Country Report Senegal March 2011

Economic policy: "Plan Takkal" is launched to restructure the power sector

Karim Wade, the minister of international co-operation, air transport, infrastructure and energy, launched in January an action plan-Plan Takkal-to redress the power problems. The plan, presented to the cabinet and expected to be discussed at the Senate and the National Assembly, consists of five elements:

  • in order to boost short-term supply, the government will rent 50 mw of generating capacity in April and a futher 100 mw in August, allowing the company to mothball more expensive generators;
  • improvements in energy demand management will be made through energy efficiency, such as new legislation that came into effect on March 1st that bans the use of incandescent lightbulbs in order to conserve around 70 mw of electricity nationwide;
  • in response to complaints that bills have not fallen despite the power shortages, domestic pre-paid meters are to be introduced to align costs with use, helping the company to re-establish credibility in its billing and reduce the illegal siphoning of power, which also reduces company revenues;
  • security of fuel supply is to be ensured through the establishment of a special fund, Fonds spécial de soutien à l'énergie (FSE), to be managed directly by the presidency; and
  • Senelec is to be restructured and recapitalised to help it to meet its obligations, which stood at an estimated CFA286bn (US$552m) by February.

The strategy will be overseen and evaluated by the new Conseil national de l'énergie (CNE), directly under the direction of the president, as well as a new permanent energy secretariat through which the CNE will operate. The secretariat will be co-chaired by the ministers of finance and energy-Abdoulaye Diop and Karim Wade respectively-and will also include, among others, the prime minister, Souleymane Ndéné Ndiaye, and the directors of Senelec and SAR.

Technical assistance will be provided by a French utility, EDF, with whom the government signed an agreement in December 2010. An audit conducted by the company found that deteriorating equipment had slashed production capacity to only 350 mw, compared with a potential of 584 mw. Furthermore, the country is over-reliant on oil-based power generation. By 2014 the government and Senelec plan to have installed coal-fired power stations that will significantly reduce costs, especially given the prospects for continued elevation and volatility in global oil prices. Senegal currently produces 90% of its electricity from oil-generated plants. The question is whether by 2014 the company will have found the funds to finance this big investment. Indeed, plans to build coal-fired power stations are already significantly delayed.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
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