system. Municipalities and beneficiaries were not initially involved in surveys and village programming until 2002 when local commissions were created. Neither were there consultations with municipal distributors, thus exacerbating the issues regarding limits of service and boundaries of intervention areas. From ONEE’s perspective, the electrification effort achieved its goals precisely because it was not slowed-down by excessive consultations and discussions. The MOI and municipal distributors regard ONEE as overreaching in expanding its electricity distribution activity further jeopardizing the municipal distribution model. There is a legal ambiguity surrounding electricity distribution: considered as a public service, it falls within the competence of local government, but ONEE is also involved in distribution in certain municipalities.

2.2.3 Summary Morocco’s success in expanding rural electrification through PERG is largely due to the critical role played by ONEE. PERG was underpinned by a clear vision and political commitment to follow the plan that was set out, a business model inclusive of domestic and international financing, and an effective institutional framework that draws on ONEE’s strengths while leveraging other national and international stakeholders. PERG was based on a least-cost spatially optimized plan that was technologically neutral, choosing the approach suited to meet local demand and using an internal GIS database that captured almost all rural communities in the country. Equally important in achieving these results is that at the outset, Morocco’s high level of urban electrification may have allowed crosssubsidization from urban to rural consumers.<sup>60</sup> By comparison in sub-Saharan Africa, one study finds that demand-side challenges are a greater obstacle to electrification due to low uptake and low household income translating into very low electricity consumption that affects the financial viability of utilities.<sup>61</sup> ONEE’s expertise provided the country with necessary technical and managerial skills to oversee an important expansion of the power infrastructure and achieve universal access to electricity. Importantly, the liberalization of generation gave ONEE the fiscal space to invest and focus on rural electrification.

# 2.3 Utility Efficiency and Financial Viability

## 2.3.1 Performance

The analysis of Morocco’s utilities here is based on, where available, time series data for technical and financial indicators on transmission and distribution losses and profitability. Given data limitations, we draw on data snapshots of ONEE and the 11 electricity distribution utilities. Since ONEE is also engaged in electricity distribution and provides water and sanitation services, these are combined in its consolidated financial reports. Though utilities are required to report technical and financial data, these are often aggregated and not publicly available.

Transmission and distribution losses<sup>62</sup> have generally increased alongside rising output over the years. In 2012, total losses stood at 13 percent, a three-point increase from 10 percent in 1990 (Figure 12). The efficiency of thermal generation plants has improved from

> 60 (Nygaard & Dafrallah, 2015)

> 61 (Blimpo & Cosgrove-Davies, 2019)

> 62 These losses can be defined as the difference between total electricity output (total gross generation + imports) and the total billed to and paid by end consumers (and exports).

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