, parts, materials, and consumables, small purchases of $300,000 or less may be procured on the basis of local procedures, which are acceptable to the Bank, provided that their aggregate amount does not exceed $4.0 million (Loan Agreement, Schedule 4, paragraph C.1). Ongoing BRPM contracts for specialized well and seismic services up to $5.0 million will be financed under the project, and upon their expiry, limited international tendering would be applied for the award of replacement contracts. Disbursements 62. The Bank loan would finance: (i) 100 percent of foreign expendi- tures and 70 percent of local expenditures for equipment, parts, materials and consumables; (ii) 80 percent of expenditures for specialized services for seismic surveys and well drilling, and (iii) 100 percent of foreign expendi- tures Eor services of consultants domiciled outside Morocco and 50 percent of local expenditures for other consultants. 63. Loan disbursements would be made against statements of expenditures and specific invoices. The statements of expenditures, which relate to spare parts, materials and consumables and to specialized services, will be supported by the monthly progress reports, a list of quantities of goods and services used during each month and appropriate documentation (invoices or contracts) on the unit cost of said goods and services. 64. Disbursements are expected to spread over a period of three-and-a- half years at a rate of about $1.2 million per month. Early disbursement is expected in the first semester of 1980 for the reconditioning of equipment and for the initial period of exploration work. Retroactive financing of an amount not exceeding $5.0 million is thus proposed for expenditures incurred after January 1, 1980. Project Benefits and Risks 65. The major benefits of this project are the following:  - 18 - (a) Greater knowledge of Morocco's oil production potential. The additional information will provide the Government with a sound basis on which to plan the further exploration and development of its oil and gas resources in most onshore areas. In addition, it will assist in the projection of likely schedules and volumes of future production, and of the size of capital investment required from both public and private sources to achieve these objectives. (b) The potential attraction of additional capital participation in future exploration and development efforts by reducing risks to investors both through the increased information provided and the catalytic role of the Bank's involvement in early exploration activities; and (c) The maintenance of the efficiency and competitive unit costs of current exploratory work as well as the fuller use of BRPM staff and equipment. 66. These benefits are not quantifiable but because of the deleterious effect on the balance of payments of increasing quantities of higher cost petroleum, every good prospect for indigenous petroleum resources should be explored. This project aims at assisting substantially with this effort. 67. Because of the inherent uncertainties in estimating the probable outcome of exploration activities, an evaluation can only be based on a probability analysis. This was carried out to obtain estimates of the rates of return on each of the Jurassic and pre-Jurassic prospects of Essaouira. While the results must be treated with caution, the rates of return that would be achieved if the programs are successful can be estimated conserva- tively at 27 percent for the pre-Jurassic program and 18 percent for the Jurassic program. 