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 addresses 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

Compact Budget

Milestones

  • Signed:
    December 10, 2018

Compact Projects

Enabling Environment and Capacity Development Project

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

To date, the project has realized the adoption and validation of the Electricity Sector Roadmap to 2024. On October 24, 2019, a National Workshop was held, presided over by Mr. Mouhamadou Makhtar Cissé, Minister of Petroleum and Energy, in the presence of Mr. Tulinabo Mushingi, U.S. Ambassador to Senegal, and attended by members of the Government of Senegal, the national regulator, utility, civil society, regional organizations, donors, and other groups in both the public and private domains. Along with a previous correspondence from the Prime Minister that confirmed the Government’s choice of a strategic alternative, the national workshop allowed the Government of Senegal to meet one of the conditions precedent to entry-into-force of the Compact. Progress in meeting other conditions precedent to entry-into-force continued with the launching of the Electricity Code and Tariff Reform studies in early January 2020. These studies will, respectively, support the passage of an Electricity Law, aligned with the previously developed sector strategy, as well as allow for the development of a Tariff Plan aimed at (1) adjusting the tariff to more fully reflect the cost of service and (2) ensuring a commitment from the Government to pay any needed compensation to revenue allowed to the utility.

Projected Long-Term Results

  • Estimated Beneficiaries 12,600,000

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

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, facilitate opportunities for income-generating activities in these regions, and improve the understanding of energy efficiency at a national level. This project envisions several opportunities for collaboration with related programs of the United States Agency for International Development (USAID), including Feed the Future and Power Africa, 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.

Projected Long-Term Results

  • Estimated Beneficiaries 181,000

Modernizing and Strengthening of Senelec Transmission Network Project

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 (2) a validated Resettlement Policy Framework, (3) the selection of the Management Oversight Social and Environmental Support (MOSES) implementation firm, (4) the drafting of a framework Environmental and Social Management System, and (5) 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 December 10, 2018