Water privatization in Morocco goes back to the times of the French Protectorate when most water supply systems were run under a private concession

Concession

Concession may refer to:* Concession : failure to challenge or cessation of challenging, as in "conceding an election" or "conceding a game".* Concession : a contracted-out service, as in concession stand....

. After independence the private utility was nationalized, but in the mid-1990s the Moroccan government privatized water and sewer services again, alongside with electricity distribution, in four cities. The privatization process began with the award of the Casablanca

Casablanca

Casablanca is a city in western Morocco, located on the Atlantic Ocean. It is the capital of the Grand Casablanca region.Casablanca is Morocco's largest city as well as its chief port. It is also the biggest city in the Maghreb. The 2004 census recorded a population of 2,949,805 in the prefecture...

 concession to Lyonnaise des Eaux (now SUEZ

SUEZ

Suez S.A. was a leading French-based multinational corporation headquartered in the 8th arrondissement of Paris, with operations primarily in water, electricity and natural gas supply, and waste management. Suez was result of a 1997 merger between the Compagnie de Suez and Lyonnaise des Eaux, a...

) in 1997, followed by the award of a concession for the capital Rabat

Rabat

Rabat , is the capital and third largest city of the Kingdom of Morocco with a population of approximately 650,000...

 in 1998 and the award of another concession for Tangiers and Tetouan

Tétouan

Tetouan is a city in northern Morocco. The Berber name means literally "the eyes" and figuratively "the water springs". Tetouan is one of the two major ports of Morocco on the Mediterranean Sea. It lies a few miles south of the Strait of Gibraltar, and about 40 mi E.S.E. of Tangier...

 to to Veolia Environnement. In 2009 private companies provided water and sanitation

Sanitation

Sanitation is the hygienic means of promoting health through prevention of human contact with the hazards of wastes. Hazards can be either physical, microbiological, biological or chemical agents of disease. Wastes that can cause health problems are human and animal feces, solid wastes, domestic...

 services to 38% of the urban population of the country.

History

Casablanca. Since the municipal public utility Régie Autonome Intercommunale de Distribution d'Eau et d'Electricité de Casablanca (RAD) had a poor service record the government decided in the mid 1990s to bring in a private company to manage the city's water, sewerage and power networks. The lengthy negotitations process for the contract, which was originally conceived "after the direct intervention of King Hassan", was accompanied by intense criticism from the press, businessmen such as the Confédération Générale des Entreprises du Maroc, and city councillors. Finally a consortium called Lydec, led by Lyonnaise des Eaux (now SUEZ), was awarded the 30-year concession without a competitive tender. Lyonnaise des Eaux thus returned to a city where it had already provided services for almost half a century. The original consortium included Lyonnaise des Eaux (35%), Elyo (24%), Agbar (5%), EdF

EDF

- Military :* Elmendorf Air Force Base, a United States Air Force Base in Alaska* Estonian Defence Forces, military of the Republic of Estonia* European Defence Force, an international military force by the European Council- Organizations :...

 (18%) and Endesa (Spain)

Endesa (Spain)

Endesa, S.A. is the largest electric utility company in Spain. The firm, a majority-owned subsidiary of the Italian utility company Enel, has 10 million customers in Spain, with domestic annual generation of over 97,600 GWh from nuclear, fossil-fueled, hydroelectric, and renewable resource power...

 (18%). The contract was signed on April 28, 1997, between Jérôme Monod, CEO of Lyonnaise des Eaux, and Abdelmoughit Slimani, President of the Council of Grater Casablanca (Communauté Urbaine de Casablanca), under the auspices of then interior Minister Driss Basri

Driss Basri

Driss Basri was a Moroccan politician who served as Interior Minister from 1979 to 1999. After General Oufkir's death in 1972, and then Ahmed Dlimi's death in 1983, Driss Basri became Hassan II's right-hand man and number two of the regime from the beginning of the 1980s to the end of the 1990s...

.

In 2008 the concession contract was renegotiated to provide a better balance between the two partners, limiting the rate of return of the concessionnaire from 14.6% to 11.7% and requiring him to increase his investments by Dirham 1bn. Also, automatic tariff increases will now be limited to specific situations such as increases in bulk water or electricity tariffs.

Rabat. After direct negotiations in 1998, a concession for Rabat

Rabat

Rabat , is the capital and third largest city of the Kingdom of Morocco with a population of approximately 650,000...

 was signed in January 1999 with REDAL, a company consisting of a Portuguese partner (Electrocidade), a Spanish company (Urbaser) and a Moroccan company (Alborada). The concession met with problems from the very beginning. According to a presentation by Moroccan government officials, "the firm was not ready" the four partners were not coordinated, the start-up was slow contractual obligations were not fulfilled leading to tumultuous meetings, contestation of bills and protests. As a result the founding shareholders transferred their equity in REDAL to Vivendi Environnement.

