Senegal Power Compact

Senegal is an important partner of the United States and MCC and has a rising economy that is attracting global investment. Senegal is one of Africa’s fastest growing economies yet economic growth and progress are constrained by the high cost of electricity to grid-connected firms and low access to electricity in the peri-urban and rural areas. Ensuring consistent and affordable access to energy in Senegal will allow businesses to grow, catalyze private sector investment, increase productivity and employment, and ultimately support diversification and growth of Senegal’s economy.

The five-year, $550 million MCC Power Compact, between the Government of the United States and Senegal, and a supplemental $50 million from the Government of Senegal for a total $600 million program, was signed in December 2018 and seeks to address these significant constraints to economic growth. The compact investment is designed to strengthen the power sector, by increasing reliability and access to electricity and aims to help the Government of Senegal establish a modern and efficient foundation upon which the nation’s power system can grow.

The compact, implemented on behalf of the government by the Millennium Challenge Account Senegal II (MCA-Senegal II) in collaboration with MCC, consists of three projects designed to take a complementary approach to improving the power sector: improving the transmission network to meet the growing demand on the interconnected network in Senegal, increasing electricity access in rural and peri-urban areas of the south and central regions, and improving the overall governance and financial viability of the sector.

Financials

Financials as of June 30, 2023

Compact Budget

Milestones

  • Signed:
     December 10, 2018
  • Entry Into Force:
     September 9, 2021

Compact Projects

Enabling Environment and Capacity Development Project

  • $43,500,000Project Total Amount
  • $10,419,462Project Amount Committed
  • $4,541,793Project Amount Expended

The Reform Project aims to strengthen laws, policies and regulations governing the electricity sector, as well as the key sector institutions, especially the utility, the regulator, and the ministry responsible for energy. In particular, the project aims to support improved management of the transmission network and increased access to electricity, reinforcing the foundations for the provision of a less costly and more reliable supply of electricity nationwide. The project builds on a participatory electricity sector planning process that MCC funded during the development of the compact to help the Government of Senegal articulate and select an appropriate long-term vision for the sector that favors more private sector participation and enhances the financial sustainability of the sector and its key stakeholders – this process resulted in the development of the Strategy, Road Map & Action Plan for the Senegal Electricity Sector (or Roadmap).

Progress and Achievements to Date

On May 2021, the Government of Senegal and Senelec, the national power utility, signed a performance contract, one which will provide financial incentives for Senelec’s performance on a number of key performance indicators. In June 2021, the Electricity Code was adopted by the National Assembly of Senegal, with the code being a framework law that establishes better coordination of investment planning, facilitates the participation of the private sector, promotes the improvement of the performance of all actors, establishes principles and conditions for opening up the national and regional electricity market, and generally confirms the operational and sectoral framework laid out in the previously adopted Roadmap. Along with the achievements of the Roadmap and performance contract, the Electricity Code will allow for a strong foundation for the project’s implementation, play a key role in the sustainability of the Compact’s investments, and further contribute to the compact’s ability to address the significant constraints to economic growth

Projected Long-Term Results

  • Estimated Beneficiaries 12,600,000

Increasing Access to Electricity in Rural and Peri-Urban Areas Project

  • $57,300,000Project Total Amount
  • $2,138,086Project Amount Committed
  • $1,642,939Project Amount Expended

The Access Project aims to extend the electrical grid in selected areas in Senegal’s south and center regions that have high economic potential but low connection rates. Through a blend of supply-side and demand-side interventions, this project also aims to increase rates of adoption and consumption of electricity, improve opportunities for income-generating activities in these regions, and facilitate the market for electric equipment and appliances. This project envisions several opportunities for collaboration with related programs of the United States Agency for International Development (USAID), including Feed the Future, and with other donors that are providing complementary support to agricultural value chains in MCC’s areas of assistance, thereby increasing the potential value of the MCC investment in Senegal.

Progress and Achievements to Date

The Access Project has recently hired a firm to design the consumer education component and is finalizing the design of the productive use of equipment component in the newly electrified areas. The project has met with the utility about the Action Plan on Connections, which is a Condition Precedent for the project, to ensure the utility is ready to connect the expected 12,000 new customers. In preparation for various grid extension and densification activities in the targeted areas, as well as reliability and other improvements throughout Senegal, all on the medium voltage network, the project has drafted terms of reference for the design of these infrastructure works expected to be implemented after the Compact’s entry into force.

Projected Long-Term Results

  • Estimated Beneficiaries 181,000

Modernizing and Strengthening of Senelec Transmission Network Project

  • $376,800,000Project Total Amount
  • $32,430,030Project Amount Committed
  • $11,900,881Project Amount Expended

The Transmission Project aims to strengthen and increase the reliability of Senegal’s high-voltage transmission network in and around greater Dakar and improve electricity service delivery throughout the country. This support for a robust transmission network is needed for Senegal to effectively capitalize on private sector-led investment in generation and to ensure that electricity is delivered reliably to consumers. This is particularly important since much of the private sector interest is in new, lower-cost generation projects including wind, solar, and natural gas that rely heavily upon a reliable, stable transmission network.

Progress and Achievements to Date

To date, the project has achieved (1) the adoption of a Spinning Reserves Strategy by the Government of Senegal, a condition precedent to entry-into-force of the compact; (2) a validated Resettlement Policy Framework; (3) the mobilization the Management Oversight Social and Environmental Support (MOSES) implementation firm; (4) the mobilization of the Transmission Infrastructure Project Preparation Consultant; (5) the drafting of a framework Environmental and Social Management System; and (6) the undertaking of a Resettlement Action Plan (RAP) audit for sections associated with the MCC funded Dakar transmission loop.

Projected Long-Term Results

  • Estimated Beneficiaries 4,600,000

As of July 26, 2023