Document of The World Bank FOR. OFFICIAL USE ONLY Report No. P-7159-MOR MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED PARTIAL RISK GUARANTEE OF UP TO DM 313 MILLION OF A SYNDICATED COMMERCIAL BANK LOAN TO JORF LASFAR ENERGY COMPANY FOR THE JORF LASFAR POWER PROJECT IN THE KINGDOM OF MOROCCO JULY 11, 1997 Infrastructure Development Group Middle East and North Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (As of June 1997) US$ 1.00 = DH 9.10 DH 1.00 = US$ 0.11 US$ 1.00 = DM 1.70 DM 1.00 = US$ 0.59 UNITS AND MEASURES kV kilo-volt = 1,000 volts KW kilowatt = 1,000 watts MW mega-watt = 1,000 kilowatts kWh kilowatt-hour = 1,000 watt-hour GWh gigawatt-hour = i million kWh ABBREVIATIONS AND ACRONYMS ABB = ABB Energy Ventures AG ABN AMRO = ABN AMRO Bank NV bp = basis points BTO = Build, Transfer and Operate CMS = CMS Generation Company EA = Environmental Assessment ERG Geschiiftsstelle ffir die Exportrisikogarantie FIBOR = Frankfurt Interbank Offered Rate GOM = Government of Morocco IPP = Independent Power Producer JLEC = Jorf Lasfar Energy Company LIBOR = London Interbank Offered Rate ODEP = Office d'Exploitation des Ports ONE = Office National de 'Electricit6 OPIC = Overseas Private Investment Corporation PPA = Power Purchase Agreement SACE = Sezione Speciale per L'Assicurazione del Credito all'Esportazione TPA = Transfer of Possession Agreement TPF = Transfer of Possession Fee US EXIM = Export - Import Bank of the United States FISCAL YEAR January 1 - December 31 Vice President: Kemal Dervi§ Acting Director: Anur Al-Khafaji (MNSID) Staff: Jorge A. Larreu, Task Manager (MNSID) Mauro Chiesa, Project Fmance Speciahst (CCFD2) Elisabeth Pendleton, Senior Counsel (LEGCF) Scott Smclair, Senior Financial Officer (CAPPF) Pierre Vieillescazes, Senior Financial Officer (CAPPF) Claudia Pardinas, Counsel (LEGMN) Bernard Baratz, Principal Environmental Speciahstist (ECSER) FOR OFFICIAL USE ONLY MOROCCO JORF LASFAR POWER PROJECT PARTIAL RISK GUARANTEE Table of Contents Page Summary of World Bank-Guaranteed Facility i Memorandum and Recommendation of the President Sector Background 1 Project Description 2 Project Sponsors 2 Project Contracts 2 Rationale for Bank Support 4 Project Cost and Financing Plan 4 Financial and Economic Rationale of the IPP 5 Proposed Bank Guarantee 5 Guarantee Fee 7 Arranger Bank Mandate 7 Project Risks 7 Benefits of Proposed Guarantee 8 Procurement 8 Environmental Aspects 8 Auditing and Reporting Requirements 9 Agreed Actions 9 Consents of Relevant Countries 9 Recommendation 10 Schedules Schedule A - Summary of Terms and Conditions 11 Schedule B - Project Cost Estimate 19 Financing Plan 20 Schedule C - Timetable of Key Processing Events 21 Schedule D - Status of Bank Group Operations in Morocco 22 Statement of IFC Investments in Morocco 23 Schedule E - Morocco at a Glance 24 IBRD Map No. 28748 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. 4 MOROCCO JORF LASFAR POWER PROJECT SUMMARY OF WORLD BANK-GUARANTEED FACILITY Borrower and Jorf Lasfar Energy Company - JLEC Implementinfg Agency: Guarantor: International Bank for Reconstruction and Development Facility Amount: DM 313 million (approximately US$ 184 million), which is the maximum guaranteed amount Term: Approximately fifteen years final maturity (approximately 3 years construction plus 12 years amortization) Guarantee Fee: A standby fee of 25 basis points shall accrue from the date of signature of the Guarantee Agreement, calculated on the maximum guaranteed amount which has been committed but undisbursed. A guarantee fee of 100 basis points shall accrue from the date of first disbursement, calculated on disbursed and outstanding amounts under the World Bank-Guaranteed Facility. The Bank will rebate to GOM any amount of the guarantee fee in excess of 25 basis points so long as GOM and ONE are not in default under the agreements. Objectives: The project includes the expansion of the power generating capacity of Morocco which will be developed by an Independent Power Producer at competitive prices while substantially improving the reliability of power supply in the country. The Bank's proposed partial risk guarantee is part of a multi-agency guaranteed support program for limited-recourse project finance. The Bank's guarantee has been the catalyst for securing lenders' financing and other agency guarantees. ii Financing Plan: US$ Thousand Equivalent - Sponsors Equity 383,179 - Surplus Operating Cash Flow 230,408 - Debt SACE Guaranteed Loan (DM 381 million) 223,816 US EXIM Bank Guaranteed Loan 246,353 IBRD Guaranteed Loan (DM 313 million) 184,000 ERG Guaranteed Loan (DM 68 million) 39,916 OPIC Loan 200,000 Total 1,507,672 Economic Rate Not applicable for the project. About 14% for ONE investment of Return: program, valuing benefits at current electricity tariff levels. Environmental Rating: "A" Poverty Catezory: Not applicable Map No.: IBRD 28748 Project Identification No.: 45615 MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED PARTIAL RISK GUARANTEE OF UP TO DM 313 MILLION OF A SYNDICATED COMMERCIAL BANK LOAN TO THE JORF LASFAR ENERGY COMPANY FOR THE JORF LASFAR POWER PROJECT IN THE KINGDOM OF MOROCCO 1. I submit for your approval the following memorandum and recommendation on a proposed partial risk guarantee for a maximum guaranteed amount of DM 313 million (approximately US$ 184 million) in support of the Jorf Lasfar power project. The proposed guarantee is part of a multi-agency guaranteed support program for limited recourse project financing of approximately US$ 894 million, including the Export-Import Bank of the United States (US EXIM), Overseas Private Investment Corporation of the United States (OPIC), Sezione Speciale per l'Assicurazione del Credito all'Esportazione of Italy (SACE), and Geschiftsstelle fuir die Exportrisikogarantie of Switzerland (ERG) 2. The Bank and the participating agencies have collaborated very closely in the preparation and assessment of the proposed project. To avoid duplication in the use of resources, the Bank has used the conclusions of the due diligence carried out by specialized advisors retained by US EXIM, OPIC and the lead arranger bank, ABN AMRO. Both United States agencies and the lead arranger bank have extensive experience in project financing. As a result, the Bank has focused its project appraisal on the issues related to the proposed guarantee and on the mitigation of the associated risks. Sector Background 3. The Government of Morocco (GOM) has embarked on a program to reform the energy sector and to promote private investments in its infrastructure. In the petroleum sub-sector, the distribution companies were privatized during 1994 and 1995. The majority of the shares of the two national refineries, Societ6 Marocaine de l'Industrie du Raffinage (SAMIR) and Societ6 Cherifienne des P6troles (SCP), were sold to private investors during 1997. 4. In the power sub-sector, GOM has taken important steps to secure private investors to operate the sector's generating and distribution facilities. In 1994 the electricity law was amended to permit the operation of Independent Power Producers (IPP's) in order to alleviate major power curtailments experienced during 1993 and 1994 as a result of rapid growth in the demand for power, tardy construction of new capacity, and low availability of existing capacity. Competitive bidding was launched in March 1994 for the lease of the existing units at the Jorf Lasfar power plant (2x330 MW) and for the construction, transfer, and operation (BTO) of its expansion (2x330 MW). Sole bidder status was awarded to the consortium ABB/CMS in February 1995. 