Provision of a sovereign loan of up to EUR 150 million in favour of the Kingdom of Morocco (the "Country") to co-finance: (i) the construction of key components of the Saiss water transfer network comprised of the main distribution pipeline as well as the primary and secondary distribution networks (the "Saiss II" component); and (ii) the rehabilitation and modernisation of the water distribution network and full conversion to drip-fed watering system in the Garet perimeter (the "Garet" component), (altogether, the "Project").
The Saiss II component is part of a staged programme to preserve the Saiss aquifer and promote sustainable water management within the Saiss plain. As part of this programme, the Bank has approved a sovereign loan of up to EUR 120 million and mobilized grant financing of EUR 30 million from the Green Climate Fund (the "GCF") to finance the construction of a 135 km (a 45 km section of the main transfer pipeline with a total length of 62 km outside the Saiss plain and a 90 km main distribution pipeline within the Saiss plain) water transfer pipeline from the M'Dez dam to the boundary of the Saiss perimeter (Saiss water conservation project or the "Saiss I").
The key objectives of the Project are (i) to enable the switch from unsustainable groundwater abstraction from the Sebou/Saiss basin to the use of more sustainable and climate resilient surface water resources from the M'Dez dam, which will contribute to the restoration of the Saiss aquifer and to the climate resilience of the Saiss plain and (ii) to rehabilitate and modernize the water distribution network in the Garet plain to facilitate a full shift to a more sustainable and efficient drip system to mitigate the adverse impacts of the current and future water scarcity.
The Project will be supported by a comprehensive TC package to facilitate effective implementation and monitoring of the Project and to provide capacity building for local beneficiaries, including targeted activities to encourage women beneficiaries' economic participation.
The transition impact of the Project is expected to focus on economic and gender inclusion as well as water savings to facilitate climate resilience of the Country:
- Water savings and climate resilience: The Project aims to contribute to climate resilience in the Saiss and Garet project perimeters through enabling a switch to a more efficient, sustainable, and environmentally friendly water infrastructure in the face of an increased water stress due to climate change.
- Economic inclusion: The Project is expected to strengthen economic opportunities and social inclusion of small farmers, who are most vulnerable and least resilient to acute water shortages, especially in the Orientale region where the Garet plain is located. The increased opportunities offered by the improved water management and upgraded system, together with improved agricultural practices, are expected to positively contribute to job creation and create economic opportunities in the Project region.
- Gender inclusion: The Project features a strong gender dimension with the aim to promote economic inclusion of women in commercial agriculture in both regions of the Project. The aim of a gender-sensitive approach is to raise awareness on women's role, needs, expectations and integration and, consequently, to increase access of women to economic opportunities as a result of this Project.
The Borrower is the Kingdom of Morocco represented by the Ministry of Finance and Economics (the "MEF"). The Project will be implemented by the Irrigation and Management of Agricultural Land Directorate (Direction de l'Irrigation et des Amenagement de l'Espace Agricole or the "DIAEA") of the Ministry of Agriculture and Maritime Fisheries, Rural Development, Water and Forest (the "MAPMDREF") through the Saiss Operational Project Directorate (the "OPD"), acting as the Project Implementation Unit (the "PIU") for Saiss and two Regional Offices of Agricultural Development (Office Regional de Mise en Valeur Agricole or "ORMVA"s).
EBRD Finance Summary
A sovereign loan of up to EUR 150 million.
Total Project Cost
EUR 352 million (excluding VAT).
Environmental and Social Summary
The Project has been categorised B in accordance with the Bank's 2014 Environmental and Social Policy. It consists of two separate components aimed at improving water efficiency and resilience in two agricultural areas in Morocco. In the Saiss Plain, the second EBRD investment toward the completion of a large surface water transfer and distribution network will convey around 100 million m3 of water per year for irrigation purposes from the M'Dez dam to the agricultural plain through a 150 kilometres long underground transfer pipeline (the initial Saiss Water Conservation Project, or Saiss I, connected to a primary distribution pipeline and secondary distribution network, key components of which are to be financed under the Saiss II Project). The volume to be transferred corresponds to the annual average water deficit of the Saiss Plain aquifer, the groundwater of which is mainly used for irrigation. In Garet, the rehabilitation and modernisation of an existing water network transferring surface water from the Mohammed V dam will result in a more efficient distribution system and result in the full conversion a to drip system, leading to significant water savings.
The due diligence for Saiss I was carried out by ESD and an independent consultant in 2016 and covered the components to be financed under Saiss II as associated facilities. A review of the E&S risks associated with the M'Dez dam was also undertaken initially, although the dam does not constitute an associated facility. Construction activities for Saiss I had not yet started at the time of the due diligence for Saiss II.
