Senior loan of up to Euro 55 Million to Sendou Power Project in Senegal

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Tunis, November 25, 2009 - The Board of Directors of the African Development Bank (AfDB) approved a senior loan of up to Euros 55 million to finance the Sendou Power Project in Senegal. The Bank is mandated to arrange a total senior debt of up to EUR 117 million. The senior debt will have maturities of up to fourteen years including a grace period of two years.

The project includes design, development, procurement, 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, and will produce 925 GWh of electricity annually, roughly 40% of the amount consumed in 2008 by Senegal. The construction period will be 24 months.

In Senegal, demand is growing at an annual rate of about 7% to 8% representing about 50MW of new capacity required in the first coming year. The rate of demand growth is expected to continue through 2025 while annual demand is estimated to reach 8,169 GWh. Senegal relies heavily on petroleum products as fuel for electricity generation. A major portion of the country’s revenues deriving from exports are used for buying imported petroleum products. In the current global market oil prices fluctuated dramatically and if the oil prices remain the same or worsen, it will continue to constrain Sengal’s power sector. More than 60% of Societé National d’Electricité du Senegal (Senelec) plants are old and past their normal efficient operating life. The grid has many small unreliable plants and lacks a large base-load plant to provide stability resulting in frequent power surges and blackouts.

To ensure sustainable long term development of the electricity sector and recognizing the challenges of fluctuating supply levels and prices of oil, the Government of Senegal has decided to diversify their energy sources from dependence on imported petroleum products through the development of coal-based technologies and introduction of new and renewable energy sources, namely coal, domestic gas, hydro, wind, biomass and solar.

By adding a net capacity of 125MW and being the largest plant in Senegal, Sendou Power will stabilize the Senegalese grid and secure its base load. This grid stabilization will contribute to the local economy and support private sector development, and specifically to large industries consuming high voltage electricity. Thus, Sendou Power will bolster Senegal’s competitiveness and allow development of industries involving production lines that need continuous power. Sendou will facilitate cost reduction of average 20% for electricity generated in Senegal as well. These reductions in cost will help to stabilize the financial performance of Senelec and contribute to a sustainable electricity tariff policy in Senegal.

The Bank has played a pivotal role in project design and preparation. It has fundamentally improved the commercial viability of the Project to bring it to bankability including mobilizing debt and equity financing. In playing its triple “financier, advisor and partner” roles, as lead arranger, the Bank’s involvement has ensured that the Project is bankable and compliant with best practices.

The Sendou Power project will boost the annual power generation by generating 40% of current production. It will significantly reduce the energy cost which will improve the country’s competitiveness. It will also improve the quality of the electricity delivery, create jobs and improve the living environment. It will further stimulate the development of the industrial zone of the area.

This is the second operation of the Bank’s Private Sector window in the energy sector in Senegal. In June 2005, the Bank approved a loan of Euro 8 million to the Kounoune Thermal Power Plant to increase the level of electricity supply at a competitive cost in order to meet the growing demand of electricity in Senegal at that time.

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