68. Exploration is by nature a risky operation as the chances of a commercial find have on average one chance in 10 to 15 of occurring, although a better ratio could be expected in Morocco on the basis of past exploration experience. However, even a medium-size commercial find would generate revenues sufficient to more than offset the exploration costs. E vironmental Impact 63. Seismic explosives shooting, preparation of drilling sites and disposal of drilling residues would cause some temporary disturbance to the eivironment; however, there would be no permanent damage. All drilling rigs will be equipped with proper safety equipment such as "blow Out" preventers to a,oid damages from accidental spills. Provisions would be made to facilitate BRPM securing the best available expertise and necessary equipment without delay in the event of a "blow out", which could create an emergency situation (Loan Agreement, Schedule 1 paragraph 4(c)).  - 19 - PART V - LEGAL INSTRUMENTS AND AUTHORITY 70. The draft Loan Agreement between the Bank and the Bureau de Recherches et de Participations Minieres, the draft Guarantee Agreement between the Kingdom of Morocco and the Bank, and the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement are being distributed to the Executive Directors separately. Special conditions of the project are listed in Section III of Annex III. 71. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 72. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments March 27, 1980 Washington, D.C.  20 ANNEX I TAJLE 3A Page 1 of 6 iDROCCO - SOCIAL InDICATORS DATA SHEET REFERENCE GROUPS (AOJUSTEO A6,RACES LAND AREA (THOUSAND SO. 534) .)ROCCO - HOST XtCENT ESTIATE) - TOTAL 447.0/f SA3E SAME NEXT HICHER AGRICULTURAL 203.377 MOST RECENT GEOGRAPHIC INCOME INCOME 1960 /b 1970 /b ESTIMATE /b REGION /c GROUP Jd GROUP le GNP PER CAPITA (US$) 190.0 300.0 670.0 1532.5 467.5 1097.7 ENERGY CONSUSWTION PER CAPITA (RILOGRANS OF COAL EQUIVALENT) 148.0 180.0 273.0 838.1 262.1 730.7 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (MILLIONS) 11.6 15.; 18.3 URBAN POPULATION (PERCENT OF TOTAL) 29.3 34.6 37.4 49.0- 24.6 49.0 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 34.0 STATIONARY POPULATION (MILLIONS) 71.0 YEAR STATIONARY POPULATION IS REACHED 2090 POPULATION DENSITY PER SQ. *CM. 26.0 34.0 41.0 19.9 45.3 44.6 PER SQ. IN. AGRICULTURAL LAND 59.0 76.0 90.0 99.0 149.0 140.7 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 44.0 47.5 46.0 45.6 45.2 41.3 15-64 YRS. 53.0 48.3 52.0 51.4 51.9 53.5 65 YRS. AND ABOVE 3.0 4.2 2.0 2.8 2.8 3.5 POPULATION GROWTH RATE (PERCENT) TOTAL 2.6 2.7 2.8 3.0 2.7 2.4 URBAN 6.4 4.3 4.1 5.2 4.3 4.5 CRUDE 5IRTH RATE (PER THOUSAND) 50.0 48.0 45.0 43.7 39.4 31.1 CRUDE DEATH RAtE (PER THOUSAND) 21.0 17.0 13.0 13.5 11.7 9.2 GROSS REPRODUCTION RATE 3.41g 3.4 3.2 3.2 2.7 2.2 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 25.1 78.0 USERS (PERCENT OF MARRIED WOMEN) .. 1.0 5.4 .. 13.2 34.7 OOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 116.3 98.0 67.0 90.8 99.6 104.4 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 90.0 102.0 108.0 99.0 94.7 105.0 PROTEINS (GRAHS PER DAY) 43.0 64.0 70.5 63.6 54.3 64.4 OF WHICH ANIMAL AND PULSE .. 