5. The above actions are being complemented by the reform of the sector's regulatory framework and practices. The Bank has provided financial assistance for the use of specialized -2- consultants to prepare documentation and advise the GOM on the contracting of IPP's, the enactment of the Electricity Code, the establishment of a Regulating Agency, and the reorganization of the Office National de l'Electricit6 (ONE). The implementation of the actions associated with the IPP's and the reorganization of ONE are well advanced, while the Code and Agency are still in preparation. Project Description 6. The project is located along the coast near the port of Jorf Lasfar, 100 km. south of Casablanca. The existing power plant consists of 2x330 MW coal-fired/steam-based turbo- generators (units 1 and 2), which were commissioned, respectively, in June 1994 and March 1995. The project provides for expansion of the power plant through the addition of two 330 MW turbo-generators (units 3 and 4) of similar characteristics as the existing generators, to be developed by Jorf Lasfar Energy Company (JLEC). The build-transfer-operate (BTO) arrangement will be executed as follows: (i) ONE will grant a lease to JLEC to operate units 1 and 2 for a period of 30 years through a Transfer of Possession Agreement (TPA), under which a Transfer of Possession Fee (TPF) will be paid; and (ii) JLEC will construct units 3 and 4 on the basis of a fixed price contract with firm commissioning dates and performance specifications and then transfer ownership of these units to ONE in exchange for the right to operate (lease) these units for a period conterminous with the lease for units 1 and 2. The power generated at Jorf Lasfar by JLEC will be sold in its entirety to ONE in accordance with a long-term Power Purchase Agreement (PPA). At the end of 30 years, the operating rights will revert to ONE. The servicing by JLEC of the debt, which finances units 3 and 4, will serve in lieu of a Transfer of Possession Fee (TPF) for units 3 and 4. Project Sponsors 7. The Sponsors are ABB Energy Ventures AG (Switzerland) and CMS Generation Co. (USA), acting through their wholly-owned subsidiaries. A special purpose company, JLEC, has been established by the Sponsors under the laws of Morocco. Each Sponsor will indirectly own 50% of the shares of JLEC (each of which will retain general and limited liability interests in their respective 50% share). Project Contracts 8. The project documents include a set of contractual agreements that define the rights and obligations of the different participants in the project. The package does not include any power plant assets, since ownership of these assets by Moroccan law must remain within ONE. The package includes the following main agreements: - Power Purchase Agreement (PEA) between ONE and JLEC for the supply and purchase of electricity. It covers the obligations of the parties, payments for electricity, operational procedures, calculation of capacity and energy charges, fbrce majeure, defaults, disputes, -3 - the termination amount, and assignment. It was initialed by ONE and JLEC on April 25, 1996. Final execution will be at financial closure. - Transfer of Possession Agreement (TPA) between ONE and JLEC for the transfer of units 1 and 2, and the granting of rights to occupy the site and operate the facilities for a period of 30 years. It stipulates the amount of remuneration to be paid by JLEC to ONE, as well as obligations of the parties and procedures to be followed in case of default, disputes, and termination. It was initialed by ONE and JLEC on April 25, 1996. Final execution will be at financial closure. - Construction and Procurement Agreement (CPA) between JLEC and ONE for the engineering, supply, construction, and commissioning of units 3 and 4. It specifies the contractual obligations of JLEC to procure and commission these units within 33 and 39 months, respectively. - Equipment Supply and Installation & Construction Agreements (ESICA) between JLEC and ABB subsidiaries for the supply, installation and construction of units 3 and 4. It specifies the contractual obligations of ABB subsidiaries to commission these units on a turnkey, fixed price, date certain basis. - Operation and Maintenance Agreement (O&M) between a subsidiary of CMS (CMS Morocco Operating Co.) and JLEC for the operation, maintenance, and administration of the entire power plant. - Coal Handling and Storage Agreement (CHSA) between ONE and JLEC for the handling by JLEC of the JLEC and ONE coal (coal for ONE's Mohammedia power plant is supplied through the same port), including the operation of the coal yard, port unloading facilities, and coal storage. - Port Agreement (PA) between Office d'Exploitation des Ports (ODEP) and JLEC for the transfer and the grant of rights to occupy the port site and operate the coal terminal. The PA and related agreements for the expansion of the terminal, the port services, and the transfer of equipment, stipulate the amount and schedule of remuneration to be paid by JLEC to ODEP, as well as obligations of the parties and procedures to be followed in case of defaults, disputes, and termination. - Coal Supply Agreement (CA) between JLEC and Carbo-Jorf (the coal supplier), a special purpose company incorporated and owned by the shareholders of JLEC, which are subsidiaries of ABB and CMS, for the procurement and delivery of coal through long- term contracts (5-year) for 70% of the coal requirements and through the spot market for the remaining 30%. - GOM Documents which includes a Guarantee of Termination Amount and Letter of Support as well as a Foreign Exchange Convertibility Letter from the Ministry of Finance -4- and a Foreign Exchange Account Letter from the Foreign Exchange Bureau regarding the convertibility of Dirhams, the establishment of foreign currency accounts and the transferability of foreign currency. - In addition, financing, loan, equity, and security documentation which include: Common and Credit Agreements among JLEC, the lenders and their agents; Intercreditor Agreement among all the lenders, their agents and intercreditor agent; Collateral Agency Agreements; Capital Contribution Agreements; and Capital Contribution Guarantees. Rationale for Bank Support 9. The Bank's strategy in Morocco has been to support policies and investments that encourage economic growth and efficiency through social development, private capital investments, environmentally friendly projects and sound public sector management. The Bank's proposed partial risk guarantee is part of a series of projects being developed to improve Morocco's environment for Private Sector Development supported by the Bank, IFC and the European Union, all in line with the Country Assistance Strategy. Its compelling justifications include: (a) provision of modem infrastructure, particularly power, by efficient private suppliers; (b) reduction of the power sector's fiscal burden on the Budget through the elimination of government capital contributions and sector debt write-offs; and (c) consolidation of macroeconomic balances by allowing budgetary resources to be reallocated to areas of priority, such as the social sectors, where private financing is much more difficult to arrange. 