Sendou Coal Power Project


Overview

  • Reference: P-SN-F00-004
  • Approval date: 25/11/2009
  • Start date: 22/08/2013
  • Appraisal Date: 29/06/2009
  • Status: OngoingOnGo
  • Implementing Agency: COMPAGNIE D'ELECTRICITE DU SENEGAL
  • Location: Senegal (Dakar)

Description

The scope of the project includes the development, construction, operation and maintenance of a 125 MW coal-fired power plant on a 29 ha site located 35 km from Dakar in Sendou (Bargny). The project will be implemented within 24 months. In addition, the project company will build the 225 kV transmission line and associated switchyard to connect the plant to Senelec's interconnected grid. It should be noted that the ownership of the transmission line and switchyard will be transferred to Senelec upon completion. The project will produce annually at least 925 GWh of electricity, roughly 50% of the amount consumed in 2006 by the country. The power generated will be injected into the national grid system at 225 kV. The coal will be transported by truck along the paved road linking the port of Dakar to the project site (approximately 30 km away from Dakar). This road is relatively congested during the day but an improved highway is located at approximately 15 km from the project site. A new four-lane toll highway is being constructed as well near the site into Dakar and is expected to be operational before the project enters into commercial operation. In addition, the Government of Senegal has awarded to Dubai World the right to construct a multipurpose harbor (Port du Future) at Bargny, nearby to the power plant site. In the long run, this harbor will be used to handle the coal as well


Objectives

Develop, construct, operate and maintain a Coal Power Plant that will produce annually at least 925 GWh of electricity, the equivalent to 40% of the currently annual production. ..


Rationale

Senegal is heavily dependent on oil for power generation which fluctuates in cost and can be extremely expensive. Hydroelectricity accounts for only about 10% of Senegal's power supply originating from the Manantali Dam located in Mali. The Societe National d'Electricite du Senegal (Senelec)'s generators are old, inefficient and costly to run. An overly large proportion of plants rely on diesel rather than cheaper heavy fuel oil. Although world oil prices have fallen in the last few months, they still remain at a level which is damagingly high to the Senegal's electricity sector, given its heavy reliance on diesel fuel for power generation. Due to the lengthy delays in adding new generation capacity, combined with vigorous demand growth of 7-8% per year Senelec has been unable to meet peak electricity demand since 2004. In 2006, in order to cover the supply shortfall, Senelec was forced to use old, inefficient plants for extended periods and resort to expensive, and leased emergency diesel-fired power generators; these obviously aggravated its financial problems. Rapidly rising generation costs (partly due to poor management and inefficient fuel procurement), combined with a lag in adjusting tariffs pushed Senelec into a severe cash flow crisis. The growth in demand, delays in commissioning new plants and fuel procurement problems aggravated the electricity shortages and the resulting load shedding caused serious damage across all sectors of the economy. Electricity tariffs to consumers were raised in both 2005 and 2006, but could not cover the full additional cost of fuel purchases. Average tariffs are now about CFAF 100/kWh - USc 20/kWh, which is high than OECD standards, but still below the cost of diesel-based power generation at current crude oil prices. In 2006, about 90% of Senelec's revenues from sales (CFAF 160 billion) were required just to cover the cost of fuel and energy purchases, leaving very little for other operating expenses. Senegal needs a large base-load plant to satisfy growing demand and add stability to the grid and coal represents the most feasible source of thermal energy in the short to medium term since the gas reserves in Senegal are insufficient for the required large base load plant. A coal plant is expected to achieve savings for Senelec of CFA37 billion/year and diversify Senegal's sources of energy. The reduction in generation costs will lead to lower tariffs that will in turn contribute to economic development in Senegal.


Benefits

The present project is strategically important to Senegal, whose major goal, as pursued by the Government under its Energy Sector Development Policy, is to improve electric power supply in terms of reliability and cost. Furthermore, the use of coal as energy source rather than oil will allow the country to reduce its energy costs which will improve competitiveness, sustainability and will enhance long-term economic growth by increasing Senegalese infrastructure capacity and thus supporting foreign direct investment, job creation, service delivery, a reduced cost of doing business and trade. The direct consumer surplus created through expanded infrastructure and more efficient management thereof is expected to be high. At the same time, the likelihood of blackouts occurrence will diminish drastically, which will result on positive externalities for households, commerce and business. The Project will also reduce the migration of population from rural to urban areas by providing local employment opportunities to rural populations by boosting productivity and industrial as well as agricultural activities in those areas. A positive impact on government revenue is expected through economic activity of the plant. Finally, the private sector participation in the financing of infrastructure will release scarce government resources for use in other important areas (e.g. education, health, etc)


Key contacts

DIOP-DIALLO Rokhaya - OPSD4


Costs

Finance source Amount
ADBEUR 49,392,473
DeltaEUR 115,218,259
TotalEUR 164,610,732