MOROCCANS MORE FORWARD-LEANING ON NUCLEAR ENERGY

UNCLAS RABAT 001109 SENSITIVE SIPDIS STATE FOR ISN/NESS, NEA/MAG AND EEB USDOC FOR 3131/USFCS/OIO/RD/CREED/GLITTMAN, HOLLY VINEYARD/MAC/ITA/USDOC, MICHELLE ONEILL/OUS/ITA/USDOC USDOC PLEASE PASS TO USTDA DOE FOR NNSA E.O. 12958: N/A TAGS: ENRG TRGY ETRD TNGD KNNP MO SUBJECT: MOROCCANS MORE FORWARD-LEANING ON NUCLEAR ENERGY THAN EXPECTED REF: A. RABAT 0693 ¶B. RABAT 1058 ¶1. (SBU) Summary: Moroccan government, research, and industry leaders told Special Envoy for Nuclear Nonproliferation Jackie Wolcott that the Kingdom is preparing the necessary infrastructure and legal and regulatory framework for nuclear power. According to the Minister of Energy, the decision that Morocco will eventually require nuclear energy has essentially been made, although the government is not yet ready to announce this "loudly." Morocco's nuclear research center is trying to identify the steps needed to prepare the knowledge and skills base that will be required to support nuclear power production, but the National Electricity Office (ONE) seems ready to plunge ahead on a contract basis, leaving technical details to be managed by private enterprise. The need for technical, regulatory, and planning assistance that will accompany progress toward nuclear power will create opportunities for bilateral civil nuclear cooperation to help steer Morocco towards a safe, secure, and non-proliferating path, as well as openings for U.S. companies with nuclear expertise to supply goods and services. End Summary. -------------- GOM's Decision Made, U.S. Cooperation Welcome -------------- ¶2. (SBU) Secretary General of the Ministry of Foreign Affairs and Cooperation (MFA) Youssef Amrani welcomed Ambassadors Wolcott and Riley to his first official meeting in his new position. Amrani noted that while the French had been pushing Morocco hard to accept (French) civil nuclear power programs, up to now Morocco has not committed to anything with France. Technical details of collaboration on nuclear technology and energy would be outside of the MFAC's purview, Amrani observed, but in general the MFA welcomes all areas of cooperation with the U.S. "Politically, our cooperation with you is essential," he stated, and "you will always find in Morocco a partner you can trust." Amrani also plugged Morocco's support of global nonproliferation efforts, including the Global Initiative to Combat Nuclear Terrorism. ¶3. (SBU) Minister of Energy, Mines, Water and the Environment Amina Benkhadra told the Ambassadors that Morocco began considering a nuclear energy industry as early as the 1960's, and envisions power generation "in the 2020 timeframe," assuming "all the conditions are right." In fact, she clarified, nuclear energy is a "long-term priority" in Morocco's new energy plan (Ref A),especially given that 96 percent of its energy needs are currently imported. The GOM has "decided that nuclear power is necessary for the long term," she added, and as soon as certain "aspects are clarified" it can "announce this more loudly." To lay the groundwork for nuclear power, the Ministry's current focus is on preparing a legal and regulatory framework, developing human resources, and selecting the most suitable technology. ¶4. (SBU) The Ministry has submitted draft nuclear legislation to the Secretary General of the Government for parliamentary action, Benkhadra said. The legislation would establish a regulatory framework, including a new regulatory body, so as to conform to "international obligations and standards." It was developed with the input and approval of the International Atomic Energy Agency (IAEA),and the GOM hopes to bring it into force in 2009. Ambassador Wolcott and her delegation applauded Morocco's progress to date and encouraged continued cooperation with the IAEA (in particular, through the Agency's "Milestones" process, to which the U.S. has been a major contributor). In addition to indirect cooperation through the IAEA, Wolcott and her delegation noted that the U.S. can offer complementary bilateral programs, such as support for setting up regulatory bodies, workshops on management and technical requirements for a nuclear energy infrastructure, funding for training programs, and university partnerships. In particular, officials of the Department of Energy's National Nuclear Security Administration (NNSA) reported that a proposal for "Technical Assistance in Development of National Regulations for Nuclear Power" had been approved by the U.S. and was now awaiting approval by the Ministry of Energy and the Moroccan National Center of Energy Sciences and Nuclear Techniques (CNESTEN). ¶5. (SBU) Minister Benkhadra praised the existing Department of Energy/NNSA collaboration with CNESTEN, and expressed her hope that this could be "reinforced" in the coming years. In particular, as soon as a political commitment to nuclear power is made, Morocco will enter a "new era" where focus will be placed on practical steps, in particular training and the development of a nuclear regulator. She noted that the Ministry of Energy, Mines, Water and the Environment (MEMEE) is the focal point for nuclear power, with technical support coming from CNESTEN and the National Electricity Office (ONE). To this end, she reiterated her support for an International Training Center (ITC) to be hosted by CNESTEN with U.S. support, and inquired into recent advances. NNSA officials reported that U.S. funds had now been allocated to purchase equipment for this facility, and that it was hoped the GOM would be able to provide funds to build the facility. Minister Benkhadra commented that this multi-purpose training center, which could be used for regional courses and also offer opportunities for "train the