10. Bank support for the proposed project has been instrumental in securing lenders' financing. Given the magnitude and complexity of the project and the associated country and collateral risk (Morocco is not rated by the international rating agencies and has no regulatory agency), the implementation of the LPP at Jorf Lasfar is only feasible with the proposed Bank guarantee. SACE (Italy) and ERG (Switzerland) and the three arranging banks have each conditioned their financing on the Bank's participation through its partial risk guarantee program. Bank support will contribute to expanding urgently needed system capacity at competitive prices (paragraph 12) while substantially improving the reliability of power supply (paragraph 14), both of which are key elements to economic development. Project Cost and Financing Plan 11. The total cost of the project is estimated at US$ 1,508 million. The project financing is being provided by the lenders and project sponsors on the basis of a 25 : 60 : 15 equity : senior debt : surplus operating cash flow ratio. The investment is to be financed by: (i) a commercial bank loan (underwritten by ABN AMRO, Banque Nationale de Paris, and Credit Suisse) totaling US$ 694 million, and consisting of four tranches, each tranche guaranteed respectively by SACE of Italy (DM 381 million or US$ 224 million equivalent), by US EXIMBANK (US$ 246 million), by ERG of Switzerland (DM 68 million or US$ 40 million equivalent) and by the World Bank (DM 313 million or US$ 184 million equivalent); (ii) a loan of US$ 200 million by OPIC; (iii) equity contribution of US$ 383 million; and (iv) surplus operating cash flow from units 1 and 2 of about US$ 231 million. Details are included in Schedule B. Financial and Economic Rationale of the IPP 12. The IPP at Jorf Lasfar was selected through competitive bidding. Its levelized electricity price amounts to 6.14 cents/kwh. This is lower than ONE's current generation costs of about 6.5 cents/kwh (which include largely or fully depreciated assets). 13. The project's levelized tariff of 6.14 cents/kwh was compared to other IPP's in developing and developed countries. Taking into consideration that: (i) this is the first IPP contracted; (ii) the project's complex structure (paragraph 6); and (iii) the absence of country's credit rating and of a regulatory framework, this tariff compares very favorably with two projects in Indonesia and one in the Philippines of similar magnitude, fuel, tariff structure and developmental order. The levelized tariffs for those projects are 7.8, 6.8 and 6.9 cents/kwh, respectively. 14. The proposed IPP's electricity price reflects important efficiency improvements, including higher power plant availability and lower fuel consumption, all of which would benefit ONE, its consumers, and Morocco. The PPA, which commits JLEC to supply about 40 % of the electricity consumed in the country, would guarantee a minimum annual average plant availability of 82 % during the 30-year contract (as compared to ONE's availability of 67 % of its existing plants). A differential in plant availability (67 /o vs. 82 %) represents a net gain of about 200 MW (300 MW gross), or about US$ 445 million of additional investment, if ONE were to undertake the project. The enhanced power plant availability would benefit Morocco's secondary industry by providing ample base-load power. 15. In economic terms, the project's guaranteed availability of 82% provides additional benefits by avoiding outage costs. The annual economic cost of the daily system power outages which occurred during 1993 and 1994 (up to 300 MW or 17 % of the then-current peak demand) is estimated at about US$ 100 million annually for each percentage point lost in availability (unserved energy in Morocco is conservatively estimated at 50 cents/kwh or five times the tariff curtailed). Proposed Bank Guarantee 16. Since the lenders do not have the traditional comfort of a lien, mortgage or security interest on the project assets, the PPA contains provisions which cover the payment of outstanding debt amounts should the PPA be terminated because of the project's non- performance, force majeure, or ONE's non-performance. In the event that ONE does not perform (an ONE Event of Default), ONE would be responsible for paying the Termination Amount which covers amounts outstanding, including debt and certain equity commitments. This obligation is in turn indemnified by the GOM under the Guarantee of Termination Amount and Letter of Support. 17. The proposed guarantee will provide coverage for defaults on payments of both principal and interest up to the maximum guaranteed amount of DM 313 million resulting from GOM's failure to pay the Termination Amount under the Guarantee of Termination Amount and Letter of Support resulting from ONE Events of Default, political events within Morocco including expropriation, and natural force majeure events affecting the project as defined in the PPA. The proposed Bank guarantee will not cover commercial risks, including project completion and operations risks and coal supply and stockage risks. JLEC has mitigated these risks by the ESICA, O&M, and CSA contracts and several insurance arrangements respectively. The obligations of the GOM, and consequently of the Bank, under the project documents, are specified in Schedule A. The following main categories of risk coverage are summarized below: * Breach of contract by GOM and ONE: Events which include: (i) non-payment under the PPA; (ii) breach of GOM Guarantee of Termination Amount and Letter of Support or Foreign Exchange Letters; (iii) expropriation; (iv) unavailability or inability to convert or transfer, foreign currency; (v) breach by ONE of its obligations under certain defined agreements in the PPA and by ODEP under the PA; and (vi) any material provision of the project agreements, the GOM's Guarantee of Termination Amount and Letter of Support or Foreign Exchange Letters becoming invalid, illegal or unforceable under Moroccan law; and # Force majeure events: As defined in the PPA, those political events within Morocco, including acts of war, civil disturbance, terrorist activity, general strike, and natural force majeure events affecting the project. 18. The proposed Bank guarantee will entitle the lenders to make a demand for that portion of any principal and/or interest payment (other than default interest), up to a maximum amount, which has not been paid by JLEC as a result of the failure of GOM to pay any amount due under the GOM Guarantee of Termination Amount and Letter of Support of the payment obligations of ONE under the PPA. Since this is a guarantee of a termination amount, the lenders would be able to make a demand on the guarantee only once JLEC had caused the termination of the PPA due to an ONE event of default or termination for force majeure, thereunder, and the GOM had failed to pay the amount due as a result of such termination. 