RESOURCES/FEATURED STORIES

PPIAF Supports Senegal’s Power Sector

03 November 2020
PPIAF Supports Senegal’s Power Sector
Senegal has enjoyed some of Africa’s highest rates of growth in recent years—since 2014, its economic growth has consistently exceeded 5 percent. But weaknesses in the power sector are constraining the country’s economic competitiveness. Recent data shows that one in every three people doesn’t have access to electricity. Blackouts are common. Eighty percent of Senegalese companies report frequent power outages, leading to annual sales losses as high as 5 percent. And costs are high—electricity tariffs in Senegal are double the world average and unaffordable for many households. Although high

Senegal has enjoyed some of Africa’s highest rates of growth in recent years—since 2014, its economic growth has consistently exceeded 5 percent. But weaknesses in the power sector are constraining the country’s economic competitiveness. Recent data shows that one in every three people doesn’t have access to electricity. Blackouts are common. Eighty percent of Senegalese companies report frequent power outages, leading to annual sales losses as high as 5 percent. And costs are high—electricity tariffs in Senegal are double the world average and unaffordable for many households.

Although high, the tariffs do not cover the cost of operating the national power utility—SENELEC—forcing the government to compensate for revenue shortcomings. As a result, the state budget has been under strain, and the power sector has developed an unhealthy reliance on government subsidies.

PPIAF is working with the World Bank and Senegal’s Ministry of Energy to improve SENELEC’s performance and potential to attract private participation in the sector.

PPIAF’s Contribution

The World Bank Group has been working closely with the government to transform the power sector into an engine of growth and poverty reduction. The scope of this collaboration is extensive, ranging from power generation and transmission to distribution and access.

PPIAF is contributing to the World Bank’s Electricity Sector Development Project by helping improve SENELEC’s capacity and performance, specifically in financial management and corporate governance. PPIAF prepared a debt sustainability plan and financial sustainability analysis for the utility, providing a detailed look at SENELEC’s financial indebtedness, debt restructuring options, and comprehensive financial projections.

Armed with this information, SENELEC has a much clearer picture of its financing needs and potential sources of finance for improving its operations and making much-needed capital investments. This work builds on previous PPIAF work with the World Bank Group and Government of Senegal to review and update SENELEC’s financial model in light of significant government sector reform efforts.

PPIAF also supported improvements in SENELEC’s corporate governance by assessing the performance of SENELEC’s Board Committees against international best practices, developing specific competency profiles for board members, and establishing criteria for appointing independent directors, including sourcing from civil society and the private sector.

In the long run, PPIAF’s efforts may help SENELEC secure non-sovereign loans from development partners and commercial sources, setting the stage for further longer-term corporate reforms. This, in turn, will help Senegal achieve universal access to energy, eliminate a major constraint to economic growth, and reduce overall poverty.