The Facility for Euro-Mediterranean Investment and Partnership (FEMIP) is set to open an office in Rabat, so consolidating its relations with the Kingdom of Morocco. The new office will help to forge links with the country's private sector - a key prerequisite for Morocco's development.

Mr Philippe de Fontaine Vive and Mr F. Oualalou, Minister of Finance, have signed the headquarters agreement paving the way for the opening of a FEMIP representative office in Morocco in 2005.

The opening of this office and the decision to hold the next meeting of FEMIP's Ministerial Committee in Morocco in June 2005 are a reflection of the increased volume of FEMIP financing in the country. The volume of loans to be signed in 2004 runs to EUR 241 million, up by 31% compared to 2003. Of this amount, loans totalling EUR 191 million were signed today for social housing, development of priority electricity infrastructure and environmental protection.

The finance contracts for these loans were signed today in Rabat by Mr de Fontaine Vive, EIB Vice-President in charge of FEMIP, Mr Nakkouch, Managing Director of Office National de l'Electricité (ONE) and Mr Filali, Managing Director of Al Omrane, an organisation responsible for social housing. The ceremony took place in the presence of the Supervisory Ministers (Mr Hjira, Minister attached to the Prime Minister with responsibility for Housing and Urban Planning and Mr Boutaleb, Minister for Energy and Mines) as well as the Finance Minister, Mr Oualalou, who also signed the guarantee agreements.

In the words of Mr de Fontaine Vive, "The Barcelona Process's undertaking to establish a free trade area between the southern and northern shores of the Mediterranean by 2010 calls for not only substantial financial support but also firm political will on both sides of the Mediterranean. The aim is to encourage the wide-ranging reforms necessary to improve the investment climate and foster the emergence of a prosperous private sector in an efficient market economy. To this end, FEMIP will provide support that is both quantitative (lending some EUR 2 billion a year) and qualitative (introducing new financing instruments and techniques, stepping up the dialogue with the Partner Countries through its Ministerial and Experts Committees and opening offices in the region). Our presence in Morocco - now and in the future - embodies this commitment. The Rabat office's role will be to ensure closer coordination with the public authorities and project promoters and to formulate FEMIP operations with the local private sector. In the same spirit of physically building the Euro-Mediterranean area, at the second meeting of its Committee of Experts in Amsterdam last week FEMIP called for the integration of the Mediterranean region through extension of the European transport networks (TENs). Its proposals will be presented to the next meeting of the FEMIP Ministerial Committee, which will take place here in Morocco in June 2005".

The loans signed today relate to the following projects:

EUR 71 million has been granted to Holding d'Aménagement Al Omrane (Al Omrane), a development company specialising in urban areas earmarked for social housing construction.

This project represents a first for the European Investment Bank in the social housing sector outside the Union. It will help to improve the living conditions of Moroccan households by financing primary infrastructure in residential districts suffering from a lack of basic amenities and in new urban development areas. Through this loan to Al Omrane, FEMIP will help to eliminate shantytowns, upgrade slum areas and alleviate the social housing shortage in Morocco.

The project comes under the "Cities without Slums" programme, which aims to build 100 000 low-cost dwellings a year. FEMIP has developed a coordinated approach with (i) Agence française de Développement (AFD), which is currently preparing a complementary scheme, (ii) the World Bank, which is developing a project to support institutional reform in this sector, and (iii) the European Commission, which will include the eradication of shantytowns among its priorities for 2005 and 2006. Through this project, FEMIP will contribute to the achievement of one of the United Nations' millennium development goals: to ensure environmental sustainability by significantly improving the lives of at least 100 million slum dwellers by 2020.

An initial list of operations to be financed by FEMIP has been drawn up, covering the following locations: the Bouznika-Rabat-Kénitra urban district (Essalam in Bouznika, Nour Zaërs near Témara, Bouknadel near Salé and Le Vallon in Kénitra); the Greater Agadir urban district (Adrar and Taddart); Tangiers conurbation (Ibn Batouta and Sania Prevention); eastern cities (Taourirt, Berkane and Oujda); and the City of Meknès.

EUR 80 million has been provided to Office National de l'Electricité (ONE) to construct a wind farm with a generating capacity of 140 MW to be located in the north of the country between Tangiers and Tétouan. The project will contribute to developing the potential of Morocco's renewable energy resources and produce electricity for supply to the public grid, thus helping to meet rising power demand. With the development of priority electricity infrastructure and environmental protection among FEMIP's goals, this operation is in synergy with the cooperation policy of other lenders such as KfW Entwicklungsbank, which is co-financing the project.

Construction of the wind farm will begin in 2005, with completion of the works and a fully operational site scheduled for 2007 at the latest. The project will comply with the relevant national and Community environmental provisions.

Morocco's wind energy sector has started to experience growth thanks to its reliable wind resources. At present, only just over 1% of the country's total primary energy supply comes from renewable sources (Tétouan - Koudia al Baida wind farm, also FEMIP-financed in 1996 and up-and-running since 2001). However, this share is set to increase to 10% over the coming years owing to the development of a substantial number of large wind farms such as the one in Tangiers.

EUR 40 million has also been advanced to ONE for investment to improve the technical performance and extend the service life of the Mohammédia power plant 25 km north of Casablanca, which has a total installed capacity of 600 MW. This project will have a positive environmental impact by significantly reducing solid waste production and flue gas emissions. It will thus help to improve the environment in the Casablanca region, the country's largest urban and economic centre. Accordingly, the loan will carry an interest subsidy from the EU budget.

Loans in the Mediterranean Partner Countries (MPCs) are granted under the Facility for Euro-Mediterranean Investment and Partnership (FEMIP). FEMIP focuses primarily on developing the private sector and financing social and economic infrastructure underpinning private sector development.

This is the culmination of a partnership between the European Union and its Mediterranean neighbours that goes back more than thirty years and was intensified in the 1990s in support of the Barcelona Process launched at the Barcelona Conference in November 1995. FEMIP aims to help the MPCs meet the challenges of economic and social modernisation and enhanced regional integration within the Wider Europe-Neighbourhood framework and with a view to the establishment of a Euro-Mediterranean free-trade area. It has enabled Europe to step up its cooperation with the Partner Countries. Thanks to this Facility, which is endowed with increased financial resources, EIB lending in the region has risen from EUR 1.5 billion to EUR 2 billion annually. FEMIP gives priority to financing private sector ventures, with the dual aim of liberalising the economies of the MPCs and developing their potential in the run-up to the planned creation of an EU/MPC customs union in 2010. It focuses on foreign direct investment and local private sector initiatives as well as social-sector projects, particularly in the fields of health, education and environmental protection, which are fundamental to achieving social stability and encouraging productive investment.

FEMIP has advanced some EUR 2 billion for large-scale economic infrastructure and private sector projects contributing to the development of the Moroccan economy. Examples of projects financed include the first EU-Morocco power grid interconnection via the Strait of Gibraltar, high-voltage electricity transmission facilities and power supplies to rural areas, upgrading of inter-regional and international telephone networks, and large-scale water management schemes (sanitation in a number of towns, irrigation of farmland in the Doukkala Plain, etc.) as well as the development of the country's ports. FEMIP has also helped to finance SMEs in the productive and cooperative sectors through global loans intended particularly for facilitating joint ventures between Moroccan and European operators.