19. Any disbursement by the Bank under the proposed guarantee will be reimbursable under the Indemnity Agreement with GOM. The Indemnity Agreement will provide for reimbursements by GOM on demand, or as the Bank may otherwise direct, of any payments by the Bank under the proposed guarantee, which in the event of termination will most likely be the full outstanding principal amount of the guaranteed loan plus accrued interest (up to a maximum amount). Any out-of-pocket expenses incurred by the Bank related to assessment, approval, loan syndication, amendment, or enforcement, will be reimbursed by JLEC without any tariff impact'. A policy on reimbursable expenses is being considered by the Bank. -7- Guarantee Fee 20. A standby fee of 25 basis points shall accrue from the date of signature of the Guarantee Agreement, calculated on the maximum guaranteed amount which has been committed but undisbursed. A guarantee fee of 100 basis points shall accrue from the date of first disbursement, calculated on disbursed and outstanding amounts under the World Bank-Guaranteed Facility. The Guarantee fee will be payable by JLEC directly or indirectly through the lenders, semi-annually in advance. The Bank will rebate to GOM (Ministry of Finance) any amount of the guarantee fee in excess of 25 basis points so long as GOM and ONE are not in default under the agreements. Arranger Bank Mandate 21. ABN AMRO, Banque Nationale de Paris, and Credit Suisse were jointly awarded the mandate by JLEC as Arranger Banks to raise the commercial financing for the project. The Arranger Banks have underwritten the US EXIM, SACE, ERG, and World Bank- guaranteed facilities. JLEC will be responsible for the payment of financing charges related to all the debt facilities, including the OPIC loan. In addition, the arranger banks have established an equity bridge loan to be used during construction of units 3 and 4. Project Risks 22. The basic potential risk faced by the Bank is that the proposed guarantee will be called due to the joint default of ONE and GOM resulting in the termination of the PPA and non-payment of the Termination Amount. The specific events of default are detailed in paragraph 17 above and in Schedule A. In this respect, the most significant potential risk is the non-payment by ONE as a result of lack of action by GOM on tariff adjustments and on reduction of the receivables in arrears due to ONE by its clients, which may deprive ONE of the liquidity needed to pay JLEC. GOM and ONE have undertaken substantial actions: (i) tariffs were duly increased which allowed ONE to achieve adequate financial performance during 1995 and 1996; and (ii) arrears due to ONE decreased from 8.5 months equivalent in 1993 to about 4.2 months in 1996 because of the implementation of a comprehensive recovery program. The Bank has made an assessment of ONE's expected financial performance and it has concluded that ONE would be able to comply with its obligations under the PPA provided that arrears are reduced to about 3 months by 1998, and tariffs are increased periodically (starting in 1998), reflecting ONE's operational cost variations. In addition, to further mitigate this risk, under the PPA, ONE must post as payment collateral in the forms of a letter of credit (equivalent to 2 monthly payments) and a cash escrow account (1 monthly payment), payable to JLEC. 23. Neither GOM nor ONE have any incentive to delay or not comply with the above tariff adjustments or reduction of arrears in a manner that adversely affects the project since any ONE failure to pay or perform under the PPA would place the project in hardship. Also, if the project is terminated, any payment made by the Bank under the proposed guarantee would have to be reimbursed by the GOM under the Indemnity Agreement. 24. The risks of default by JLEC under the PPA, including failure to timely commission units 3 and 4, to meet the corresponding performance specifications, and to maintain the contracted plant availability of 82%, and by Carbo-Jorf , for the purchase, supply and stockage of coal, are duly mitigated by the ESICA, O&M, and CSA contracts and several insurance arrangements. Benefits of the Proposed Guarantee 25. The proposed Bank guarantee would bridge the financing gap for the project of about US$ 184 million, which is critical to the completion of the financing package. It is on the basis of Bank involvement in the project that the arranger banks will underwrite the financing package. The Bank will be maximizing its leverage with a minimal level of participation of only 17% of the total new project cost (US$ 1,068 million) and 21% of the term debt financing requirements (US$ 894 million). The proposed guarantee will indirectly attract US$ 383 million in foreign direct investment and help retain US$ 231 million of future cash flows for future investments, for a total of US$ 614 million, or more than three times the amount of the proposed guarantee. 26. The proposed guarantee will also achieve substantial additional benefits by helping the power sector to borrow at more favorable market terms consistent with the economic life of the project. The 15-year maturity would be the longest maturity ever obtained by a privately owned entity in Morocco. Based on currently available medium-term maturities (without guarantee) the debt amortization would necessitate electricity tariffs substantially higher than those discussed in paragraph 12 above. In addition to a longer term, indications from the arranger banks show that a Bank guarantee will also contribute to reducing the spread over LIBOR - 175 basis points (bp), on long-term facilities versus 250 bp on non-guaranteed short-term facilities - and hence the total cost to ONE and consumers. Moreover, the project will help establish a bankable framework for private sector entry into the energy sector, without necessarily creating a need for further Bank guarantee support at the same level. Procurement 27. The Bank has established that the goods and works under the project are of satisfactory quality and efficiency and that they would be delivered in a timely fashion. Furthermore, since competitive bidding was followed to retain the private operator, the price of the power generated has been duly optimized and it reflects market prices (paras. 12 through 15). Therefore, the procurement guidelines for Bank guarantees have been duly met. Environmental Aspects 28. In accordance with O.D. 4.01 (Environmental Assessment) the proposed project has been rated category "A" in the Bank's environmental classification scheme. The project Sponsors retained qualified consultants, who have completed the Environmental Assessment (EA) in strict accordance with World Bank requirements and submitted the EA to the Bank for review. Based upon air quality data collected, the proposed project complies with World Bank environmental guidelines (1988). However, the EA shows that: (i) existing ambient sulfur dioxide (SO2) levels are above OPIC standards; therefore the Sponsors must introduce emission offset measures so that with project implementation the power plant emissions will not exceed OPIC air quality requirements; and (ii) ash produced by units 1 and 2 is being discharged to the sea and no detailed proposal was included in the above EA, addressing permanent on-land ash disposal facilities. Before effectiveness of the proposed guarantee, JLEC should undertake appropriate