EBRD provides €300 million first sustainability-linked loan to ONEE in Morocco

• EBRD and ONEE sign €300 million loan agreement to support ONEE’s financial resilience
• Loan structured as a sustainability-linked loan – the first in the region’s energy sector – with ambitious climate-related targets
• Project will also support ONEE’s digitalisation journey

The European Bank for Reconstruction and Development (EBRD) and Morocco’s Office National de l’Electricité et de l’Eau potable (ONEE) have signed a €300 million loan agreement.

ONEE is involved in generation, transmission and renewables. Morocco is strongly committed to the energy transition in order to achieve its objective of having 52 per cent of its installed capacity from renewables by 2030. In this context, ONEE and the country as a whole are taking important steps towards decarbonisation, while maintaining the security and affordability of energy.

The loan is structured as a sustainability-linked loan (SLL) – the first one in the MENA and Africa region’s energy sector. It provides an example of how energy utilities can link financing with support for the transition to a low-carbon economy. The proceeds will be used to improve the company’s financial resilience, helping to alleviate the impact of the energy crisis.

The SLL builds on ONEE’s increasing climate ambitions via two key performance indicators – namely, reducing the carbon intensity of electricity generated in Morocco and increasing renewable sources’ share of the country’s total electricity production. The company’s Sustainable Performance Targets (SPTs) are in compliance with Morocco’s updated Nationally Determined Contribution (NDC) commitments, and a leading independent second-party opinion provider has confirmed the SLL’s alignment with the internationally recognised Sustainability-Linked Loan Principles, rating the overall project as “ambitious”. This verification process was supported by FSD Africa.

As part of the loan, ONEE has committed to undertake retirement of some Carbone intensive thermal capacities in the medium term, building on Morocco’s enhanced climate ambition of transitioning to a net-zero economy by 2050 as announced at COP28.

The EBRD will be supporting ONEE’s efforts to (i) prepare a decarbonisation strategy, (ii) improve its climate governance and expand the digitalisation of the company’s core activities by establishing a digital roadmap strategy and implementing digital use cases.

As part of this decarbonisation effort, ONEE is further strengthening its network and capacity planning to facilitate the renewables to be connected to the grid, as well as continuing to optimise electricity dispatch by taking into account the network’s carbon intensity.

Morocco is at the forefront of the climate action agenda, and the EBRD has been one of the leading financiers of green technologies in the country for more than a decade now, being particularly active in private-sector financing.”

Mark Bowman, the EBRD’s Vice President for Policy and Partnerships, said: “This landmark sustainability-linked loan – the first of its kind in the region’s energy sector – demonstrates that innovative finance can drive real impact. The EBRD’s support, in close coordination with the Moroccan Government, is helping ONEE to accelerate its decarbonisation and digitalisation journey while strengthening its financial resilience in response to the energy crisis. This reflects our commitment to sustainable growth and long-term impact.”

Tarik Hamane, the CEO of ONEE, commented: “Under the guidance of His Majesty Mohammed VI, Morocco is recognised as having one of the most ambitious strategies in the region for promoting renewable energy and pioneering green technologies. We are proud that ONEE is playing a major role in the integration of renewables into the energy mix with a view to increasing renewables’ share to 52 per cent by 2030. The EBRD has been a long-standing and trusted partner in supporting our decarbonisation and energy transition goals. This new partnership marks another important milestone in our joint efforts to build a more sustainable, resilient, and low-carbon power system.”

Morocco is a founding member of the EBRD and became a beneficiary of Bank resources in 2012. To date, the EBRD has invested more than €5.4 billion in the country through 119 projects.