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Notes on Senegals PPP strategy for its rural electrification program

Email : ahe@yiitidi.com www.yiitidi.com Yiitidi Ltd 71-75 Shelton StreetTel : + 44 (0) 20 32 87 51 17 London WC2H 9JQ (UK )

Rural Electrification Rural electrification is a complicated issue because:of user affordabilityrural inaccessibilitylow population densities and dispersed householdslow project profitability, and over-dependence on subsidies and increasing fiscal deficit.

Senegal and its infrastructure gap 196.000 km2 (1/3 of France or of Japan)14 million population of which 57% live in a rural areas.GDP per capita is US$ 1,046.59 (2013), more than 60% of the rural population lives under the poverty line. Only 56% of the total population - but significantly only 26% of the rural population- has access to electricity.

Agence Sngalais dElectrification Rurale ASERASER was created as centralized agency for RE and developed a two pronged strategy:

PPER: Large Priority RE program. ERIL: Small sized programs based on local initiative.

Agence Sngalais dElectrification Rurale ASERPPER: Only 6 concessions were signed by 2012 and still 2 large concessions are to been assigned.

Agence Sngalais dElectrification Rurale ASER

ERIL: Uncertainty in ERIL framework discourages investment

Hence, the rural electrification issue is not solved.

Requirements for the success of a PPP programThe three basic requirements that make a PPP work are:

Economics Politics Execution.

EconomicsSuccessful PPP programs require:

sound fundamentals;a structure that optimizes cost, quality, and service.

Although in theory the two concession models, ensure profitability for operators, profitability still has to be proven.

Economics: FundamentalsBy crossing data from Mobile use and electricity use D-4-D provided data for assessment of potential demand and thus the financial viability of concessions

Economics: Fundamentals

Determination of zones and their financial viability

PoliticsSuccessful PPP require:

Securing political championsBuilding stakeholder supportEnvironmental & social impactSolid regulatory environment

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PoliticsSecuring political champions, fully achieved in Senegal, with the full support of top leaders.

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Politics

Building stakeholder support, which has proven difficult: High political profile of electrification issues resulting in lack of continuityObstacles in aligning objectives between ASER & SENELEC;

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PoliticsEnvironmental & social impactcumbersome process to assess of environmental and social impactsSolid regulatory environmentNegotiations between stakeholders accounting for long delays

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ExecutionSuccessful PPP require:the right mix of local and global expertssupport a transparent, competitive bid process andplan for ongoing contract monitoring and review.

ConclusionsSenegals Rural Electrification program has tackled many issues proactively but has encountered difficulties to gain momentum

For private investors, the access to real data will enable sound feasibility & viability studies, and reactivate private investment in both PPER & ERIL.

Inherent conflict of ERIL projects stepping into PPER areas under concession must be addressed. Private investors need a clear ERIL framework to raise funds.

Thank you

Email : ahe@yiitidi.com www.yiitidi.com Yiitidi Ltd 71-75 Shelton StreetTel : + 44 (0) 20 32 87 51 17 London WC2H 9JQ (UK )