measures for compliance with OPIC's ambient levels of SO2 requirements. In addition, JLEC will be required to submit to the Bank an acceptable proposal for the design, construction and operation of a permanent ash disposal site. The proposal must include detailed engineering design, completion schedules, financing plan, and contracting arrangements with a contractor for the construction of the permanent disposal site. Both, the Project Agreement between JLEC and the Bank, and the Common Agreement among lenders, their agents, and JLEC, will specify that the permanent ash disposal facilities will be fully operational by the commissioning dates of the new units (3 and 4) to be developed by JLEC. Auditing and Reporting Requirements 29. JLEC will be responsible for maintaining its accounts and financial statements in accordance with sound accounting practices. These accounts and statements will be audited in accordance with adequate auditing principles by independent auditors. Certified copies of the audited reports will be submitted to the Bank within six months from the end of the fiscal year. These reports will be prepared in sufficient detail to enable the Bank to ascertain that all disbursements of the IBRD-guaranteed loan were used to finance eligible expenditures. Furthermore, JLEC will provide the Bank with all relevant financial information provided to the commercial lenders and with copies of all correspondence and documentation with ONE or GOM concerning any occurrence of an event of default or an event which with the passage of time could become an event of default. Agreed Actions 30. In order that the proposed guarantee becomes effective: (i) the Indemnity and Project agreements as well as all other project-related documentation shall have been signed by authorized signatories and be in form and substance acceptable to the Bank; (ii) the Sponsors shall have submitted satisfactory evidence regarding compliance with SO2 level emissions as well as availability of the permanent ash disposal yard. Furthermore, all other relevant conditions precedent to initial disbursement of the commercial loans shall have been fulfilled; and (iii) the initial installment of the Guarantee fee shall have been paid. Consents of Relevant Countries 31. In accordance with Article IV, section 1 (b) of the Articles of Agreement, the consents of all relevant governments have been obtained. - 10 - Recommendation 32. I am satisfied that the proposed partial risk guarantee would comply with the Articles of the Agreement of the Bank and recommend that the Executive Directors authorize the Bank to issue the guarantee substantially in accordance with the terms and conditions described in this Memorandum and schedules hereto. As of the date of this Memorandum, drafts of the Bank's Guarantee, Indemnity, and Project Agreements have been distributed to, and substantially negotiated with, the lenders, GOM, and JLEC respectively. 33. The final terms and conditions of the guarantee shall be as determined by either the Vice President, Middle East and North Africa or the Vice President, Resource Mobilization and Cofinancing, of the Bank, and the Executive Directors will be informed. If there is any substantial change in the terms and conditions of the Guarantee, Indemnity, or Project Agreements from those described in this Memorandum and schedules hereto, the approval of the Executive Directors will be sought. James D. Wolfensohn President by Caio Koch-Weser Attachments Washington, D.C. July 11, 1997 - 11 - Schedule A Page 1 of 8 SUMMARY OF TERMS AND CONDIONS WORLD BANK-GUARANTEED FACILITY(approximately 21% of the Debt Facilities) Borrower: Jorf Lasfar Energy Company (JLEC), a socigtN en commandite par actions incorporated in Morocco. Arrangers and Underwriters: ABN AMRO Bank NV (the Agent), Banque Nationale de Paris, and Credit Suisse. Amount: up to DM 313,000,000, which is the Maximum Guaranteed Amount. Term: Approximately 15 years (approximately 3 years of construction plus 12 years of amortization). Loan Drawdowns: During the construction period, the Agent will approve loan drawdowns according to drawdown schedules in the construction contracts. Loan drawdowns will be based on milestones for completion of works and may vary according to actual progress. Drawdown certificates will require the endorsement of the lenders' independent engineer. Amortization: Straight-line over a period of 12 years from commissioning of Unit 4. Margins: Years 1 to 7: 175 basis points over LIBOR or FIBOR Years 8 to 15: 188 basis points over LIBOR or FIBOR Fees: 2.75% at financial closing, plus various ongoing administrative fees. Use of Proceeds: Proceeds will be used for design, engineering, procurement, construction, financing, and startup costs of Units 3 and 4. Conditions Precedent to Initial Drawdown: The World Bank-Guaranteed Facility and the World Bank Guarantee will be effective upon receipt by the World Bank of: (a) an Indemnity Agreement from the Kingdom of Morocco; - 12 - Schedule A Page 2 of 8 (b) a Project Agreement with the Borrower; (c) execution of all the finance, project and security documents for the project; (d) satisfactory legal opinions; (e) confirmation from the Agent of satisfaction or waiver (with the World Bank's consent, where required) of all conditions precedent to first drawdown under the Common Agreement and World Bank- Guaranteed Facility, including compliance with environmental requirements, effectiveness of all required insurance, contribution of initial equity, transfer to the Borrower of Units I and 2, the Project lands, the coal handling facilities and the coal pier and establishment of the escrow account; and (f) confirmation from the Agent that the initial Guarantee fee has been included in the first disbursement under the World Bank- Guaranteed Facility and has been paid directly to the World Bank. Security: The security package will differ from the standard for a financing of this type in that the Borrower will not own the generating assets, thereby making a lien on such assets unavailable. The lenders' security package includes the following: (a) (insurance): a comprehensive set of insurance policies, including builders all risk, property, general liability, automotive, and business interruption; (b) (escrow): an escrow account will collect the electricity payments of a specified list of ONE customers in an amount designed to be approximately 1 month of ONE payments to the Borrower; (c) (letter of credit): ONE will maintain a letter of credit in an amount of approximately 2 months of ONE payments to the Borrower; (d) (Government letters): the Foreign Exchange Convertibility Letter from the Minister of Finance and the Foreign Exchange Account Letter from the Foreign Exchange Bureau regarding the - 13 - Schedule A Page 3 of 8 convertibility of Dirhams, transferability of Deutsche Marks and Dollars and the establishment of foreign currency accounts; (e) (Government guarantee): the guarantee of the Government of Morocco under the Guarantee of Termination Amount and Letter of Support (described below); and (f) (World Bank Guarantee): the guarantee of the World Bank under the World Bank Guarantee (described below). Defaults: Usual and customary events of default (and cure periods) for a financing of this type, including