In 2019, ONEE’s purchases from international markets amounted to $1.31 billion.
The decision is expected to strengthen the office’s resilience to changes in the global markets of coal, natural gas, electricity, freight, and foreign exchange.
“This is a major project that restructures risk management activities. It consists of providing the office with a complete management, analysis, and decision-making system to manage and cover risk,” said a press release on June 29.
The strategic project aims to control and optimize the expenses relating to high-stake purchases, set up efficient and optimal risk management strategies, dynamically follow global markets, and quickly intervene in the markets.
ONEE’s trading room is expected to become operational in 2021, the press release added.
The office has launched a call for bids to select experts who will assist the internal team supervising the project by providing them with the necessary tools to establish a firm basis during the project’s “anchorage period.”
Global markets “are quickly-evolving environments that induce numerous risks, including exogenous one,” said the press release, explaining the motivations behind the project.
“The risks have multiple variables and can lead to financial consequences for the office,” the document continued.
ONEE, as a national “planner and manager of [electricity’s] offer and demand,” is exposed to the risks relating to fluctuation in the prices of fuel and freight. Thus, the office needs to mitigate negative impacts on its “conversion differences, balance sheets, financial charges, equities, and treasury.”
At the end of 2019, energy and fuel purchases represented more than 68% of the expenses of ONEE’s electricity branch, said the press release. The purchases’ value reached MAD 11 billion ($1.13 billion), including MAD 8 billion ($822 million) for purchasing coal, MAD 2.5 billion ($257 million) for natural gas, and MAD 174 million ($17.9 million) for electricity imports.
The vast majority of the transactions were made in euros and US dollars, leading ONEE to make significant purchases from foreign exchange markets as well. In 2019, ONEE’s total purchases from international markets reached MAD 12.81 billion ($1.31 billion), including MAD 7.29 billion ($749 million) paid in euros and MAD 5.08 billion ($522 million) paid in US dollars.
The significant amount of international transactions is another important reason behind the trading room project, ONEE’s press release concluded.