POWER DOSSIER 74

Dakar out of the dark

The Africa Report - - CONTENTS - By Sadi­bou Marone in Dakar

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.

DOUBTS RE­MAIN

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.”

DI­VER­SI­FY­ING SOURCES

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.

IN­DIAN IN­VEST­MENT

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

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