2023-09-09 09:02:34
“Rome was not built in a day.” This is the adage that Leila Benali mentioned when we asked her regarding the impatience of Moroccans regarding certain reforms. However, the minister with a well-stocked CV wants to move quickly, very quickly. As when she mentions the need for Morocco to triple, from today, its investments in renewable energies (RE). In terms of green hydrogen, the Pamiste minister reassures regarding the preparation of the Morocco Offer. But she also mentioned other subjects, such as the rise in prices at the pump, electric mobility or even the state of our energy mix. Interview.
A “Morocco Offer” in terms of green hydrogen is being prepared. A meeting has just been held under the chairmanship of the head of government. What can you tell us at this stage?
His Majesty, may God help him, has indeed requested the implementation of the Morocco Offer. The head of government announced that the outlines of the Offer will be public by the end of the year and we are working to be there. We have just held the new series of ministerial meetings under his presidency. Morocco has undeniable assets for producing green hydrogen and its derivatives, in terms of potential and experience in renewable energies, infrastructure planning and advanced and bidirectional integration with European markets. The novelty is that we rigorously define the mechanisms for support and distribution of risks with the international and national private sector, and the sectors (industry, electricity, transport) in which Morocco can thus position itself competitively, while by remaining in step with technological developments and preserving the interests of the Kingdom. The investor’s journey is much more simplified and transparent. There is strong competition between several countries. The speculative bubbles that can form on part of the value chain, the technological and economic challenges that the transport and uses of hydrogen still pose, and our 14 years of experience in risk management on renewable energy, we teach that an updated production cost target of around one dollar per kilogram of green hydrogen would be reasonable to position itself competitively during the first years.
We have recently observed an increase in prices at the pump. How do you interpret this development?
The volatility of commodity markets in recent years, including recent months, is the cause of this situation. Recent increases, particularly during the summer period, are linked to several factors, including the behavior of players in the oil market, whether crude or refined products such as diesel. Today, it is obvious that there is no consensus regarding the future trajectory of oil prices, due to the combination of positive and negative events that punctuate the markets. For example, some countries, such as Iraq, Venezuela and Iran, increased production, which helped to relax the market. At the same time, Saudi Arabia wants to avoid volatility in the market, both upwards and downwards, in collaboration with OPEC+ and Russia. Thus, the consensus of economists is that the price of Brent should stabilize around 80 to 84 dollars on average for 2024. However, participants in the physical and financial markets will not be able to prevent a certain volatility, especially due to global changes since the Iraq War in 2003. It is important to note that we are aware of this price volatility and its impact on internal and external markets. These price increases have a direct and indirect impact on the purchasing power of Moroccans as well as their ability to save. This is negative for the growth and development of the country and the government is doing everything possible to mitigate its effects.
Could the direct subsidies granted to transporters, exceeding 5 billion dirhams, be considered as a form of compensation?
Unlike compensation which did not protect or stimulate a certain category of consumers, these subsidies are granted in a targeted manner. And when we have completed the establishment of the Unified Social Register (RSU), we will be able to put in place compensation mechanisms that target the middle classes and the most vulnerable segments of the population, to protect their power to purchase and improve their savings and investment capacity in the economy. It should also be noted that despite some divergent points of view concerning the precise mechanisms for setting up and financing subsidies, the main parties of the government majority all agree on the general philosophy, namely the principle of subsidies. targeted. Everyone seems to agree on the fact that going back on the liberalization of fuel prices, despite the shortcomings that we highlighted in the parliamentary committee, would be the failure of an entire reform.
Doesn’t the non-existence of a refinery in Morocco make the situation worse? What is your position regarding the Samir case?