14.0/h 15.6 16.0 17.4 23.5 CHILD (AGES 1-4) mORTALITY RATE 30.0 22.0 17.0 15.9 11.4 8.6 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 47.0 52.0 55.0 53.8 54.7 60.2 INFANT MORTALITY RATE (PER THOUSAND) .. .. .. .. 68.1 46.7 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL *- 51.0 55.0 56.4 34.4 60.8 URBAN .. 92.0 100.0 83.4 57.9 75.7 RURAL .. 28.0 25.0 34.3 21.2 40.0 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPUIATION) TOTAL .. 29.0 .. 59.1 40.8 46.0 URBAN .. 75.0 .. 78.2 71.3 46.0 RURAL *- 4.0 . 26.4 27.7 22.5 POPULATION PER PHYS;CIAN 9400.0/j 12650.0 11100.0 3677.0 6799.4 2262.4 POPULATION PER NURSING PERSON .. 2820.0 1700.0 1730.6 1522.1 1195.4 POPULATION PER HOSPITAL RED TOTAL 680.0 660.0 710.0 577.0 726.5 453.4 URBAN .. 460.0 .. ,, 272.7 253.1 RURAL ,. 2980.0 .. ,. 1404.4 2732.4 ADMISSIONS PER HOSPITAL BED .. 15.5 16.5 21.8 27.5 22.1 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 4.8 5.5 . 5.S 5.4 5.3 URBAN 4.3 4.9 .. 5.5 5.2 5.2 RURAL 5.1 5.8 .. 6.0 5.5 5.4 AVERAGE ltUMBER OF PERSONS PER ROOM TOTAL 2.2 2.4 .. .. .. 1.9 !JRSAN 2.1 2.1 .. .. .. 1.6 RURAL 2.3 2.6 .. ,. ,. 2.5 ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL 76.0/i *- 45.1 28.1 50.0 URBAN 85.477 68.4 55.0 67.9 45.1 71.7 RURAL 31.07o .. .. ., 9.9 17.3  21 ANNEX I TA3L' 3A page 2 6f 6 MOROCCO - SOCIAL INDICATORS DATA SREET dCzoCCO REFERENCE CROUPS (AAJUSTED AERACES MOROCCO ~~~~- MOST RECENrr ESTNAI I SAME SA. NEXT hIGaEX 1VST RECE!NT CEOCRAPYtC INCOME LNCOFE 1960 /b 1970 /b ESTIMATE Jb REGION /c GROUP /d GROuP /t EDCCATION ADJ', S,E.' ROLLYENT RATIOS PP9LAXfY: TO-AL 47.0 52.0 65.0 85.0 82.7 102.5 MALE 67.0 67.0 82.0 103.7 87.3 108.6 FEMALE 27.0 36.0 47.0 66.0 75.8 97.1 SECCONDAY: TOTAL 5.0 13.0 17.0 27.6 21.4 33.5 MALE 7.0 18.0 22.0 39.2 33.0 38.4 FEXALE 2.0 7.0 12.0 20.8 15.5 30.7 VOCATIONAL EIROL. (' Of SECONDARY) .. 2.0 3.0 4.3 9.8 11.5 PLPIL-TEACHR3 LATlO PRIMARY 43.0 34.0 40.0 32.6 34.1 35.8 SECONIDARY .. 20.0 21.0 23.4 23.4 22.9 ADULT LITERACY RATE (PERCENT) 14.0 21.0 28.0 41.4 54.0 64.0 CoNStrtrION PASSENCER CARS PER THOUSAIND POPULATION 11.0 15.0 20.2 16.7 9.3 13.5 RADiO RECEIVERS PER THOUSA.ND POPULATION 46.0 60.0 92.0 147.9 76.9 122.7 TV RECEIVERS PER THOUSAND POPULATION 0.4 11.0 27.0 36.0 13.5 38.3 IrEVSPAPER ("DAILY GENERAL INTEREST") CIRCLLATION PER THOUSAND POPULATION 22.0 16.0 21.0 17.9 18.3 40.0 CINEMA ANFUAL ATTE(DA.NCE PER CAPITA 2.0 .. 1.6 2.9 2.5 3.7 LABOR FORCE IOTAL LA3CR FORCE (THOUSANDS) 3254.0 3981.0 4670.0 rEMALE (PERCENI) 10.6 15.2 19.0 S.6 29.2 25.0 AGRICULTURE (PERCENT) 62.5 56.9 53.0 43.0 62.7 43.5 tXDUSTRY (PERCENT) 13.8 17.4 19.0 23.7 11.9 21.3 PARTICIPATION RATE (EERCENT) TOTAL 29.0 26.S 26.1 26.7 37.1 33.5 :4ALE 52.1 45.2 44.4 46.4 48.8 46.0 FEMALE 5.9 7.5 7.9 5.1 20.4 16.8 ECONOMIC DEPMENCY RATIO 2.0 1.9 1.8 1.8 1.4 1.4 INCOME DISTRI3UTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGEEST 5 PERCENT O HOVSEHOLDS 18.O/ 20.0/4 .. 21.4 15.2 20.8 RICHEST 20 PERCE.NT OF EOCSEHOLWS 43.3/j 49.OL *- 48.6 48.2 52.1 LOWEST 20 PERCENT OF hOUSEHOLOS 7.O/1 4.0/ .. 5.3 6.3 3.9 LOWEST 40 FERCENT OF RPUSEHOLDS 1I.oj7 12.01 .. 15.0 16.3 12.6 POVERTY TARGET GROL'PS ESTIKMAED ABSOLi-E POVERTY INCOME LEVEL (USS PER CAPITA) URu,Lq 107.0 157.0 319.0 201.3 241.3 270.0 RURAL 66.0 10.0 167.0 134.2 136.6 183.3 ESTIMATED RELATIVE POVERTY INCOME LEV'L (UsS PER CAPITA) UR3AN .. .. 242.0 288.6 179.7 282.5 RURAL .. .. 157.0 170.0 103.7 248.9 ESTIMA1'ED PO