Learning from Power Sector Reform Experiences: The Case of Morocco

• In Event: The Political Economy of Electric Power Sector Reforms in Developing Countries

Abstract

Morocco’s experience with power sector reforms presents an interesting case. The country has made little progress in implementing the 1990s “textbook” reforms. The vertically integrated public utility (VIU) ONEE has not been unbundled and there is no independent regulator. Yet, there is significant private participation in the liberalized electricity generation and distribution sub-sectors, although with limited competition. The share of power generation by ONEE has fallen from 90% in 1995 to less than 30% in 2015 whereas private generation now constitutes about 50% of the total. Morocco has made impressive strides in broader energy sector objectives such as rural electrification, clean cooking technologies and renewable energy. It achieved 100% rural and urban electricity access in 2016, up from 56.1% in 1990. As a middle-income country, Morocco is a leading performer in its renewable energy strategy and actual steps taken to decarbonizing its energy system. Renewable energy – including hydro, solar and wind – constitutes up to 34% of installed generation capacity, a rate higher than some OECD countries. All of these appear to be driven by an imperative to secure its energy sector: by reducing its dependence on imported fuels, reducing vulnerability to droughts, relieving financial pressures and lowering the economy’s energy intensity.

Morocco’s power sector therefore is an interesting paradox of progress in the achievement of strategic energy objectives within an institutional architecture that is different from the prescribed model. What has informed and shaped the direction of Morocco’s power sector reform experience? How did the country attract private investment in electricity generation and distribution and achieve electrification without extensive textbook model reforms? Will Morocco’s unconventional institutional arrangements in the power sector endure, adapt to or be disrupted by the country’s energy transition? What lessons does Morocco’s experience and achievements in the power sector provide for other developing countries? What are the implications of its experience to our understanding of the effectiveness of textbook reforms?

The analysis in this paper addresses these questions by drawing on technical and financial data from Morocco’s utilities and external databases, and from interviews with experts knowledgeable about the country’s power sector. Where necessary, these data are supplemented by published reports and studies.

Author

• Zainab Usman, World Bank