POWER DOSSIER 74
Dakar out of the dark
The electricity blackouts that plagued Senegal in 2011 are long gone but customers are wary of Senelec’s power strategy
The power cuts of late 2011 have abated and the government is promoting a series of projects to boost production over the next few years. But customers are not convinced about Senelec’s plans for smart meters and untried investors
Electricity problems tend to cause people to pour out into the streets of Dakar. This was true of the regular and long power cuts leading up to elections in 2012 and the piloting of troublesome ‘smart’ meters in the neighbourhood of Grand Médine late last year. In the last months of 2011, angry residents of the Dakar neighbourhoods of Soprim and Patte d’oie burned tyres, blocked roads and sacked government offices in the ‘electricity riots’ that spread to other parts of the country. Since then, a new government is in place and the national electricity utility, the Société Nationale d’electricité (Senelec), is now making profits rather than large losses. The company is still having trouble attracting investors to the sector and says that fraud is costing it 27bn CFA francs ($46.2m) per year. To cement its reforms, President Macky Sall’s government wants to reduce its subsidies to the electricity sector from 123bn CFA francs in 2013 to 50bn this year. All the same, the International Monetary Fund estimates that the direct and indirect costs of the country’s electricity problems will total 250bn CFA francs or 2.8% of gross do- mestic product this year, which is a major drain on the economy. Reforms of the powersector play a key role in the government’s longterm development programme, the Plan Sénégal Emergent. It seeks to banish the period of 12-hour daily power cuts to the history books through the installation of 600,000 smart meters and the setting up of a one-stop shop to make it easier and quicker for companies to get hooked up to the national grid. Smart meters – which regularly communicate consumption levels to the electricity company – have not been a silver bullet to cutting down Senelec’s losses. The com---
pany rolled them out in the neighbourhood of Grand Médine late last year and faced protests reminiscent of 2011, with a wave of looting and arrests. Residents said Senelec was not communicative when it installed a series of defective meters that recorded vastly inflated usage.
While blackouts are now shorter and less frequent, Senelec has not won over the Dakarois population. Amadou Touré, who lives in Dakar’s suburbs, says: “In the middle of march we had some long power cuts that make us think that the coming months, especially the period from July to September, will be difficult.” Momar Ndao, the president of the Association des Consommateurs du Sénégal, says that the often harsh judgment of the street must be put in context. He says that smart meters are a necessary element of measuring consumption and that Grand Médine was the only area to receive the problematic meters, which he says reported consumption levels that “were 1,200% to 1,800% higher” than the actual sums used. Officials from companies in the private sector say that the electri- city supply has improved recently. B. G. Gueye, the director of a company at the Sodida industrial zone in Dakar, tells The Africa Report: “The power cuts have dropped in intensity these last two years. It is helping our production to grow substantially.” The government has organised major reforms at Senelec since it came into office in April 2012.During the crisis, Ndao estimates that the company lost 128m cfa francs per day “due to repeated rentals of power generators and production deficits, leading to a production cost of 190 CFA francs per kwh while consumers paid just 115.”
Pape Dieng, Senelec’s director general, tells The Africa Report: “When Macky Sall came into power, the supply of electricity was insufficient and was supported by the expensive rental of 150MW of power capacity which represented 30% of demand. Production without the rental was 304MW. Senelec did not have any money to buy fuel to power its plants or to conduct maintenance.” Headds that the plants only functioned at 64% of capacity, that there were an average of 915 hours of blackouts per year and that disputes with two independent producers were in the courts. In Senegal, appointments to important parastatals tend to be politicised. Dieng was a member of the Parti Socialiste, which ruled the country from 1960 to 2000, and made a late switch to support Sall’s Alliance pour la République. Dieng has a long history at Senelec and had retired to set up a business selling meters and services in the electricity sector. Dieng’s critics say he owes his appointment to his political connections, which also pushed him to make an unsuccessful bid for the mayor’s office of Pékesse, a rural town 120km north of Dakar last year. With a new team in place, Senelec cut costs, stopped renting diesel-powered generators and purchased power barges and containerised generators. Dieng says: “We renegotiated certain contracts. We are now securing meters, and we started a big campaign to fight against fraud, which is costing us 27bn CFA francs per year.”
Senelec’s leadership wants to transform Senegal’s energy mix. The country currently uses oil products for around 90% of its electricity generation, with most of the rest coming from hydro. Dieng is pushing for coal, gas and renewables to account for 52%, 17% and 7% of production by 2017. Since 2012, the government has added 100MW to output through expansion and rehabilitation projects. Improvements in provision and the rapid drop in oil prices last year are not leading Dieng to make any rash promises about cutting tariffs. Dieng says: “Taking into account where the company is coming from, we have to reduce costs and diversify the sources of production […]. You know that the drop in the price of oil is something that is hard to manage over the long term. It would not be the sole factor in a [tariff ] decision.” If Senelec meets its targets over the next two years or so, then the government could consider a reduction, which Dieng says would make Senegal’s economy more attractive. For its industrial clients, Senelec has worked with the Agence de Promotion des Investissements to set up a body that centralises the process of providing new electricity connections in order to reduce delays. Many projects have held the promise of rapidly increasing Senegal’s production, only to be slowed by delays and disputes. In January 2012, a few months before President Abdoulaye Wade lost the presidential election, his son and energy minister Karim signed a landmark deal for the construction of a 250MW coalfired power plant at Sendou with South Korea’s KEPCO at a cost of $600m. Sall’s government put Karim on trial for several cases of corruption and sentenced him to six years in prison in March. Since the agreement was signed, KEPCO has said that it is abandoning most of its international projects, including the one in Senegal. The government says it is looking for a new partner to pick up where KEPCO left off. It first launched a tender for a project there in 2005.
Another Asian company has come to Senegal’s aid in the form of India’s Jindal Steel and Power. It signed an accord in February with Senelec for the construction of a 350MW coal-fired plant at Kayar. Officials said that the production cost will be 63.75 CFA francs per kwh, considerably lower than the 117 CFA francs per kwh that consumers now pay. The government says the project is going ahead and that the parties are working on technical studies and procuring the land needed to develop it. Other plants due to be developed include local company Africa Energy’s 300MW coal- and gas-fired plant at Mboro. The project is a joint venture between the relatively unknown firm and Senelec, which signed the deal in August 2013. At the time, Senelec said that the private company was responsible for raising the money and managing construction. In March, the project was again in the news for its lack of progress and concerns about transparency. Help has also come from neighbouring Mauritania, which is exporting its surplus power. Senegal began receiving 20MW of power from its interconnection in March. The amount supplied is expected to rise to 80MW by the end of this year and 135MW by 2018 or 2019 as gas projects in Mauritania reach their full potential. If projects fail to deliver and production wavers, Sall’s government can be sure that the population will not shy away from saying what it thinks.
Keeping the lights on is paramount for Macky Sall’s government, as patience with power cuts has run out