Under its Facility for Euro-Mediterranean Investment and Partnership (FEMIP), the European Investment Bank (EIB), the EU's financing institution, is lending a total of EUR 210 million for energy and the environment in Morocco.

The finance contracts relating to these loans were signed in Morocco by Mr Philippe de Fontaine Vive, EIB Vice-President with responsibility for FEMIP, and concern the following projects:

EUR 170 million is being lent to Office National de l'Electricité (ONE) for the final phase of the national rural electrification programme, which aims to cover 98% of the rural population.

The project will benefit 327 500 households (i.e. around 2 million inhabitants) in 8 375 villages throughout the country that currently do not have permanent access to the electricity network.

The project will help to improve the quality of life of the population and promote the economic development of rural areas.

The various components of the project, which will be built over the period 2006-2008, will help to satisfy the growing demand for electricity in Morocco. The Moroccan power network is interconnected to the North African power transmission grid, comprising Morocco, Algeria and Tunisia. This grid is linked up to the European Union via a power interconnection with Spain, for which the EIB provided a loan of EUR 80 million.

ONE is a public sector borrower that is well known to the Bank, which has already granted it nine loans totalling EUR 627 million since 1983.

EUR 40 million is being lent to Office National de l'Eau Potable (ONEP) for investment in support of sanitation systems in 17 urban centres located for the most part in the wadi Sebou basin, which is situated between Taza to the east and Khenitra on the Atlantic coast. Each of the 17 sub-projects involves the rehabilitation and extension of the wastewater collection and stormwater drainage network and the construction of a secondary wastewater treatment plant.

The whole project has a total population-equivalent capacity of around 750 000 and entails the construction of some 420 km of wastewater collection networks and 100 km of drainage networks.

The project is expected to have a substantial environmental impact, justifying the granting of an interest subsidy financed from EU budgetary resources. This fifth EIB loan signed with ONEP brings the total amount advanced by the Bank to this utility to EUR 200 million.

The project also provides for a maximum amount of EUR 4 million in FEMIP technical assistance for the Project Management Unit (PMU) and a number of studies on ways to improve ONEP's performance and increase its capacity in the sanitation sector.

During his visit, Mr de Fontaine Vive stated: I am delighted to come to Morocco to formalise the European Investment Bank's significant financial support for the development of public infrastructure, which is essential to the growth of Morocco's economy and the well-being of its people. The signature of the loan contracts today demonstrates FEMIP's solidarity with and concrete support for the priorities of the Moroccan authorities. I am also pleased to underline the fact that this solidarity also involves other lending agencies, such as the European Commission, Agence Française de Développement (AFD), the Japan Bank for International Cooperation (JBIC), the Kuwait Fund for Arab Economic Development (KFAED) and the Islamic Development Bank (IDB). It illustrates the importance that the EIB attaches, in common with all the other donors, to supporting the development of rural areas and the water sector in Morocco by complementing the Bank's numerous operations in favour of power generation and distribution, drinking water, agricultural irrigation and sanitation projects, thus covering all stages of the water cycle.

With loans totalling EUR 8 to 10 billion at the end of 2006, FEMIP marks an important step forward in financial and economic cooperation between the Union and the Mediterranean partner countries. Its main priority is to promote the development of the private sector (in particular SMEs and FDI) and support projects that help to create a favourable climate for private investment (economic infrastructure, programmes in the health and education sectors). Its ultimate goal is to assist the Mediterranean partner countries in meeting the challenge of economic and social modernisation and to strengthen regional integration, with a view to the Euro-Mediterranean free trade area due to be established in 2010.

In addition to the loans and grants provided for technical assistance, FEMIP encourages the rapid expansion of the private sector by taking equity or quasi-equity participations in private companies in order to help the Mediterranean partner countries accelerate their economic and social modernisation, in particular through reinforced regional integration. These FEMIP activities are financed from the European Community budget (EUR 200 million over the period 2001-2006) and the FEMIP Trust Fund, which was established in December 2004 (EUR 33.5 million).

With an office in Rabat since June 2005 and investments of approximately EUR 2 billion in Morocco since 1995, FEMIP has been involved in financing capital projects that will have a major impact on the country's economic development.