trainer" programs, would be a "good starting point" for the future. NNSA also noted that it was co-hosting a seminar with CENSTEN in March/April 2009, which would focus on human resources issues related to the development of nuclear power. ¶6. (SBU) Additionally, Minister Benkhadra observed, developing countries like Morocco have a great need for renewable energy technologies, and hope that advanced countries like the U.S. would assist them in fielding more renewable energy applications (Ref B). Nuclear is one long-term energy solution for Morocco, Benkhadra explained, but renewables are also important, and "easier than nuclear energy" to implement in the near term. "We'll need all these kinds of energies in the future," she concluded. -------------- CNESTEN Working to Lay Foundations -------------- ¶7. (SBU) CNESTEN Director General Khalid El Mediouri explained that CNESTEN's stated missions, to promote nuclear science and technology, to develop a technical base for a nuclear power program, and to provide technical support to higher level authorities, will each offer critical support for a political decision to pursue nuclear power. El Mediouri explained that Morocco's political establishment has approached the nuclear energy option by identifying two major decision points: a choice to invest in the infrastructure required to prepare for nuclear power (made decades ago),and a choice to proceed with power generation (yet to be finalized). The commitments Morocco has already made stemming from that first decision are "not trivial," Mediouri argued, highlighting the USD 100 million investment in CNESTEN's Maamora research center and research reactor. (Note: The latter, a 2 MW TRIGA Mark II reactor from General Atomics that was supported in part by export credits from the Ex-Im Bank, was commissioned earlier this year and now awaits a final license to authorize regular operation. This license is expected within weeks. End Note). Despite the high cost, the GOM's political commitment would similarly ensure the funding to pay for the regulatory, training, and oversight functions that would be required to support the deployment of nuclear power. ¶8. (SBU) In potential anticipation of a positive decision, CNESTEN has recently been moved from the Ministry of Higher Education back to the Ministry of Energy (under which it was originally established in 1986). The Ministry of Energy has also recently established a multi-agency commission to coordinate nuclear-power-related decision making (similar to the Nuclear Energy Program Implementation Office, or NEPIO, recommended by the IAEA "Milestones" document.) ¶9. (SBU) El Mediouri noted that Morocco's most significant requirement to prepare for a nuclear power industry will be the development of human resources. It will take time and money to train enough people to fill the operational, regulatory, and technical positions needed, and a real challenge will be creating opportunities for personnel to gain experience, for example at power plants overseas, without Morocco losing their skills and its investment in their training to permanent emigration. The future ITC is a high priority for CNESTEN, El Mediouri asserted, as it will provide a venue and impetus for greatly expanding Morocco's domestic training programs in addition to international outreach. ¶10. (SBU) NNSA already supports many areas of engagement with CNESTEN, dating back over 20 years. In addition to the ITC project, DOE is helping CNESTEN to host a workshop on human resource development in March/April 2009 which will include participants from North Africa and Jordan, the United States, and the IAEA. A series of Action Sheets provide pathways for NNSA assistance to CNESTEN in areas such as regulatory body development, materials accountability, radiation protection/health physics, reactor operations, radioactive waste management, implementation of international obligations, and other related fields. DOE and DOS (through their financial support of the IAEA) also promote joint research and Moroccan participation in scientific and technical conferences in nuclear technology. CNESTEN greatly values the continuing cooperation with the USG, El Mediouri assured Ambassador Wolcott, and hopes to continue to benefit from this cooperation. -------------- -------------- ONE Proceeding with Plans for Commercial Generation -------------- -------------- ¶11. (SBU) Amid management turmoil at Morocco's National Office of Electricity (ONE's Managing Director was dismissed and a replacement named one day before Ambassador Wolcott's visit) (septel),Ambassador Wolcott's delegation met with ONE's Directors of Finances (Mohammadi Allach),Strategy and Planning (Mohamed Fadili),and Electro-nuclear Projects (Taheri). The ONE management team outlined ONE's history of studying nuclear technology, including hiring international consultants to conduct assessments and feasibility studies in the early 1980's. At that time, with the assistance of the French firm SOFRATOME and the IAEA, the managers explained, ONE identified and qualified a site (Sidi Boulbra) halfway between the coastal cities of Essaouira and Safi, that met IAEA standards (such as ease of access, population density, and availability of cooling water). This early feasibility study also looked at demographic, geological, hydrological, meteorological, seismic, radiation protection, and other factors, the managers reported. Though technically feasible, however, the study indicated that electricity generated from a nuclear plant would not have been cost competitive at the time. As a result, the project was shelved. ¶12. (SBU) In 2003 - 2005, ONE again conducted a feasibility study (this time handled internally, but again in consultation with the IAEA) that