Senegal’s energy future

Senegal’s energy industry is at the core of the government’s infrastructure modernization program. Ministers are pursuing a policy of energy diversification as they look to reduce the country’s heavy reliance on oil imports for electricity production.

Officials want the power industry to switch to other fossil fuels such as coal and natural gas and are also seeking foreign investors to finance and develop renewable energy technologies, such as bio-fuels, solar power and wind power.

Senegal is a net importer of crude oil and refined oil products that increase the economy susceptible to sharp rises in global oil prices.

To alleviate this susceptibility, the government has developed an eight-point "Major Energy Strategy" to tackle the range of problems facing the national electricity company, Senelec, find proper solutions and overcome challenges.

As part of the power industry overhaul, Senelec will be restructured, with the recovery plan for the sector implemented and monitored by industry experts and professionals. The measures, which will be introduced over the next four years, will boost capacity, improve efficiencies, and ensure the sector’s financial health.

The government wants the industry to strike a better balance between supply and demand, and adopt a pricing policy that may require reforms to current pricing legislation and regulations. It is determined to increase generating capacity by 100 megawatts in the short term through a series of construction works.

Through a major Sino-Senegalse deal signed in October 2006, China is spending $71 million on the construction of a major energy plant in Dakar. The project will boost electricity supply and capacity in the capital by 2015.

Other major energy projects in the pipeline include wind farms at Taiba Ndiaye and Saint Louis that will generate an extra 125 megawatts and 15 megawatts of electricity, respectively.

In addition, a solar power station due to be built at Ziguinchor, will boost capacity by 7.5 megawatts, while a state-of-the-art bio-mass facility at Ross Bethio will generate an extra 30 megawatts of power.

The energy strategy’s key points include the increased use of hydropower and greater regional cooperation, particularly in the river basin area and with other members of the West African Power Pool (WAPP).

Through this impressive regional cooperation, Senegal is actively involved in the development of energy trade with neighboring countries through the integration of various power generation projects along key rivers. The realization of these local and regional projects over the next four years will drastically increase Senegal’s electricity capacity and is certain to leave its appeal among foreign investors.

This progressive energy network improvement plan follows the success of an ambitious modernization program for the 2006-2010 period when Senelec boosted production capacity and expanded distribution networks.

These new power plants included modern facilities at Kounoune and Kahone capable of producing 120 megawatts of electricity. During the past decade, Senegal has made significant strides in rural electrification programs through a combination of heavy investment in efficient technology and the formation of PPPs.

This progress is illustrated by the fact that in 2000, only 7 percent of Senegal’s rural areas were electrified, but by 2010 that figure had more than tripled to 22 percent.

Several major rural electrification programs will start later this year and push that figure even higher, while the government recently introduced an initiative giving local authorities more control over electrification projects.

The Senegalese government has also succeeded in strengthening transmission and distribution networks as it looks to improve general living standards and drive economic growth.

One such project, funded by China, involved the installation of 29 kilometers of fiber-optic cables in Dakar. The multi-million dollar project will secure the power supply to the capital by improving service quality and operational flexibility. It will also generate increased savings and efficiencies for government-owned Senelec as the new technology will drastically reduce energy losses.

The comprehensive industry blueprint aims to secure the supply of local oil by strengthening local processors, increasing supply logistics, improving cooperation and relations with oil-producing nations, and developing storage facilities for refined petroleum products and butane gas.

The strategic plan is also designed to ensure that energy infrastructure can be adapted to meet the needs of public and private sector companies, give greater control of energy demand, and improve energy efficiencies and governance of the sector. In addition, the strategy underlines the importance of electricity to an area’s socioeconomic development, particularly in rural areas.

Power projects, rural electrification works and improved energy services play a crucial role in commercial and social activities. To meet the plan’s goals, Senelec is investing huge sums in an ambitious program of emergency rural electrification of more than 400 villages.

Because electricity production and distribution problems have applied the brakes to Senegal’s economic and social development, ministers have designated the sector’s development an urgent priority.

With the help of foreign investors and financial institutions, the government plans to pump billions of dollars into the power sector to ensure the rapidly growing demand for electricity is matched by an increase in production capacity.

Minister of International Cooperation, Air Transports, Infrastructures and Energy, Karim Wade said: "This rise in capacity is a key priority and, as an emerging country in the sub-Saharan region, Senegal will benefit from the added value these major developments will generate."

Minister Wade acknowledged China’s expertise and vast experience of energy matters and revealed positive negotiations with Chinese enterprises interested in contributing to the power industry’s development had recently taken place.

"We have held discussions with several Chinese groups who wish to help us develop our energy sector. We already have some Chinese companies working here that are mainly involved in upgrading the transport and distribution capabilities of our national power company."

In March 2010, Minister Wade and Gong Yuanxing, Chinese ambassador to Senegal, put pen to paper on a major agreement for the modernization and expansion of the electricity grid in a Dakar suburb.

The project involved the construction of about 500 electricity substations and the installation of 350 kms of underground cabling, plus the purchase and installation of 100,000 pre-payment meters for consumers.

President Abdoulaye Wade, who is the coordinator of energy issues for West Africa development group ECOWAS, said: "I have held discussions with Chinese firms about a solar energy project worth $128 billion. This project would be profitable for Senegal since the country needs more power generation."

Despite unfavorable conditions and high oil prices in recent years, Senegal has recorded a series of significant achievements. These include the "Wade Formula" that was invented by President Wade.

The formula aims to counter the negative impact of oil price rises on African economies. It uses 3 variables to ensure economic stability. The variables comprise: excess profit from oil firms operating in Africa, royalties or revenues from the oil-producing African nations, and the oil import surcharge paid by non-oil producing African states.