Senegal Energy Sector Recovery Development Policy Financing

closed

The objective of the Energy Sector Recovery Development Policy Credit is to ensure a sustained and sound long term development of electricity services and supply of petroleum products for Senegal. To achieve this objective, the operation comprises: (a) financial support to the Government to allow the power utility of Senegal - Societe Nationale d Electricite (National Power Utility of Senegal) (SENELEC) - to restore by end CY2009 its financial equilibrium and to meet standard financial ratios and credit worthiness; and (b) policy measures aimed at ensuring that the electricity sub-sector and the downstream hydrocarbon sub-sector develop and operate in an efficient and transparent way with adequate governance. The main risk under this operation is related to the rising and widely fluctuating international energy prices particularly of petroleum products, which create instability in domestic energy costs and may induce the Government to suspend or only partially implement the continued pass-through of cost increases to consumers. This risk is mitigated by: (a) the Government's commitment for reform and actions to reduce costs, improve operational efficiency, invest in efficient and least cost facilities and to diversify; and (b) the existing regulations and price adjustment mechanisms for electricity services as well as for petroleum products allowing for monthly or quarterly adjustments.