indicated the technical and economic feasibility of introducing two nuclear power generation units of 700 to 1000 megawatts electric (MWe) each in 2017 - 2018, using the site identified in the earlier study. At the time of introduction, a 1000 MWe plant would constitute about 12 percent of Morocco's projected total installed capacity (assuming average growth of 8 percent), predicted Planning Director Fadili. ¶13. (SBU) Nuclear project manager Taheri told Ambassador Wolcott's delegation that ONE began a "pre-selection" process in 2006 by inviting non-binding offers from interested reactor vendors and operators on a proposal to construct, operate, and maintain two production units. ONE would consider any of the major commercialized technologies now in use, he noted, including pressurized light water reactors (PWR),boiling water reactors (BWR),or heavy water reactors (such as the Canadian CANDU). ONE declined to identify the firms that responded, but stated that following that initial sounding, ONE is now finalizing draft contracts that will form the basis for a formal request for proposals. These draft contracts, which have been prepared with assistance from a technical consultant (Sargent & Lundy),a legal consultant (Simon and Simon),and the IAEA. ONE anticipates hiring an Engineering, Procurement, and Construction (EPC) firm which would be tasked with assembling a consortium to oversee all aspects of plant deployment (finance, construction, operation, maintenance, fresh fuel provision, and spent fuel management). ¶14. (SBU) ONE would likely be a minority partner in the consortium, but would be a guaranteed and unique off-taker of the produced electricity, which would then be sold to one of its many distributors, Taheli outlined. In fact, the management team reiterated, ONE intends all of its future generation facilities of any technology to fit this model, where Independent Power Producers (IPPs) would sign Power Purchase Agreements (PPA) with ONE, and financing would be provided by a private entity via a Special Purpose Vehicle (SPV). Morocco will need to add 600 to 700 MWe of generating capacity each year on average, and a nuclear plant will be considered just as any other option. ONE's sole concern, Director of Planning Fadili emphasized, is to purchase electricity at the lowest cost possible. ¶15. (SBU) Ambassador Wolcott's delegation raised concerns about potential lack of clear roles for licensing and regulatory oversight. Fadili noted that as a partner in the consortium, ONE would be responsible for full compliance with the government's regulations. The GOM's role would include regulatory oversight, as well as guarantees that ONE would continue to purchase the power as contracted. The contract package will include a "letter of support" from the GOM, Allach explained, which would include not only the purchase guarantee but assurances to the investor of support for the project in the legal and regulatory fields as well. Regulatory oversight will come from the proposed regulatory body to be created under the draft nuclear legislation, Taheri noted, drawing elements from the Ministries of Energy and Health, and two extant government committees provide guidance on national policy for nuclear energy. The first is a National Council for Nuclear Energy created in the 1980's under the Prime Minister, including the Ministers of Energy, Health, Industry, Agriculture, and Environment, and the second is an ad hoc "Review Committee" recently set up by Minister of Energy Benkhadra and including ONE, CNESTEN, national phosphate mining company Office Cherifien des Phosphates (OCP),and the Ministries of Health and Energy. The conclusion of this latter committee on the utility of nuclear power is due in 3 to 4 months, ONE stated. -------------- Moving Ahead, but Varying Degrees of Clarity -------------- ¶16. (SBU) Comment: Moroccan officials seemed much more forward-leaning on nuclear power during this visit than in previous interactions, from Minister Benkhadra's hinting that the decision has already been made, to ONE's apparent readiness to issue a tender for nuclear plant construction. It was striking that while CNESTEN is most concerned with developing a local infrastructure and human knowledge base to support a nuclear industry, ONE appears to be willing to leave all such concerns to private industry (with regulatory oversight from the government). ONE seems determined to treat nuclear power as just another option for electricity supplies, emphasizing several times that as long as the projected kilowatt-hour cost is less than competing options, ONE has no hesitation pursuing a nuclear power plant. Given the advanced state of ONE's preparations to act on an expected forthcoming official decision to proceed with nuclear power, the delegation recommends that USTDA consider sponsoring an Orientation Visit to the U.S. of Moroccan government and corporate officials to meet with U.S. companies and potential suppliers or service providers in the nuclear energy arena. End Comment. ¶17. (U) Ambassador Wolcott's delegation included: -- Ambassador Jackie Wolcott, Special Envoy for Nuclear Nonproliferation, Department of State -- Alex Burkart, Deputy Director, ISN/NESS, Department of State -- Marc Humphrey, Special Assistant to the Special Envoy for Nuclear Nonproliferation, Department of State -- Michael Mayfield, Nuclear Regulatory Commission -- Matthew Van Sickle, DOE/National Nuclear Security Administration -- Moussaddak Bissani, Lawrence Livermore National Laboratory ¶18. (U) Ambassador Wolcott's party has cleared this cable. ***************************************** Visit Embassy Rabat's Classified Website; http://www.state.sgov.gov/p/nea/rabat ***************************************** Riley