73748 August 2012 P U B LI C -P RI VAT E INFR ASTR UCTUR E AD VISORY FACILITY IMPACT STORIES PPIAF Supports Rural Electri�cation in Senegal by Helping to Reform the Enabling Environment for Public-Private Partnerships PPIAF’s support to Senegal’s policy-enabling environment in the power sector led to the structuring of rural electri�cation concessions with private sector participation. The recommendations of a Country Framework Report that PPIAF supported in 2000 were incorporated into the design of a rural electri�cation program, the objective of which was to increase electri�cation coverage from 14% of rural households in 2005 to 50% in the next couple of decades. The Public-Private Infrastructure Advisory Facility (PPIAF) has provided technical assistance to the government of Senegal since 2000 in support of its objectives to foster the effective development of private sector participation in infrastructure, including the electricity sector, and strengthen the capacity of its Electricity Sector Regulatory Commission. PPIAF’s �rst such intervention in the country was grant funding for a Country Framework Report prepared at the request of the government. PPIAF SUPPORT AND RESULTING OUTCOMES The Country Framework Report made recommendations that were followed by the government as it developed a Rural Electri�cation Program (REP). The REP was initiated in 2003 with the assistance of the World Bank as a priority program for the ef�cient scale-up of rural electri�cation through public-private partnerships structured as privately-operated concessions. Among the REP’s recommendations were the following: • Recommendation: Direct concessional �nancing of components targeting poverty alleviation. • Result: The REP aimed to bring electricity to poor rural areas and was structured with subsidies from in- ternational donors to reduce up-front costs of construction, installation, and concession structuring. • Recommendation: Introduce more competition in the infrastructure sector. • Result: The REP concessions were competitively awarded. Under the REP, the country was divided into 11 concessions awarded pursuant to an international bidding process. Prior to each process, all bidders received noti�cation regarding a pre-determined amount of output-based aid (OBA) subsidy funding available for the project. Awards were made based on the highest number of new connec- tions proposed for the pre-determined subsidy amount. • Recommendation: De�ne pricing systems for cost recovery, which reconcile economic and social objectives. • Result: Tariffs for rural concessions in the REP were set at levels consistent with the socioeconomic conditions of the target customers, their consumption patterns, and their ability to pay. • Recommendation: Achieve universal coverage of electricity services. • Result: The REP prioritized this objective. www.ppiaf.org DONOR COORDINATION On November 20, 2009, the 25-year rural electri�cation con- cession for Louga–Kébémer–Linguère was awarded to Mo- Several donors are providing subsidies for the Rural Electri�- rocco’s Of�ce National de l’Electricité. cation Program. These include the World Bank, the African Development Bank, the Agence Française de Développe- In December 2010, the 25-year rural electri�cation conces- ment, Germany’s KfW, and the Global Environment Facility sion for the Kaffrine–Tambacounda–Kédougou region was (GEF), which have partnered to support the rural electri�ca- awarded to the French company Electricité de France and its tion concessions in the country. Senegalese partner Matforce. The concession is located in the southeast of the country, and covers a 48,000 km2 region— one quarter of the national territory. It covers a rural popula- IMPACTS tion spread out over more than 2,000 villages. During an initial In May 2008 the �rst concession, the Saint–Louis–Dagana– three-year phase, the program (initiated in early 2012) aims Podor project in the northern part of the country, was to bring electricity to 180,000 people. There was complete awarded to the Of�ce National de l’Electricité, Morocco’s freedom of choice of technology, with the main solutions de- electricity utility. It has attracted foreign direct investment ployed being photovoltaic kits and connection to the national totaling $24 million, funded with a mix of equity, debt and electricity grid. The €11.625 million project is �nanced by a subsidies. The World Bank is providing subsidies represent- €7.7 million loan from the Agence Française de Développe- ing approximately 30% of the �nancing, and the GEF is pro- ment, a €2 million loan from a private bank, and €1.925 mil- viding a $1.1 million grant to support solar technology in lion in shareholders’ equity, of which €1.348 million is from 5,719 new connections (29% of the total). Electricité de France and €0.577 million is from Matforce. This �rst concession is also expected to bring 19,574 new electricity connections to 298 villages over three years (2010– 13), supplying electricity to approximately 130,000 people. Furthermore, it is expected that the 11 concessions, when completed, will make possible 200,000 new connections that RELATED PPIAF ACTIVITIES will bene�t over one million people. These new connections in turn are expected to improve education and health, among IN SENEGAL the other bene�ts that arise from access to electricity. Infrastructure Development Strategies: • 2000: Country Framework Report, $410,000 In January 2010, the International Finance Corporation • 2005: Assessment of the Infrastructure Asset Base partnered as a shareholder with the utility in this venture and Alternative Sources of Capital Investment, and will contribute 19.9% of the total capital required by $15,000 the project. • 2008: Market Survey and Pre-Feasibility Study for the Matam–Bakel–Kanel–Ranérou Rural Electri�cation Concession, $350,000 Capacity Building: Since 1999 PPIAF, a • 2000: Co-Sponsor the Creation of the African multidonor technical Forum for Utility Regulation (AFUR), $196,000 assistance facility, has helped • 2001: Sponsor a High-Level Meeting of AFUR in developing countries use public- Dakar, $75,000 private partnerships to improve their • 2008: Review the Institutional Challenges of infrastructure. A key focus has been Regulatory Agencies in Five Countries, Including upstream technical assistance to support Senegal’s Electricity Sector Regulatory Commission, the development of an enabling $75,000 environment for such partnerships. This series highlights how PPIAF’s support has made an impact on the ground.