The Offer is intended to cover the entire value chain of the green hydrogen sector. It was developed by the Government of Morocco to address the needs of developers and investors in order to position the Kingdom of Morocco as a competitive player in this "nascent high-potential green hydrogen sector" by maximizing the benefits for the Kingdom of Morocco and providing the investors and developers with a "holistic, transparent and pragmatic approach" for developing and investing in their green hydrogen projects in the Kingdom of Morocco. Many hydrogen players and observers hope this may finally kick-start long-awaited projects and initiatives.
We set out here our key takeaways from the Offer.
Scope of the Offer
The Offer is aimed at investors and developers wishing to produce in the Kingdom of Morocco, on an industrial scale, green hydrogen and its derivatives for export and/or domestic use. The Offer applies to integrated green hydrogen projects (from generation of renewable electricity and production of hydrogen through electrolysis to the transformation of green hydrogen into green ammonia, e?methanol, synthetic fuels, etc.).
The Offer goes specifies that those investors and developers who position themselves only in one or some segments in the upstream chain of the green hydrogen sector and possibly in the downstream chain, or only in the downstream chain, remain eligible for the general national programmes set up by the Kingdom of Morocco to attract investments to Morocco, including the new investment charter established by law No. 03-22 dated 9 December 2022. However, investment applications would be processed by the Regional Investment Centres (Centre Régional d'Investissement) or the Moroccan Agency for the Development of Investments and Exports (Agence Marocaine de Développement des Investissements et des Exportations (AMDIE)) rather than the bodies established and identified by the Offer.
It remains to be determined whether, in practice, non-integrated green hydrogen projects and particularly infrastructure projects developed in the context of green hydrogen project(s) can still benefit from the process outlined in the Offer.
Allocation of land as part of the Offer
The Government of Morocco has identified significant public land (circa one million hectares located within the wind energy development zones and the solar energy development zones established by the ordinances enclosing the coordinates of the wind energy development zones and the solar energy development zones1) with high potential in terms of green hydrogen production to be allocated to developers for the development of green hydrogen projects as part of the Offer. The allocation of such land will be phased out in two phases. Phase one comprises 300,000 hectares to be divided into lots of 10,000 to 30,000 hectares. Investors and developers who express interest in a larger area will be allocated as part of phase one approximately 30,000 hectares and will be given visibility on the overall land that may be made available to them during phase two.
The Offer acknowledges the importance of providing investors and developers with certainty about the availability of the land for their projects and establishes a process for the identification of the land, its allocation, reservation and, ultimately, its lease to the relevant project company. Refer to section 4 below for additional information.
Green hydrogen sector shared infrastructure
The Offer acknowledges the importance of the availability of shared facilities required for the operation and maintenance of integrated green hydrogen projects. To that effect, the Offer envisages the development, construction, operation and maintenance of competitive shared infrastructure within the framework of public-private partnerships. Such infrastructure includes ports, transmission lines, pipelines (including the GME and the Nigeria-Morocco pipeline) and water desalination plants.
An indicative timeline for the development of some of the shared infrastructure is set out in ?Schedule 1.
A detailed timeline for development of the shared infrastructure and access conditions are yet to be defined by the Moroccan Government and the relevant stakeholders.
Investors selection process and contracting with the State
The Offer outlines, in high-level terms, a rather detailed process for the selection of the eligible investors/developers and lays down an outline of the agreements anticipated to be entered into between the selected investors and the Kingdom of Morocco.
The Offer outlines a staged approach for the development of integrated green hydrogen projects.
Investors wishing to develop integrated green hydrogen projects in Morocco within the framework of the Offer are invited to communicate their offers to Moroccan Agency for Sustainable Energy (MASEN). There is no prescribed form of offers to be submitted to MASEN. However, such offers must detail at a minimum the information used for the assessment criteria set out below. Investors who have initiated feasibility studies before the date of the Offer will be integrated by MASEN in the process outlined by the Offer. The evaluation of the offers submitted by the investors will be based on a set of criteria relating to, in particular, the creditworthiness of the investors, their track record and the anticipated impact of their projects on the Kingdom of Morocco, especially in terms of anticipated horizontal and vertical industrial integration.
Upon the selection of an investor or a group of investors, the investor is allocated a plot of land and a preliminary land reservation agreement would be entered into between the investor(s) and the Kingdom of Morocco (a Preliminary Land Reservation Agreement). Each Preliminary Land Reservation Agreement will be for a six-month term (extendable by mutual agreement between the parties) and is expected to cover the period necessary for the performance of by the investor(s) of the preliminary front-end engineering and design (Pre?FEED). The Offer sets the end of Q3 2024 as target date for the execution of Preliminary Land Reservation Agreements in relation to the plots of land corresponding to the phase one (300,000 hectares) referred to in paragraph ?2 above.
