The government aims to stimulate new avenues for supply to reduce dependence on imported energy.

orocco conjures images of handsome mosques, sun-kissed beaches and imposing mountain peaks. A stroll through chaotic Marrakech or a stopover in medieval Fez reveals that Moroccans are rightfully proud of their resources, carefully preserved from the past. But as the country looks to the future, seeking to overcome poverty, combat illiteracy and fortify its infrastructure, it faces a daunting mission. An emerging economy requires energy to grow, and Morocco imports almost all of the energy it consumes.

Reducing this deficit is the most pressing task facing the country’s energy authorities. They see liberalization of the power sector, tax breaks for investors and diversification of the energy supply as key to softening Morocco’s foreign fuel dependence. Government estimates show that Moroccans rely on overseas markets for 95 percent of their energy needs in a country where demand is expected to double by 2030.

Mohamed Boutaleb, the Minister of Energy and Mines in the outgoing government, says foreign firms are entering Morocco’s energy market at an unprecedented pace, attracted by tax incentives and the lure of uncharted fields of oil and gas. By bringing in foreigners, Morocco aims to open new avenues for supply, stimulate its economy and reduce its $1 billion-a-year bill for imported energy.

Against the backdrop of rising energy prices, Morocco can’t afford to wait any longer to enact reforms. “We have a strategy of exploration, which has never been the case before,” Mr. Boutaleb said of foreign exploration in Morocco.

The country of 33 million inhabitants is expected to need 8 percent more energy per year through 2012, according to the National Office of Energy. The lion’s share of local exploration of oil and natural gas takes place in the Essaouira Basin on the Atlantic coast, while gas is also extracted from the northern Gharb. Electricity is generated at coal and oil-burning power plants, with nearly all of the coal imported from South Africa, the United States and Colombia.

Electricity customers will also benefit from liberalization, according to Mr. Boutaleb, as eligible clients will be able to choose their energy providers to stimulate competition. “The energy sector followed the trend of the economy and was largely freed up from regulation,” Mr. Boutaleb says. “Now it’s time for reform in the electricity sector.”

MOHAMED BOUTALEB Minister of Mines & Energy in the outgoing government

Policies to liberalize and modernize the electricity sector will hopefully goad even more investors to consider Morocco. The government is pushing more public-private partnerships and is working to promote the country as a regional energy hub.

Dallas-based Kerr-McGee, Malaysian-based Petronas, French firm Total, and European giant Shell are among the energy companies involved in oil and gas exploration in Morocco. Tax relief is being billed as an incentive to lure investors.

Budget plans call for reductions of value-added taxes for companies relying on renewable sources of energy, such as wind power. The rate is down from 20 percent to 7 percent. The government hopes this will stimulate SMEs and increase energy consumption.

Younes Maamar, CEO of the National Electricity Office, says the initiatives are both innovative and attractive for investors. “I am not thinking about a service provider but an operator which accepts the risk and reward of the projects,” he comments. Morocco is viewed in many quarters as a latecomer to renewable energy, so the kingdom has announced plans to increase the contribution to 10 percent of the total, a tenfold increase.

Plans are under way for a new $500-million power plant at Tahaddart near Tangiers, with German and Spanish interests running operations. Also, the Islamic Development Bank has allocated $190 million to build a gas turbine power station in the city of Mohammedia, 45 miles southwest of Rabat.

Additionally, the government has shown great interest in setting up a national strategy on nuclear safety following the launch this year of the country’s first research Triga II reactor.

Morocco’s history as a crossroads for trade should serve it well as it enters this new phase. Mostafa Terrab, General Manager of the National Office of Phosphates says Morocco’s famed ability to forge relations with trade partners will help it reap benefits in the energy sector as well. He adds, “It is not only natural or physical, but it is also social, political and societal. It gives Morocco the economic dynamism that we are experiencing now.”