ONE is Morocco’s electricity utility created in 1963. ONE focuses on energy generation, transmission and distribution. In 2008 it had annual energy sales of 23,994 GWh supplying electricity to 3.8 million customers. Each year ONE undertakes large investment projects to increase its installed capacity and to extend the transmission and distribution networks including to rural areas. ONE has extensive experience in rural electrification, considered a model in Africa. A new electrification program in Morocco called Programme d’Electrification Rurale Globale “PERG”, launched in 1995, permitted to increase the electrification rate from 18% in 1995 to around 95.4% in 2008. As of December 31, 2008, ONE has electrified a total of 34,419 villages (out of a total of around 40,000) providing electricity to over 1.86 million rural households. ONE has more than 13 years of experience investing in solar technology in Morocco. As of end 2008, ONE had electrified 3,653 villages with solar kits (around 10.6% of total electrified villages), supplying electricity to 51,509 households (2.8% of the total rural households).

Total Project costs amount to US$21.9 million equivalent, which will be financed with a mix of sponsor’s equity, long-term debt and subsidies. The Company will receive up to US$6.9 million in Output Based Subsidies from the WB and the GEF fund.

0.75 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	0.75

* These investment figures are indicative

The concession area comprises all villages of the Departments of St. Louis, Dagana and Podor, excluding 51 villages which have been electrified by Senelec, and is located 270 km north of Dakar, along the Senegal River, close to the border with Mauritania; it comprises 16 rural communities in an area of 19,000 km2, with a population estimated at 362,000 inhabitants in 2003 and an annual growth rate of 1.7%.

Support the improvement of the living conditions of population in rural areas and contribute to the reduction of poverty. Rural electrification has been a long-time focus of the WB and IFC. Access to reliable electricity is an active catalyst for sustainable development as it can boost living standards, it can prevent rural exodus and emigration to urban areas, it can reduce mortality and improve gender quality. The Project aims to support the progressive transformation and improvement of living conditions of the population in rural areas of Senegal which at present lack electricity (85% of the population in rural areas in 2005). This will be achieved by (i) providing lighting and access to modern communications to rural households; (ii) improving delivery of social services with the provision of electricity for potable water systems, health clinics and schools; and (iii) enhancing economic productivity with the use of electricity for productive purposes. Senegal’s population in rural areas depends on fuel-wood for cooking, kerosene lamps and some small flashlights operating with batteries for lighting, and on human force - frequently from women - for domestic and productive tasks. The Project has the potential of promoting growth and the personal development of women and children by making their domestic workload less heavy. In addition, the social benefits from electrification – the ability to power lights, radios, small appliances and televisions – make a significant contribution to enhancing the quality of life and to the reduction of poverty. Improve access to electricity: The Project will provide electricity to 19,574 rural users in the next three years who at present do not have access to electricity, covering 298 villages. The proposed Project will provide electricity to 213 schools and 118 health centers, thus allowing rural populations to access better education and health services. Foster the development of local businesses and improved health services: The PREM subsidies will allow the Company to put in place electrical installations to increase the productivity of one SME, the Laiterie du Berger, and to improve the operations and services of 28 health centers as they will be able to preserve vaccines. The doubling of capacity of the SME will provide extra income of US$60-80/month approximately to each of 400 additional families who will supply electricity to the Laiterie. Supply reliable electricity using renewable energy technologies: The Company has opted for solar powered systems to supply electricity to certain populations located at a certain distance from the grid as electricity from these systems is more cost competitive, reliable and efficient than extending the grid to isolated populations. Electrification with renewable energy systems provides a less polluting alternative to diesel-based generation and reduces transmission and distribution losses. The Project will have a positive environmental impact as it will help to reduce CO2 emissions; it will also promote conservation by using renewable sources of energy (solar energy) and efficient lamps.

Private sector investment: Traditionally, governments have undertaken investments to bring electricity to rural areas and have absorbed the costs of such effort. To encourage private operators to undertake investments in rural electrification the GOS designed the PPER. IFC’s support of the Project will encourage other private sector companies to make sustainable investments in rural electrification and will encourage governments to design OBA schemes for rural electrification, following Senegal’s PPER. Mitigation of regulatory risk: Electricity distribution companies are highly regulated, and in many cases regulatory entities lack the track record and knowledge to regulate, enforce and monitor their performance. Thus, private sector distribution companies need development institutions to support and assist them in mitigating regulatory risk, mainly to reduce the discretionality of regulatory entities and the uncertainties related to tariff revisions. Adherence to high environmental and social standards: IFC’s involvement in the Project will ensure the application of IFC’s Performance Standards and will promote sustainability by ensuring that the implementation of the Project meets international social, environmental, health and labor safety standards. Collaboration role: Collaboration between IFC, the WB and other donors to support rural electrification concessions is part of an integrated WBG effort to move the infrastructure development agenda forward.

This is a category B project according to IFC’s Procedure for Environmental and Social Review of Projects. Impacts arising from installation of solar kits and new distribution lines for rural electrification are not expected to be significantly adverse, and they will be appropriately managed by the Environmental and Social Management Plan (ESMP) prepared by the Company.

IFC’s appraisal reviewed the following issues and opportunities:
- Environmental and social management framework for the rural electrification concessions established by WB and ASER;
- Company’s plan to manage environmental and social impacts and opportunities (e.g. construction management, operation and maintenance arrangement, right-of-way acquisition of connecting distribution lines, health and safety management); and
- Environmental benefit of the Project (e.g. greenhouse gas displacement by solar power generation).

The Company is committed to implementing the Project in accordance with not only the Senegalese environmental, health and safety requirements which includes ESMP, but also IFC Performance Standards.