It is important to make a clear distinction between the two topics. Morocco has made a political and economic choice in favor of decompensation and liberalization of hydrocarbon prices, with the exception of butane. This liberalization was implemented relatively quickly. Therefore, the possession of a national refinery, supplied by crude which will be imported anyway, will not necessarily lower the price level, especially if it is not competitive. I can tell you that today I receive many investors who are moving towards projects linked to hydrogen and renewable energies, but none seem to show interest in refining projects in Morocco. With regard to the particular situation of Samir, it should be remembered that this file is currently in the hands of the Casablanca commercial court for a judicial liquidation procedure. In addition, an international arbitration process is also underway at the International Center for Settlement of Investment Disputes (ICSID). Until these legal and arbitration proceedings are finalized, it is difficult for any government to take actions that might interfere with the ongoing legal process.
“The right woman in the right place”, Leila Benali responds perfectly to this adage since she has devoted her entire career to the energy sector. She also completed her doctoral thesis on electricity reforms in the Middle East and North Africa at Sciences Po.
What is the current situation regarding our strategic stocks?
She is reassuring. We have sufficient inventory to manage supply volatility. In addition, the ministry is supporting the private sector to increase our storage capacity. This year, an amount of 2 billion dirhams has been mobilized, which will allow us to benefit from nine additional days of stock. By 2026, we plan to add between six to seven days, once more thanks to financing from the private sector, which brings us to a total capacity of between 50 and 60 days of storage, depending on the products. It is important to note that Morocco is not intended to become a major center for logistics and hydrocarbon trading. We currently represent approximately one-fifth of the Turkish market and twenty-fifth of the Indian market in terms of size. Today, we must recognize our comparative advantage, which lies mainly in the energy transition and renewable energies.
Recently, the Competition Council published a press release indicating that it had notified grievances to hydrocarbon distributors. What reading do you make of it?
The Competition Council fulfills its supervisory role within the framework of competition regulation. This is one of the important elements to complete the hydrocarbon liberalization process begun in 2015.
Some suggest that it would be wise to cap distributor margins. What is your opinion on this?
The ministry, in collaboration with all stakeholders, monitors distributors’ margins ex post. To answer your question, even if we might put in place a mechanism to cap margins ex ante, which would lead to a reduction in prices of a few cents per liter, this would not solve the main problem, namely the impact on power. purchasing power and the saving capacity of Moroccans. This is the government’s main concern. In any case, capping margins and prices goes once morest Morocco’s economic policy choices. If superprofits are identified by the General Directorate of Taxes, it will be necessary to put in place an automatic taxation mechanism. One of our proposals is that this taxation can finance the targeted subsidies mentioned above. The other problem, which arises with a cap on margins, is that if we arbitrarily choose prices disconnected from the international market, this will impact the competitiveness of the national market, while Morocco has embarked on an energy trajectory renewable energy, energy efficiency and regional market integration.
Can we take stock of our current energy mix, including renewable energies, as well as current short and medium term projects?
Our energy mix is relatively diverse, although not as varied as desired. We have already confirmed our exit from coal at the COP26 Conference of the Parties in Glasgow, meaning we will not build any new coal-fired power stations. Currently, approximately 42% of our installed electrical capacity comes from renewable sources, including hydro, wind and solar. We plan to increase this share to 52% even before 2030. However, it is important to be aware that the acceleration of our transition poses new challenges related to energy security, flexibility, and modernization of the system energy, for which we support players in the public and private sector.
When it comes to gas, there are often announcements of discoveries. What is Morocco’s concrete production?
Currently, the historic Meskala and Gharb basins hold approximately 300 million cubic meters of recoverable reserves in complex wells. Production costs are increasing due to the complexity of these wells. Five years ago, Morocco was ranked above 100th in terms of proven gas reserves. However, two interesting discoveries at Tendrara and Anchois added 16 billion to recoverable reserves, bumping the Kingdom’s global ranking to around 80th place.
Does this mean that Morocco will not be self-sufficient in natural gas in the short term?