non-payment of amounts owing to lenders, default by ONE under the Power Purchase Agreement (PPA), subject to a cure period of up to 90 days, bankruptcy of JLEC, invalidity, illegality or unenforceability of the agreements, expropriation, monetary restrictions or the occurrence of a political risk event under any of the political risk guarantees. Cure Periods: Before any Debt Facility may accelerate, the Intercreditor Agreement will require coordination and sufficient cure periods of up to 90 days in general, and before foreclosure on the project, a 270-day standstill period, if ONE or the Government of Morocco has not paid all of the Termination Amount under the PPA but the Borrower has paid all of its obligations. Choice of Law: State of New York. GUARANTEE OF TERMINATIONAMOUNTAND LETTER OF SUPPORT Guarantor: Government of Morocco, by the Prime Minister and Minister of Foreign Affairs and Cooperation. Beneficiary: The Borrower. Guarantee: The Government of Morocco will guarantee the following: (a) the punctual payment of the Termination Amount by ONE after termination of the PPA following an event of default or force majeure; and - 14 - Schedule A Page 4 of 8 (b) the "quiet enjoyment" of the site and port facilities. ONE Events of Default and Force Majeure Events under the PPA: The PPA may be terminated for certain specified events, including ONE events of default and force majeure events extending beyond six months that prevent the performance of ONE or JLEC, for which ONE must pay the Termination Amount, which in all cases would include the loan amount due to the World Bank-Guaranteed lenders. ONE events of default include: (a) nonpayment by ONE of any amount due under the PPA that continues for more than 5 days after receipt of notice; (b) failure to maintain the letter of credit or breach of the escrow agreement as provided in the PPA; (c) material breach by ONE of the Direct Agreement among ONE, JLEC and the Collateral Agent; (d) material breach by Morocco of the Guarantee of Termination Amount and Letter of Support, the Foreign Exchange Convertibility Letter, or the Foreign Exchange Account Letter; (e) compulsory acquisition of any asset or right of JLEC by Morocco or any other public sector entity or any impairment of such asset or right; (f) inability of JLEC or Carbo Jorf Company to convert Dirhams into Deutsche Marks or Dollars within 20 days or to transfer such currency to foreign currency accounts; (g) any material provision of certain project agreements (PPA, TPA, CPA, CHSA, PA), the Guarantee of Termination and Letter of Support or the Foreign Exchange Letters becoming invalid, illegal or unenforceable under Moroccan law; and (h) cross default of the PPA caused by defaults of ONE under certain project agreements (TPA, CPA, CHSA) or by ODEP under the PA. - 15 - Schedule A Page 5 of 8 Force majeure events include: (i) political events such as an act of war, civil unrest, military or guerrilla action, terrorist activity, radioactive contamination, general or sectoral strikes that are widespread or nationwide affecting several economic sectors, not specific to the terms of employment at the Project, and acts of third parties beyond the control of Morocco or JLEC; and (j) natural events such as lightning, earthquake, storm, fire, explosion, chemiical contamination, epidemic or plague. Cure Periods under the PPA: In general, 30 days following receipt of notice, which period shall be extended if one party is diligently pursuing a cure; 60 days for ONE to cure a non-payment default; 90 days for ONE to cure an event of default related to the escrow account or letter of credit; 10 days to cure an event of default related to foreign currency convertibility and no cure period if any material provision of the agreements becomes invalid, illegal or unenforceable under Moroccan law. Waiver: Morocco will waive sovereign immunity. Choice of Law: Private laws of the Kingdom of Morocco. WORLD BANK GUARANTEE Guarantor: The World Bank Beneficiary: The Agent, on behalf of lenders in the World Bank-Guaranteed Facility. Maximum Guaranteed Amount: DM 313,000,000, amortizing over 12 years from commissioning of Unit 4. Guarantee Fee: A standby fee of 25 basis points shall accrue from the date of signature of the World Bank Guarantee, calculated on the maximum guaranteed amount which has been committed but undisbursed. A guarantee fee of - 16 - Schedule A Page 6 of 8 100 basis points shall accrue from the date of first disbursement, calculated on disbursed and outstanding amounts under the World Bank-Guaranteed Facility. Amounts over 25 basis points will be rebated to the Government of Morocco (Ministry of Finance), provided that ONE is not in default under the PPA and Morocco is not in default under the Indemnity Agreement. Guarantee: The World Bank will guarantee to the Agent amounts it would have otherwise received under the Common Agreement and World Bank- Guai anteed Credit Agreement but for the payment default of the Government of Morocco under the Guarantee of Termination Amount and Letter of Support, except for events of default under the PPA: (a) caused by the Borrower; or (b) due to events of force majeure regarding the unavailability of equipment, supplies, or products, and failure of equipment. Claims: If there is a dispute, the World Bank Guarantee would be callable only in respect of amounts that the Government of Morocco is obligated to pay, and fails to pay, in accordance with the dispute resolution procedures contained in the PPA, the Guarantee of Termination Amount and Letter of Support and other project agreements. Claims must be made within 90 days of non-payment and the World Bank must pay within 60 days thereafter. Conditions Precedent: Satisfaction of the conditions precedent to the initial drawdown of the World Bank-Guaranteed Facility, including payment of the first installment of the Guarantee fee. Suspension of Additional Coverage: In any of the following events, the World Bank may by written notice deny guarantee coverage to subsequent drawdowns: (a) default by ONE under the PPA; (b) default by the Borrower under the Project Agreement; - 17 - Schedule A Page 7 of 8 (c) payment defaults by Morocco under any borrowing, guarantee, or indemnity agreements with the World Bank and suspension of lending by the World Bank to Morocco; or (d) suspension or lapse of Morocco from membership in the World Bank or the International Monetary Fund. Cessation of Coverage: Except in respect of demand notices already delivered to the World Bank, failure to pay the Guarantee fees within 10 days of the due date will automatically terminate the World Bank Guarantee. Subrogation: If the World Bank is not fully paid within 60 days by Morocco under the Indemnity Agreement and to the extent of any payment under the World Bank Guarantee, the World Bank will be subrogated to the rights of the World Bank-G aranteed Facility lenders, except for voting and enforcement rights unless and until such lenders are paid in full. Offer to Purchase Loan: Following a default by the Borrower, a demand by the lenders and payment under the World Bank Guarantee and a failure by Morocco to indemnify the World Bank, the World Bank shall have the right, at its sole discretion, to offer to purchase the loan from the lenders at par for an amount equal