Tangiers and Tetouan. The concession in Tangiers and Tetouan covering 23 municipalities with 1.1 million inhabitants was awarded in January 2002 after competitive bidding. Seven bids were received, of which one was discarde for non-conformity. The six offers included groups led by Lyonnaise des Eaux (France), Enron

Enron

Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...

 (USA), Thames Water (UK), Union Fenosa (Spain) SAUR (France) and Vivendi (France). The bids were evaluated on the basis of technical and financial criteria combined in a single score. The contract was awarded to to the roup led by Vivendi, which used the brand nem Amendis. The formal name of the group is Société des eaux et d'électricité du Nord (SEEN), consisting of Vivendi

Vivendi

Vivendi SA is a French international media conglomerate with activities in music, television and film, publishing, telecommunications, the Internet, and video games. It is headquartered in Paris.- History :...

, Hydro-Québec International

Hydro-Québec

Hydro-Québec is a government-owned public utility established in 1944 by the Government of Quebec. Based in Montreal, the company is in charge of the generation, transmission and distribution of electricity across Quebec....

 (Canada) and ONA (Morocco).

Regulation

The public counterparts (delegating authorities) of the concessions in Morocco are the municipalities. Each delegating authority has set up a technical committee to regulate the contracts, comprising representatives of the municipality, the Ministry of Interior and the concessionnaire. The committee reviews work plans and reports. In addition, about one year after the contracts in Casablanca and Rabat were signed local supervisory commissions were set up. Also, a supervisory commission was created at the national level. As of 2002, the government concluded that the members representing the delegating authority in the technical committee in Casablanca felt constrained by a lack of expertise compared to the specialists from the private concessionnaire. On the other hand the concessionnaire felt that there was interference in the management of the services. This improved somewhat after the local supervisory commission was set up in Casablanca. This experience influenced the design of the concession contracts in Tangiers and Tetouan where clauses to protect consumers were added and local supervisory commissions were included in contract design from the beginning.

Investment

Lydec's 30-year investment plan totals 30 billion Moroccan Dirham. According to one source 21 billion of this sum will come from connection fees paid by new customers into a fund, 8.2 billion would come from Bank loans and internal cash generation, and 0.8 billion would be in the form of equity to be raised by the subsidiary running the concession. According to another source the concessionnaire will not provide any significant equity, nor will it borrow significant debt. Instead it will generate 87.8% of its contribution of 6.3 billion Dirham by using its technical and commercial know-how to mobilize funding from its customers. The remainder would be mobilized through connection fees. According to Lydec, the company invested 7.7 billion Dirham between 1997 and 2008, of which the company financed 4.4 billion. 33% of the investment was for sanitation, 23% for water supply, 34% for electricity and 10% were investments that benefited all three sectors. A substantial share of the investments in sanitation were dedicated to storm water management.

Outcomes

According to Lydec, surveys show that more than 90% of its customers have noticed improvements: shorter waiting time at customer centers, simplified procedures, quicker repairs, more reliable billing and less inundations. In particular, Lydec built the Western collector, a 4.7 km underground stormwater drain with a capacity of 40 m3/s. Also, the company says that it saved 25 million cubic meters of drinking water in 2002 compared to the situation before the concession.

According to Amendis, during the first five years of its concession in Tangiers and
Tetouan it expanded the wastewater collection and treatment system in the two cities and provided 40,000 subsidized water and wastewater connections.

The level of non-revenue water

Non-revenue water

Non revenue water is water that has been produced and is “lost” before it reaches the customer. Losses can be real losses or apparent losses . High levels of NRW are detrimental to the financial viability of water utilities, as well to the quality of water itself...

has been reduced from 32% in 2002 to 19% in 2008 in Rabat, and from 41% to 21% in Tangiers, according to Veolia.

Tariffs

Between 1997 and 2001 the average water tariff in Casablanca increased by 35% and the average sewerage tariff by 34%. However, the electricity tariff decreased by 6%. During public management by RAD water tariffs had increased by 60% between 1990 and 1995. However, this increase had to a large extent been due to an increase in bulk water tariffs charged by ONEP to RAD.

Concerning the concessions by Veolia, tariff increases in the 2007-10 period were lower than contractually required, according to Veolia. The company claims that the government owes it Dirham 93 million (US$11.5 million) because of unimplemented tariff increases. Increases in the tariffs for bulk water supplied by the public company ONEP to the private companies, as well as increases in electricity tariffs, cannot automatically be passed on to consumers.