Recurring droughts force Moroccan farmers to rely heavily on irrigation. In the southern part of the country, citrus farmers on the Guerdane perimeter have long depended on water from an underground aquifer. But years of intensive agricultural practices have seriously diminished groundwater supplies. The government worked with IFC to attract private investment in an irrigation network that could channel water to the perimeter from a distant dam complex. The resulting concession was the world’s first public-private partnership irrigation project.
The perimeter of Guerdane, in the Moroccan province of Taroudant, covers approximately 10,000 hectares and produces 50 percent of Morocco’s citrus crops. For years, private wells pumping into the Souss underground aquifer were the only source of irrigation water for about 600 citrus farmers, but due to overexploitation, the level of groundwater was decreasing by an average 2.5 meters a year. Many farms were abandoned as private wells dried up or pumping costs became unaffordable. The threat to Morocco’s high value citrus industry was undeniable.
To alleviate the lack of water in the perimeter, the 1995 Watershed Management Plan of Souss-Massa allocated an average yearly volume of 45 million cubic meters of water originating from the Mohamed Mokhtar Soussi-Aoulouz dams, about 40 miles away. The government sought a private partner to construct a 300 kilometer water irrigation network to transport the water and a distribution system to deliver it to farmers based on the size of their citrus groves. The surface water allocated for the project met half of the water needs of the citrus farms in the perimeter.
The Moroccan government entered a 30-year concession with Omnium Nord-Africain to build, co-finance, and manage an irrigation network to channel water from the dam complex and distribute it to farmers in Guerdane. The total project cost was estimated at $85 million, with the government providing $50 million, half as a grant and half as a subsidized loan. The private partner provided the balance.
The concessionaire has exclusivity to channel and distribute irrigation water in the perimeter. Operational, commercial, and financial risks related to the project were allocated to the various stakeholders. The construction and collection risks were transferred to the concessionaire, and the government was responsible for ensuring water security. The demand/payment risk was mitigated by a subscription campaign; farmers paid an initial fee covering the average cost of on-farm connection. The concessionaire’s construction obligation did not begin until subscriptions were received for 80 percent of the water available. The risk related to water shortage was allocated to the concessionaire, the farmers, and the government.
The unique selection criteria was the lowest water tariff, which supported the government’s goal of making surface water accessible to the largest number of farmers possible. The public subsidy was designed to maintain water tariffs equivalent to current pumping costs. The winning bidder provided a tariff significantly lower than the price that farmers in Guerdane had typically paid for groundwater supplies.
- Safeguarded a citrus industry that provides direct and indirect jobs for an estimated 100,000 people.
- Made surface water available to farmers at an affordable price.
- Mitigated the risk of depleting under-ground water resources.