to outstanding principal and accrued but unpaid interest on the loan. Choice of Law: State of New York. INDEMNITYAGREEMENT Parties: The World Bank and the Kingdom of Morocco. Indemnity: Morocco will reimburse and indemnify the World Bank on demand, or as the World Bank may otherwise direct, for any payment made by the World Bank under the World Bank Guarantee and for all losses, damages, costs and expenses incurred by the World Bank with respect to the World Bank Guarantee. Schedule A Page 8 of 8 Remedies: If Morocco fails to perform under the Indemnity Agreement, the World Bank may suspend or cancel, in whole or in part, the rights of Morocco to make withdrawals under any other loan agreement with the World Bank. Choice of Law: The Indemnity Agreement will follow the legal regime, and include dispute settlement provisions, which are customary in agreements between member countries and the World Bank. PROJECT AGREEMENT Parties: The World Bank and the Borrower. Representations and Warranties: The Borrower will represent, among other things, that it is in compliance with applicable environmental laws and other applicable World Bank requirements. Covenants: The Borrower will covenant, among other things, that it will use the proceeds of the disbursements under the World Bank-Guaranteed Facility in accordance with the terms and conditions of the World Bank- Guaranteed Credit Agreement, comply with applicable laws, including environmental laws and other applicable environmental requirements, provide annual audited financial statements and regular access and reports to the World Bank. Costs and Expenses: The Borrower will reimburse the World Bank for out-of-pocket expenses in the event of amendment or enforcement of the agreements.2 Choice of Law: State of New York. 2 A policy on reimbursable expenses is being considered by the Bank. - 19 - Schedule B Page 1 of 2 MOROCCO JORF LASFAR POWER PROJECT Project Cost Estimate (US$ thousand) Units 1&2 Units 3&4 Total Capital Costs - EPC Contract 618,318 618,318 - Ash Disposal Facilities 5,000 5,000 10,000 - Port Extension 4,990 4,989 9,979 - Additional Capital Cost 7,750 1,715 9,465 - Generator Contingencies 885 31, 500 32,385 - Spares/Tools 37,903 37,903 - Developers' Fee 13,000 13,000 26,000 - Advisors/Insurance 6,591 20,650 27,241 - Reimbursable Development Costs 27,284 27,284 54,568 - Withholding Tax 11,275 11,275 Sub - Total 65,500 771,634 837,134 Initial O&M Capital Costs 13,465 13,465 TPA Fee Downpayment 263,158 263,158 Financing Costs - Up front loan fees 21,311 21,311 - ECA Premiums 42,508 42,508 - Capitalized IDC 82,246 82,246 - Expensed IDC and Fees 75,717 75,717 Sub - Total 221,782 221,782 Debt Service Reserve Account 74,824 74,824 Initial Coal and Oil Inventory 43,329 43,329 Initial Working Capital and VAT 53,980 53,980 TOTAL COST 439,432 1,068,240 1,507,672 - 20 - Schedule B Page 2 of 2 MOROCCO JORF LASFAR POWER PROJECT Financing Plan (US$ thousand) Senior Credit Facilities - SACE Guaranteed Loan (DM 381 million) 223,816 - US EXIM Bank Guaranteed Loan 246,353 - World Bank Guaranteed Loan (DM 313 million) 184,000 - ERG Guaranteed Loan (DM 68 million) 39,916 - OPIC Loan 200,000 Total Debt 894,085 Equity 383,179 Surplus Operating Cash Flow (units #1 & #2) 230,408 TOTAL FINANCING 1,507,672 - 21 - Schedule C MOROCCO JORF LASFAR POWER PROJECT Timetable of Key Processing Events Project prepared by: Sponsors and Lenders with assistance of Bank staff First Bank mission: December 1995 Receipt of official GOM September 1996 request for Bank Guarantee: Operations Committee review: February 1997 Appraisal: March 1997 Green Cover July 1997 Board Approval: August 1997 Expected Effectiveness Date: October 1997 Ueneratec: May 7, ,U Status of Bank Group Operations in Morocco IBRD Loans and IDA Credits in the Operations Portfolio Difference Original Amount in US$ Millions Between actual Loan or Fiscal and expected Project ID Credit No Year Borrower Purpose IBRD IDA Cancellations Undisbursed Disbursements a/ Number of Closed Loans/credits: 120 MA-PE-5449 L28260 1987 MINISTRY OF INTERIOR GREATER CASABLANCA S 60 00 0.00 0.00 15.76 15.76 MA-PE-5440 L31710 1990 KINGDOM OF MOROCCO HEALTH SECTOR INVEST 104.00 0.00 0.00 17.67 17.67 MA-PE-5437 L31560 1990 GOVERNMENT FORESTRY 11 49.00 0.00 0.00 11.74 11.74 MA-PE-5495 L33720 1991 MOROCCAN BANKS FINANCIAL SECTOR DEV 11.50 0.00 0.00 3.85 -7.65 MA-PE-5495 L33710 1991 MOROCCAN BANKS FINANCIAL SECTOR DEV 9.50 0.00 2.62 .05 -6.82 MA-PE-5495 133670 1991 MOROCCAN BANKS FINANCIAL SECTOR DEV 19.50 0.00 0.00 1.18 -18.32 MA-PE-5495 L33660 1991 MOROCCAN BANKS FINANCIAL SECTOR DEV 29.50 0.00 0.00 16.49 84.52 MA-PE-5460 L32950 1991 GOVERNMENT OF MOROCCO BASIC EDUCATION 145.00 0.00 45.00 55.18 95.52 MA-PE-5433 L32840 1991 GOVT. OF MOROCCO PORT SECTOR 99.00 0.00 0.00 13.10 -85.90 MA-PF-5433 L,32830 1991 GOVT. OF MOROCCO PORT SECTOR 33.00 0.00 5.00 8.88 13.88 MA-PE-5459 L32620 1991 GOVT. OF MOROCCO SECOND RURAL ELECTRI 114.00 0.00 60.10 25.82 84.39 MA-PE-5514 L36180 1993 GOV. OF MOROCCO LAND DEVELOPMENT 66.00 0.00 0.00 53.17 80.71 MA-PE-5517 L36170 1993 GOV.OF MOROCCO/FEC MUNICIPAL FINANCE 1 100.00 0.00 0.00 32.38 24.71 M%'A-PE- 5462 L351.10 1993 GOVFERNIMENT SECOND LSI IMPROVEME 215.00 0.00 35.00 132.76 19.76 MA-PE-5438 L35570 1993 KINGDOM OF MOROCCO TELECOM.RESTRUCTURIN 100.00 0 00 0.00 47.55 38.87 MA-PE-5493 L37650 1994 GOV. OF MOROCCO ASIL II 121.00 0.00 61.00 19.70 22.03 MA-PE-5499 L36880 1994 GOV. OF MOROCCO IRR. AREAS AGR. SERV 25.00 0.00 5.00 17.17 10.07 MA-PE-5435 L36650 1994 KINGDOM OF MOROCCO/ONEP WATER SUPPLY V 32.00 0.00 0.00 27.90 -4.10 MA-PE-5435 L36640 1994 KINGDOM OF MOROCCO/ONEP WATER SUPPLY V 128.00 0.00 0.00 114.67 42.14 MA-PE-5486 L36620 1994 CNCA NATIONAL RURAL FINAN 100.00 0.00 50.00 28.99 74.99 MA-PE-5504 L36470 1994 KINGDOM OF MOROCCO ENVIRONMENT MANAGEME 6 00 0.00 0.00 4.86 2.32 MA-PE-5489 139010 1995 KINGDOM OF MOROCCO SECONDARY ROADS 57.60 0.00 0.00 57.60 17.08 MA-PE-42414 L40260 1996 GOVT OF MOROCCO COOR/MON SOCIAL PRO 28.00 0.00 0.00 20.00 1.17 MA-PE-42415 L40250 1996 GOVT OF MOROCCO SPI - HEALTH 68.00 0.00 0.00 68.00 1.50 MA-PE-5501 L40240 1996 GOV. OF MOROCCO SPI - EDUCATION 54.00 0.00 0.00 54.00 1.25 MA-PE-5503 L40100 1996 KINGDOM OF MOROCCO SEW.4 WATER REUSE II 40.00 0.00 0.00 40.00 .92 MA-PE-41303 L39351 1996 GOVERNMENT OF MOROCCO EMERG. DROUGHT RECOV 50.00 0.00 0.00 7.45 19.93 MA-PE-43725 L41281 1997 ONCF RAILWAY RESTR & PRIV 42.50 0.00 0.00 37.30 0.00 MA-PE-43725 L41280 1997 ONCF RAILWAY RESTR & PRIV 42.50 0.00 0.00 42.50 0.00 MA-PE-38978 L40911 1997 GOVERNMENT OF MOROCCO PSD III-VOC TRG. 11.50 0.00 0.00 10.33 0.00 MA-PE-389?8 L40910 1997 GOVERNMENT OF MOROCCO PSD III-VOC TRG. 11.50 0.00 0.00 11.50 1.42 Total 1,972.60 0.00 263.72 1,005.53 Active Loans Closed Loans Total Total Disbursed (IBRD and IDA): 692.83 5,338.46 6,031.29 of which has been repaid: 37.90 2,573.03 2,610.93 Total now held by IBRD and IDA: 1,670.98 2,783.22 4,454.20 Amount sold 0.00 20.11 20.11 Of which repaid : 0.00 20.11 20.11 Total Undisbursed : 1,005.53 10.48 1,016.01 10 OQ It ,nd d 'linb,rornon,t ito date minus actual disbursements to (Lite a:. prolected at appraisal. (D D b. Rating of 1-4. see OD 13.05. Annex D2. Preparation of Implementation Summary (Futia 590). Following the FY94 Annual Review or Porttolio poriormance (ARPP), . a letter based system will be used (HS = highly Satisfactory, S = satisfactory, U = unsatisfactory, HU = highly unsatisfactory): see proposed Improvements in Project and Portfolio Performance Rating Met.hodology (SecM94-901), August 23, 1994. 