Morocco



Situation Before Reform



The Moroccan railway network was built in the 1920s and operated by three private foreign-owned concession companies. In 1963, the Government of Morocco created the Office National des Chemins de Fer (ONCF), a public corporation (Etablissement public industriel et commercial or EPIC) under the Minister of Transport, which took over management of the existing network and railway services operation. The ONCF is administered by a Board of Directors, chaired by the Minister, comprises eight representatives from various ministries, and has a General Manager appointed by Dahir (Royal Decree). During ONCF’s first 25 year, ONCF, headed by the same General Manager, extended the network to better serve the phosphate mining industry, modernized infrastructure (high-volume traffic routes were electrified), and introduced high-quality passenger services on selected routes. As a result, traffic increased significantly: during 1963-78, phosphate traffic rose by 10 million tons and during 1980-88, passenger traffic more than doubled.


Economic Model Running Out of Steam

In the mid-1980s, the 1,900 km railway network was considered adequate; it served most of Morocco’s major towns, ports, industrial and mining areas. The ONCF was active in three transport market segments: (a) the monopoly on phosphate rock transport from mines to ports; (b) general freight transport where stiff competition existed with the trucking industry; and (c) intercity passenger transport with significant market share on the few routes it served. Traffic density was high at 3.4 million traffic units per route-km. Most infrastructure was in good condition but close to capacity on some routes. Some rolling stock and locomotive power was nearing the end of its useful life but availability was satisfactory; 80 percent of rolling stock was more than 20 years old. Locomotive, freight wagon, and passenger coach productivity in ONCF was equal to or better than Western European railways, especially staff productivity (in 1988, ~570,000 traffic units per employee). In ONCF, managers and staff were technically competent and the working atmosphere was generally good.

Despite these favorable aspects, by the end of the 1980s, the railway economic model was declining in relevance. Beginning in 1980, ONCF’s financial situation was seriously deteriorating and by 1986, the deficit had reached 30 percent of traffic revenues. Balancing ONCF’s books depended increasingly on substantial funding transfers from Government, which was having its own fiscal problems. The transfers were not only unsustainable but also not fully transparent. Moreover, competition was increasing from the deregulated road sector and ONCF competitiveness was seriously hampered by a ‘technically oriented’ internal organization and by cumbersome bureaucratic management procedures. Government had to approve tariffs, a State financial controller had prior review of expenses, and public procurement procedures were mandatory. In 1988, ONCF suffered a serious financial crisis that threatened its technical performance.

In 1994, as the financial crisis deepened, Government appointed a new ONCF general manager who enjoyed full Government support at the highest level. The formerly private-sector manager was granted a general mandate to ‘fix’ the railway. He assembled a new management team, promoted well-trained younger managers who were ready and willing to participate in railway sector turnaround, and established salary levels comparable to the private sector.

    
 
 
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