At the expiry of the term of a Preliminary Land Reservation Agreement, and provided the investor(s) have complied with their obligations thereunder, the investor(s) and the Kingdom of Morocco shall negotiate and enter into an advanced feasibility study agreement (a Detailed Feasibility Study Agreement). Each Detailed Feasibility Study Agreement is expected to define the objective to be achieved by each integrated hydrogen project before a final investment decision is achieved and a framework investment agreement is entered into (a Framework Investment Agreement) with the Kingdom of Morocco in relation to said project.
The Offer does not refer to standard form documentations to be used with the various investors and as such the terms and conditions of the agreements entered into in relation to each integrated green hydrogen project can be freely negotiated between the investors and the Kingdom of Morocco.
Refer to Schedule 2 for an outline of the anticipated investors selection and negotiation processes.
Investment incentives outlined by the Offer
The Offer does not establish a specific investment incentive scheme applicable to the integrated green hydrogen projects. Any such projects are nevertheless eligible to the investment incentives contemplated by law No. 03-22 dated 9 December 2022 relating to the investment charter. To benefit from those investment incentives, any investor shall enter into an investment agreement with the Moroccan State and would further attract certain incentives, including:
- custom duties exemptions (exemption from import duties); and
- tax exemptions (import VAT exemption for equipment, materials and tools and related parts, spare parts and accessories related to the project, VAT exemption for investments goods purchased locally).
This law sets out two non-cumulative investment schemes: the main investment incentive scheme; and the specific investment incentive scheme for strategic projects.
An investment may benefit from the main investment incentive scheme granting up to 30% of the investment amount if:
- the project creates more than 150 stable jobs; or
- the project investment is equal or superior to MAD50,000,000 and creates at least 50 stable jobs.
Several kinds of premia may be granted in relation to the main scheme, depending on certain criteria such as the creation of stable jobs or the existence of a gender ratio equal or superior to 30%.2
Especially, projects implemented in certain specific territories benefit from a territorial premium in order to enhance territorial equity. The targeted territories may allow the granting of a 10% premium for Category A or a 15% premium for Category B.3
Moreover, investments in some "promising sectors", including renewable energies, benefit from a 5% premium.
The maximum subsidy for projects dedicated to the production of renewable energy is MAD60,000,000,000.
An investment may benefit from the specific investment incentive scheme for strategic projects if:4
- the project investment is equal or superior to MAD2,000,0000,000; and
- the project meets one of the following criteria:
- contributes effectively to ensure the water, energy, food or health security of Morocco;
- has a significant impact on the number of direct or indirect jobs to be created;
- has a significant impact on Morocco's economic reach and strategic positioning on a regional, continental or international scale;
- has knock-on effects on the development of sectoral ecosystems or activities;
- contributes significantly to the development and ownership of leading-edge technologies.
A strategic project would benefit from specific and tailor?made support measures.
The investment agreement grants certain advantages to the investor but also compels the investor to comply with the commitments set out in the investment agreement (ie investment programme, time limit for implementation of the investment programme, job creation, use of local suppliers wherever possible, etc.). In that regard, please note that the State can challenge the investment agreement if the investor does not implement the required investment programme or fails to comply with its contractual and legal obligation under the investment agreement or with the provisions of the Moroccan tax code (Code Général des Impôts) applicable to the incentives granted under the investment agreement.
Governance of the Green Hydrogen Sector and Coordination of the Offer
The Offer acknowledges that the success of the Offer is intrinsically linked to the implementation of a simplified path for investors, in order to ensure a clear approach as well as visibility in the implementation of their projects.
As such, MASEN has been assigned the role of focal interlocutor and designated as the primary point of contact for the investors5. In addition, the Offer establishes a steering committee in charge of green hydrogen projects chaired by the Chief of Government (the H2 Steering Committee) and an investment committee in charge of green hydrogen projects (the H2 Investment Committee). The roles of each of MASEN, the H2 Steering Committee and the H2 Investment Committee are defined in the Offer.
Footnotes
1. In accordance with Moroccan law, renewable energy production projects must be carried .out within the pre-defined areas within the Moroccan territory for the development of wind and solar projects as fixed by decree.
2. Article 7 of Decree No. 2-23-1 dated 16 February 2023 relating to the implementation of the strategic investment projects.
3. The geographical zones which do not benefit from the territorial premium are Benslimane, Berrechid, Casablanca, El Jadida, Médiouna, Mohammédia, Nouaceur, Settat, Marrakech, Kénitra, Rabat, Skhirate-Témara, Agadir Ida-Outanane, Fahs-Anjra and Tanger-Assilah.
4. Article 15 of Decree No. 2-23-1 dated 16 February 2023 relating to the implementation of the strategic investment projects.
5. In particular, MASEN is tasked, inter alia, with the preliminary selection of the proposed investments in the green hydrogen sector and their submission to the H2 Investment Committee.