0 ( c. Following the FY94 ARPP, "Implementation Progress" will be reported here. Generated by the Operations Information System (OIS) -23 - MOP Schedule D Generated: May 19, 1997 page 2 of 2 Morocco STATEMENTOF IFC's Committed and Disbursed Portfolio As of 31-Mar-97 In Millions US Dollars Committed Disbursed -IFC- --FC FY Company Loan Equity Quasi Partic Loan Equity Quasi Partic Approval 1963 BNDE 0 00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1978 BNDE 0.00 0.00 0.00 0.00 0.00 0 00 0.00 0.00 1980 SOMIFER 0.00 2.35 0.00 0.00 0.00 2 35 0 00 0.00 1983 BNDE 0.00 0.00 0.00 0.00 000 000 0.00 0.00 1985 BNDE 2.06 0 00 0.00 0.00 2.06 0 00 0.00 0.00 1987 CIH 7.89 0.00 0.00 0.00 7 89 0.00 0.00 0.00 1987 SETAFIL 3.14 .92 000 0.00 3.14 92 0.00 0.00 1990 CIH 24.18 0.00 0.00 2.83 24.18 0.00 0.00 2.83 1990 ENNASR 1.08 0.00 0.00 0.00 1.08 0.00 0 00 0.00 1992 Banque Exterieur 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1992 Ciments du Maroc 0 00 0 00 0.00 0.00 0 00 0.00 0 00 0.00 1993 INTERFINA 0.00 3.24 0.00 0 00 0.00 2 44 0.00 0.00 1993 SETAFIL 0.00 .28 0.00 0.00 0.00 28 0.00 0.00 1994 Ciments du Maroc 624 000 0.00 259 6.24 000 0.00 2.59 1994 Euratlas Capital 0.00 4.00 0 00 0 00 0.00 0 00 0.00 0.00 1994 Mediafinance 0.00 .50 0.00 0.00 0.00 .50 0 00 0.00 1995 Attijari 000 50 0.00 0.00 000 26 0.00 0.00 1995 Fin. Euratlas 0.00 .09 0 00 0.00 0 00 0.00 0.00 0.00 1996 Banque Exterieur 0.00 7 11 0 00 0.00 000 000 0.00 000 1996 Mediafinance 0 00 66 0 00 0.00 0 00 66 0 00 0.00 Generated by the Operations Information System (OIS) - 24 - Schedule E page 1 of 2 Morocco at a glance M. East Lower- POVERTY and SOCIAL & North middle- i Morocco Africa income Development diamond* Population mid-1995 (millions) 269 273 1,154 GNP per capita 1995 (USS) 1,130 1.780 1,700 Life expectancy GNP 1995 (billions USS) 304 486 1,961 Average annual growth, 1990-95 Population (%) 20 2.7 14 Labor force (%) 2.6 3.3 1 8 GNP A Gross Most recent estimate (latest year available since 1969) per pnmary M r t1capita enrollment Poverty: headcount index (% of population) 13 .pt. Urban population (% of total population) 48 56 56 Life expectancy at birth (years) 65 66 67 Infant mortality (per 1,000 live births) 55 49 36 Child malnutrition (% of children under 5) 9 Access to safe water Access to safe water (% of population) 59 82 78 Illiteracy (% of population age 15+) 56 39 Gross pnmary enrollment (% of school-age population) 73 97 104 - Morocco Mate 85 104 105 1 Lower-middle-incomre group Female 60 90 101 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1975 1986 1994 1995 GDP (billions USS) 9.0 129 30.3 32.4 Economic ratios Gross domestic investment/GDP 25.2 27.1 21.3 21 0 Exports of goods and non-factor services/GDP 22.5 25.5 25 3 27.3 Openness of economy Gross domestic savings/GDP 14.3 18.4 15.7 134 Gross national savings/GDP 13.3 207 18.9 16.1 Current account balance/GDP -6.1 -64 -2 4 -49 Interest payments/GDP 07 43 4.2 42 Sn Total debt/GDP 26.2 122.4 71 1 68 3 Total debt service/exports 6.7 33.5 34.3 31 6 Present value of debt/GDP . . 62.3 Present value of debtlexports .. .. 194 2 Indebtedness 1976-84 19115-95 1994 1995 1996-04 (average annual growth) GDP 4.4 2.9 11.6 -7.6 5.6 --Morocco GNP per capita 1 7 0.9 10.2 -9 3 3.8 Lower-middle-incomre group Exports of goods and nfs 42 5.9 -09 4.1 6.5 STRUCTURE of the ECONOMY 1975 1985 1994 1995 Growth rates of output and investment (%) (% of GDP) Agriculture 173 166 184 143 Industry 34.7 334 31.5 332 10+ Manufacturing 166 186 17 6 192 s Services 480 50.0 501 525 o Pnvate consumption 694 658 674 71.2 i General government consumption 163 158 169 15.5 Imports of goods and non-factor services 334 34.2 309 34 GDi -O-GDP (average annual growth) 1975-84 1985-95 1994 1995 Growth rates of exports and imports (%) Agriculture 1.4 -0 1 63 0 -45 9 25 Industry 3.0 2 8 4.3 31 2 Manufacturing 35 4.2 29 1s Services 64 38 32 1 2 5 Private consumption 3.6 44 166 -69 o . General govemment consumption 5.7 3 2 1.7 -3.7 -, 90 91 92 93 9. 95 Gross domestic investment 00 1.1 115 -8.5 .1o Imports of goods and non-factor services -0 5 7.3 5 2 4.0 Gross national product 40 3.0 12.4 -7.6 - -Exports --Imnports Note 1995 data are preliminary estimates The diamonds show four key indicators in the country (in bold) compared with its income-group average If data are missing, the diamond will be incomplete - 25 - Schedule E page 2 of 2 Morocco PRICES and GOVERNMENT FINANCE Domestic prices 1975 1985 1994 1995 Inflation (%J (% change) 10 Consumer pnces 77 51 61 8 Implicit GDP deflator 15 84 02 72 e 4 Government finance 2 (% of GDP) o Current revenue 207 242 239 90 91 92 93 94 95 Current budget balance -24 28 14 - GDP def CPI Overall surplus/deficit -9.6 -32 -53 TRADE (millions US$) 1975 1985 1994 1995 Export and Import levels (mill. US$) Total exports (fob) . 2,283 5,538 6.676 ¶2.000 Other agnculture .. 603 1,280 1,457 1o.coo X Phosphorus . 479 273 291 Manufactures . 477 1,474 1,600 8.II Total imports (ci) 3,921 8.265 9.936 6000 Food . 507 798 1,332 4.000 Fuel and energy . 1,074 1.113 1,184 2.000 Capital goods . 649 1,845 1,854 0 Export pnce index (1987=100) 89 122 137 89 90 91 92 93 94 95 Import pnoe index (1987=100) 104 113 131 Exports wi Imports Terms of trade (1987=100) 86 108 104 BALANCE of PAYMENTS (mdllions 1975 1985 1994 1995 Current account balance to GDP ratio (%) Exports of goods and non-factor services 1.997 3.278 7,688 8,840 o Imports of goods and non-factor services 2.939 4,402 9,368 11,314 a9 90 91 92 93 94 95 Resource balance -942 -1,124 -1,680 -2,474 -1 Net factor income -88 -766 -1.170 -1.209 Net current transfers 482 1.031 2,070 2,115 Current account balance, 4 before official transfers -548 -826 -726 -1,587 Financing items (net) 519 845 1,240 886 Changes in net reserves 28 -19 -513 702 , Memo: Reserves including gold (mill USS) 345 4.548 3,613 Conversion rate (locabUSS) 4 1 10.1 9 2 8 5 EXTERNAL DEBT and RESOURCE FLOWS 1975 1985 1994 1995 (millions US$) Composition of total debt, 1995 (mill. US$) Total debt outstanding and disbursed 2,353 15,753 21,587 22,147 IBRD 244 1,288 3,746 3,966 IDA 31 43 35 33 G 418 A 3966 Total debt service 172 1.429 3.338 3,541 IBRD 33 167 572 630 F 5742 IDA 0 1 2 2 Composition of net resource flows Official grants 26 416 279 300 ' D 2831 Official creditors 253 412 -313 -284 Pnvate creditors 591 195 201 132 Foreign direct investment 0 20 601 818 Portfolio equity 0 0 63 29 E 9105 World Bank program Commitments 33 379 127 433 A - IBRD E - Bilateral Disbursements 111 307 246 426 l - IDA D - Other muftilateral F - Private Pnncipal repayments 18 87 302 350 C - IMF G - Short-term Net flows 93 220 -56 76 Interest payments 15 81 271 282 Net transfers 78 139 -327 -206 Intemational Economics Department 5/20/97 M SN 1BRD 28748 ,. � ' „ , Mf�1�?�СС� 8 � � r����� � � � /v1 �e �7 � e � r ci�п e�� ��� � ,� � ц� � �� . � � � Зt�RF 'LASFAR�,PC���� �'R�?:���Т � ° �,,, � „ �. � � �WC?Rii� BAPVK�PA�tT1AL R151C �4,�R�NT� � �� Е4�' " �-�"• �1 _ кув � ш kк г � r� �ni но г � ,� ,� 4 п}р� � G �Qaed Е1 мпlдiс� пе lтzеvгhепв , 5 bua_пе �.. 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