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IFC Helps Morocco Secure Competitive Private Sector Bids for World’s First Public-Private Partnership Irrigation Project


In Washington:

Ahmed Badawi-Malik

Phone:  +1 (202) 458-7148

Fax:      +1 (202) 974-4384

Email:
Abadawi@ifc.org

Imane Akalay

Phone: +1 (202) 458-8305

Fax:      +1 (202) 522-0920

Email:
iakalay@ifc.org

In Rabat:

Joumana Cobein

Phone: + (212) 3765-2479

Fax:     + (212) 3765-2893

Email:
jcobein@ifc.org


WASHINGTON, D.C.,/RABAT, July, 20, 2004 – The International Finance Corporation, the private sector arm of the World Bank Group, announced today that the government of Morocco  has chosen - in a highly competitive and transparent bidding process - a private partner for the planned public private partnership (PPP) irrigation project in the citrus-growing area of Guerdane, Taroudant province. Surface water is urgently needed for irrigated citrus farming in the 10,000 hectare Guerdane perimeter, which currently depends largely on the extraction of rapidly diminishing groundwater supplies drawn up from the Souss basin.

The bid for the Guerdane PPP irrigation project was won by a consortium led by Omnium Nord-Africain (ONA), a Moroccan industrial conglomerate. Other members of the consortium include Morocco’s Caisse de Dépôt et Gestion, France’s Compagnie Nationale d’Aménagement de la Région du Bas-Rhône et du Languedoc, and Infrastructure Development and Management, an Austrian firm.


The Guerdane project is the first PPP irrigation project in the world. IFC – with the support of a technical assistance grant from France’s FASEP - provided the government with advice on structuring and implementing the Guerdane PPP irrigation project to deliver a high-quality, accountable and financially and environmentally sustainable public service to end-users.


As part of its contractual obligations, the ONA-led consortium will enter into a 30-year concession for the construction, co-financing, and management of an irrigation network. The network will channel water from a dam complex, located some 40 miles from Guerdane, to some 600 citrus farmers. The Guerdane irrigation project will cost an estimated at $85 million to build, of which the Moroccan government will provide around $50 million  - half as a loan and half in grant form.


Bids by the various consortia for the Guerdane PPP irrigation centered on providing the most competitive water tariff structure for end-users. The tariff structure submitted by the ONA-led consortium is significantly lower than the price that citrus farmers in Guerdane typically pay for irrigated groundwater supplies.


As Morocco has suffered from recurrent and persistent drought, the contractual documents for the Guerdane PPP irrigation project were structured so as to fairly share the main project risk – consistent water supply - amongst the private investor, the government, and the end-users. The tender was also tailored to promote the participation of Moroccan companies in the bidding process. The outcome therefore heralds the creation of Morocco’s first ever domestic private infrastructure operator.


Hassan Benabderrazik, general secretary of the Moroccan ministry of agriculture, expressed great satisfaction with the outcome of the bidding process, saying, “By bringing in the private sector, Morocco will benefit from the integration of capital and management expertise from the private operator, which should produce cost-reducing efficiency in this public-private partnership.” He added, “Competition and transparency helped the government secure a highly-competitive tariff for the end-user of the project – and indeed local farmers have told the ministry that they are highly satisfied with the result.”


Bernard Sheahan, IFC director for Advisory Services, noted that “A high level of competition and transparency has been maintained throughout the process, with a positive outcome for the government and the farmers. The Moroccan authorities should be praised for their strong commitment to making this project succeed."


Sami Haddad, IFC director for Middle East and North Africa, added, “It is estimated that more than 100,000 people earn their living, either directly or indirectly, from citrus farming in the Guerdane perimeter, which is noteworthy for its dynamism, high-level of productivity and innovation in the commercialization of citrus production to both local and external markets. The success of the bidding process for the Guerdane PPP irrigation project sets a worldwide precedent for future irrigation investments in a very difficult global environment".


The mission of IFC (
www.ifc.org) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY03, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY03 was $16.8 billion for its own account and $6.6 billion held for participants in loan syndications.