Self-sufficiency depends on how you define it. Two sectors in Morocco have a pressing need for natural gas. First of all, in the electricity sector, where 850 megawatts depend directly on natural gas through the Ain Bni Mathar and Tahaddart power plants, which we were able to restart with the reverse flow of the Maghreb-Europe Gas Pipeline. ONEE’s investment plan also provides for around 2,000 MW in combined cycle and open cycle gas power plants, in addition to the conversion to natural gas of some of these installations which currently burn fuel oil. Then, in the industrial sector, several companies aim to do without heavy fuel oil or propane to be competitive and carbon neutral. Currently, we have a latent demand, between 3 and 5 billion cubic meters, requiring significant investments.
Let’s talk regarding liquefied natural gas terminals. Are they still on the agenda?
The choice of port which will host the gas terminal has not yet been decided. Options include Mohammedia, Nador, Jorf, Tangier, even Dakhla. This decision will be taken following an ongoing study with the International Finance Corporation (IFC) to structure and launch a public-private partnership (PPP) project with private sector players for the development of sustainable gas infrastructure. By the end of the year, we will have decided not only the location and type of terminal, but also the transport framework in order to supply power plants and industrial zones.
In terms of industrial zones, what regarding the deployment of laws on medium voltage and self-production?
I understand the impatience felt by Moroccans regarding these subjects. However, it is essential to realize the speed with which we have worked on decarbonization issues. Some actors can’t keep up. The intense debates between the different stakeholders concerning the overhaul of the laws on self-production and renewable energies have enabled significant progress. These have created a radical change in several areas by opening new perspectives for medium voltage, promoting private sector investment in production and giving consumers the opportunity to be autonomous in production and consumption. electricity, mainly. But above all, it is essential to note that these two laws also allowed an unblocking on the principle of storage as a service, began to demonopolize transport and introduced the possibility of obtaining certificates of origin to attest to the green nature of the electricity produced. I made a commitment to Parliament to have these decrees adopted within four years. A year has already passed since then. It goes without saying that we are fully mobilized. Capacity and resources in this sector must be strengthened to carry out this reform which takes time, and implementing decrees play a crucial role. But it is important to recognize that this will not solve the major problem of the electricity sector in Morocco, which is modernization, digitalization, continuous investment driven by good governance, and the necessary flexibility of the electricity transmission network. We have this south-north highway project for optimized transport between renewable energy production sites, in the south of Morocco, and certain consumption centers in the north. As with water, the highway will solve part of the problem. More concretely and more generally, we must triple the rate of investments in renewable energies in less than a year. We are thus going from 4 billion dirhams per year, on average, over the last 15 years, to 14 billion per year between today and 2027. The network will require an annual investment of 5 billion. These investments will mainly be carried out by the private sector.
Electric vehicles are gaining popularity in Morocco. Are you preparing a strategy for this sector? Are subsidies for the purchase of electric cars being considered?
Regarding sustainable mobility, it is true that electric cars are present on our roads, as are hybrid vehicles. However, it is crucial not to confuse the issues. Clean energy and sustainable mobility encompass a broader spectrum than just electric mobility. It is a global concept which firstly requires a clean electrical mix. This is why our main objective is to focus our efforts on the energy transition of our electricity mix. Although it takes time, we have significantly accelerated this process. Currently, nearly 38% of our energy bill is allocated to transport, mainly due to our dependence on gasoline and diesel. This represents around 16% of our total greenhouse gas emissions, and what is even more worrying is the pollution and congestion it causes in our cities, not to mention its impact on related inflation. heavy transport. Within the Ministry of Energy Transition and Sustainable Development, we are convinced that there is no single solution applicable to all regions of Morocco. As long as we do not make investments in the electricity network and in the decarbonization of our energy mix, the introduction of electric cars, however numerous they may be, will not solve the underlying problem. It is a global problem that arises in the United States, Europe and Asia. The National Conference on Sustainable Development is planned in the coming months, during which we will unveil the specific recommendations made by Moroccans on the mobility they want in their regions. This adaptation to the Moroccan context and this new, more inclusive way of defining public policies means that if we aspire to make our transport more sustainable, we will all have to seriously interact with these recommendations and the corresponding levers.
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