Morocco solar power project gets 654 mln euro German loan

Aziz El Yaakoubi
Solar panels are seen in fields near Andover in southern England
Solar panels are seen in fields near Andover in southern England May 3, 2013. REUTERS/Toby Melville

By Aziz El Yaakoubi

RABAT (Reuters) - Morocco has secured a 654 million euro loan from German state-owned bank KFW to part-finance two solar power plants totalling 300 megawatts worth an estimated 1.7 billion euros.

Tenders for construction of the two plants, one of 200 megawatts (MW) and the other of 100 MW, near the southern city of Ouarzazate are expected in the next weeks, Mustapha Bakoury, the head of Morocco's solar energy agency Masen, said on Wednesday at the Desertec industrial initiative (Dii) Conference held outside Rabat.

Masen said consortia led by Spain's Abengoa, GDF's International Power and ACWA Power had been pre-selected for the 200 MW (Noor II) tender.

The three groups are also pre-qualified for the 100 MW (Noor III) tender, along with another consortium led by France's EDF.

KFW confirmed that it will make the loans.

"We will lend 330 million euros for Noor II, and 324 million euros for Noor III, and we evaluate the first plant contract at 1 billion Euros, while the second would reach 700 million euros," Head of KFW North Africa & Middle East Wolfgang Reuss told Reuters.

"It is almost the half of the necessary funds," he said.

KFW would be by far the largest lender to the second phase of Ouarzazate 500 MW project, banking sources said.

The authority has chosen parabolic mirror technology for the 200 MW concentrated solar plant with a contract estimated at 1 billion euros, while the 100 MW plant, expected to reach 700 million euros, will be built as a solar power tower.

Saudi Arabia's ACWA Power is already building the first 160 MW plant in the Ouarzazate area under a government initiative to produce 2 gigawatts of solar power by 2020, which is equivalent to about 38 percent of Morocco's current installed generation capacity.

Morocco is expecting to get around 300 million euros from the World Bank and about the same from the African Development Bank and from the European Investment Bank, as well as other smaller loans from the World Bank's Clean Technology Fund, the French Development Agency and the European Union to seal the contracts financing.

Sources added that all the lenders would give the necessary funding, although this had not yet been announced.

Asked by Reuters, Bakoury said financing details would be given with the launch of tenders.

Morocco is spending heavily to subsidise power production. It currently imports power from Spain with demand growing by around 7 percent year.