Energy officals have two main objectives: ensuring adequate and universal supply and diversifying energy consumption and exploitation patterns.

The new dynamism introduced by King Mohammed VI since his accession to the throne in July 1999 has made an impact on all economic sectors, and energy is no exception, explains Amina Benkhadra, the Moroccan Minister of Energy, Mines, Energy and Environment and the head of the government-run National Office of Hydrocarbons and Mining (ONHYM).

In fact, energy was one of the first sectors to be liberalized with the privatization of national refinery Samir and the transfer of the Jorf Lasfar electricity power station into private hands.

However, as the largest energy importer in northern Africa, Morocco needs to step up activity in the sector. The ministry has two main objectives: ensuring adequate and universal supply, and diversifying energy consumption and exploitation patterns. In addition, a campaign to improve energy efficiency is expected to reduce overall power consumption by 15% by 2020. “The energy sector today is facing larger challenges than over the past decade, given the rise in petroleum product prices, and the fact that our dependence on foreign energy is of 96%,” says Mrs. Benkhadra. “We are looking at establishing a strategic plan for the development of this sector in the short, mid and long-terms.”

Changing the make-up of what the minister terms the ‘energy mix’ involves studying the country’s present use of national resources and looking at ways to increase production. It also includes the gradual introduction of more renewable energy sources over the next five years, with the aim of boosting the use of this type of power from today’s 4% to 10% by 2012. Plans are under way for the establishment of a code for the sector, which will help define investment and development strategies.

Already, the introduction of solar power has helped the government to meet the objectives set out in its Global Rural Electrification Program (PERG), initiated in 1996 by the National Electricity Office (ONE) in conjunction with the ministry of energy and mines. So far an impressive rural electrification rate of 94% has been achieved, up from a mere 18% in 2005. Part of the program’s success has been due to the innovative financing system, where funding is shared between local communities, the actual beneficiaries and ONE. In fact, so successful has it been that there are plans to export it to other nations with similar energy distribution issues.

Amina Benkhadra Minister of Energy, Mines, Water & Environment

As Morocco’s demand for electricity increases, the government is turning more and more to the private sector to meet the country’s power needs. “Over the next few months we will be reorganizing the electricity sector to provide a clearer distinction between ONE and the private sector actors in distribution and transportation,” says Mrs. Benkhadra. As part of the short-term strategy, a regulatory agency will be set up.

However, one of the main targets of the ministry’s development plan is the renewal and expansion of oil and gas exploration programs. Morocco’s known reserves stand at 1.07 million barrels of oil and 60 billion cubic feet of natural gas, but the existence of large expanses of unexplored sedimentary basins offshore provides hope of further potential, especially after such discoveries in neighboring – and geologically similar – Mauritania. Just one major discovery could substantially change the structure of the Moroccan energy sector.

“Our objective is to increase investment in this sector, and this includes an appeal to U.S. investors,” says the minister. Conditions for investors are certainly favorable thanks to the hydrocarbons code established in 2000: the state has a maximum share of 25% in any discovery; all exploration and development equipment is exempt from customs fees and taxes; and companies have a ten-year exemption from paying company tax. The country has also established transparent and simple procedures for the granting of licenses; in all, more than 25 foreign companies have set up in Morocco for exploration and development of oil and gas in the past five years.

Added to the possibilities of discovering fresh reserves, Morocco benefits from an advantageous geographical position at the meeting point between Europe and sub-Saharan Africa. The country already is a transit center for Algerian gas exports to Spain and Portugal and the minister would like to see this interconnection status enhanced by improving supply and distribution conditions. Morocco is gradually integrating its electrical grid with those of its neighbors in Africa and Europe.

U.S. companies in particular, says the minister, stand to benefit from Morocco’s potential reserves, from its favorable investment environment, and from its geographical position, thanks to the U.S.-Morocco Free Trade Agreement of 2004, established to open the doors to bilateral trade. More needs to be done, however, to ensure that the image Americans have of Morocco is current and correct rather than clichéd and outdated.