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Senegal: Energy Plan

 7 April 2009

Electricity production has long been a problem for Senegal, but a new
plan will begin putting the country's rivers to work in providing
much-needed energy. Existing dams have been generating power for over
20 years, but they only supply a small amount of growing demand and
with the country vulnerable to external commodity shocks, the
government has begun to look for more secure long-term alternatives.

If harnessed effectively, the full hydroelectric potential of the
Senegal River basin could provide an estimated 2000 MW. To capitalise
on this, the region's two hydroelectricity agencies - Senegal River
Basin Development Authority (Organisation pour la Mise en Valeur du
Fleuve Sénégal, OMVS) and the Gambia River Basin Authority
(Organisation pour la Mise en Valeur du Fleuve Gambia, OMVG) - have
launched a series of major power projects as part of a wider plan, the
Power System Development Sub-programme, to expand the energy supply to
Gambia, Guinea, Guinea-Bissau, Mali and Senegal.

Second-generation power production is scheduled to begin with the
construction of two hydroelectric power stations at Felou and Gouina,
downstream of the Manantali Dam, between 2011 and 2013. The cost of
development at Felou, for installed capacity of 60 MW and production
of 335 GWh annually, is about $154m. Costs at Gouina, for 69 MW
installed capacity and 307 GWh annual energy production, are estimated
at $128m.

OMVG also plans to install two new hydroelectric generating stations.
The first, which is planned for Sambangalou in Senegal, will cost
$411m, boast an installed capacity of 128 MW and annual production of
402 GWh. The other, to be located at Kaléta in Guinea, will boast an
installed capacity of 240 MW, annual production of 946 GWh and cost
$253m. The power generated will be shared among the West African Power
Pool countries through an interconnection line.

Establishing these key components of West Africa's electricity highway
is a costly business, but nearly two-thirds of the estimated $1.2bn
that will be needed has already been secured. The Islamic Development
Bank is providing $208m and a further $140m will come from the African
Development Bank. OMVG member states are contributing $123m and the
remainder will likely come from international sources.

With the implementation of the new hydroelectric projects, Senegal's
overstretched energy sector is laying the foundations for future
generating capacity. As a result of years of financial
over-commitment, volatile fuel prices and outdated installations, the
industry has repeatedly found itself in distress, leaving Senegal to
pay a heavy price, both financially and environmentally, for its two
major sources of national energy: imported hydrocarbons and
wood/charcoal. Nearly 40% is produced from imported hydrocarbons but
nearly 60% comes from wood and charcoal, emptying great swathes of
Senegal's forests in the process and leading to a policy of
"butanisation", which encourages the widespread use of imported
liquefied petroleum as a result. Renewables form a negligible part of
Senegal's current production, with 1% of the total output coming from
hydroelectric plants, followed by natural gas (0.1%) and solar energy
(0.01%).

"We have to diversify sources, develop renewable energy and
hydroelectricity, and work towards substituting fuel with cheaper coal
alternatives," Ibrahima Thiam, the president of the Electricity
Regulatory Board, told OBG.

Aside from the country's hydroelectric plans, several other new
generation projects will boost Senegal's installed capacity from 456
MW in 2007 to more than 700 MW by 2010. Among the new projects is the
60-MW diesel independent power plant at Kounoun, which broke ground in
2008 and should be operational by 2012. The plant was partially funded
by the International Finance Corporation, with both Mitsubishi and
Matelec, a division of the Lebanese Doumet group, as partners.
Additionally, the 60-MW, state-owned Senegal National Electricity
Company's diesel plan at Kahone began operating in November 2008, and
a 70 MW build-operate-own diesel plant at Tobin is due in 2009. The
contract to build a 125-MW, coal-fired plant at Sendou, scheduled to
come on-line in 2010, with a further 125 MW set to be added two or
three years later, has been awarded to a consortium of companies
headed by the Swedish operator Synergetics.

While Senegal works to decrease its imported energy dependency, it
will no doubt benefit somewhat from the recent decline in global oil
prices. Still, while this will reduce the trade bill dramatically,
investing in sustainable local generation facilities remains the best
way to ensure long-term energy security.

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