The appraisal for Saiss II consisted of a review of the existing due diligence and the progress made to date in the implementation of the Environmental and Social Action Plan (the "ESAP") agreed for Saiss I. In addition, meetings were held with the MAPMDREF, implementing agencies and other relevant institutions. The updated due diligence confirmed that the impacts and associated mitigation measures identified under Saiss I remain pertinent and are by-and-large applicable to Saiss II. The Project will not result in any physical resettlement nor will it impact on any sensitive areas. Adverse impacts are primarily linked to construction and can be readily managed by extending the mitigation measures agreed under Saiss I. The Project is not subject to an Environmental Impact Assessment under Moroccan legislation.
Saiss II is entirely located within the Saiss plain, which is dominated by agricultural activities. There is one legally protected and internationally recognized area in the North of the Saiss plain: Dwiyate Important Bird Area. A risk assessment and appropriate preventive measures are to be carried out by the MAPMDREF as per agreement under Saiss I. Delays in the development of a formal Land Acquisition and Compensation Plan as per the original ESAP have been addressed by appointing an expert to work with the client and prioritise this important management tool. The due diligence found that principles of avoidance of physical resettlement, consultation with the affected parties, as well as minimisation of economic displacement were well understood and implemented, though some gaps with EBRD requirements persist and need to be addressed as a matter of priority. Environmental impacts of Saiss, once operational, will be mainly linked to the reduced flow downstream of the M'Dez dam. The Law 36-15 on water requires the application of a minimum flow to preserve aquatic ecosystems, and support is being provided by EBRD through Technical Cooperation ("TC") support to determine the minimum flow in the context of the Project.
The due diligence for Garet included a review of the environmental and social assessment report carried out by the MAPMDREF as part of the feasibility study, a visit to the site, including a meeting with affected farmers, as well as discussions with the MAPMDREF and implementing agencies. The adverse impacts associated with this rehabilitation and modernisation project are limited, readily managed, and largely confined to the construction stage. Limited land acquisition associated with two water storage and settlement basins and the potential construction of a new water transfer station will be managed in line with Performance Requirement ("PR") 5. While largely beneficial, the conversion to a drip system will not be voluntary as the new system will be designed to only support localised irrigation technology. The costs of equipping all holdings for a drip system will be borne by the Project and meetings with a small number of farmers, as well as past consultation records, indicated broad community support for the Project.
Overall, the positive socio-economic impacts during the operation period of both the Saiss and Garet developments are expected to be significant, by improving access to irrigation water, more efficient usage, and increased crop yields and value. An important dimension of maximising these positive benefits will be the pricing of the water distribution service. It is a key priority for the MAPMDREF to ensure access to irrigation water is equitable and work is ongoing to determine the most suitable and inclusive pricing structure. The Project aims to further women's economic inclusion in both Saiss and Garet plains by supporting women farmers' access to information, capacity building and economic opportunities.
Based on the environmental and social actions already agreed under Saiss I, separate ESAPs will be developed for Saiss II and Garet and agreed with the MAPMDREF. Existing and new TC support will be adapted or developed to support the project implementation. The Project will be structured to meet EBRD's Performance Requirements ("PR"s) and this PSD will be updated when the two ESAPs have been agreed with the Client. The key actions to be considered for the ESAPs will include requirements to (i) finalise project designs and associated land acquisition requirements with input of a social expert, (ii) ensure construction activities are managed in line with EBRD requirements, (iii) ensure operation of the distribution networks under integrated E&S Management System certified to or in line with ISO9001, ISO14001 and OHSAS18001 standards, (iii) implement the agreed Land Acquisition and Compensation Plan, and (iv) implement Stakeholder Engagement Plans for both Project locations. The Bank's TC will also support a Public Participation Programme at the Saiss plain level and the design of a hydrogeological model and Geographic Information System of the Saiss aquifer.
An independent consultant will be retained to monitor the implementation of the Saiss and Garet components of the Project.
The Project will benefit from the following TC of up to EUR 2.0 million:
- Project Implementation Support for Garet component, including Environmental and Social Support: EUR 1,050,000 expected to be provided by an international and/or multilateral donor to assist with review of the technical requirements of the Project, including procurement process, compliance to loan requirements, and to support the development and improvement of Environmental, Health & Safety and Social performance in order to meet the requirements of the ESAP.
- Stakeholder Engagement and Participation Plan: EUR 950,000 expected to be provided by an international and/or multilateral donor to provide capacity building for local beneficiaries and deliver stakeholder participation activities in order to encourage the adoption of more efficient and sustainable agricultural practices as well as targeted activities aimed at supporting women beneficiaries' economic participation.
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