IMPERIAL COLLEGE LONDON Faculty of Natural Sciences

Centre for Environmental Policy

The Senegalese Rural Electrification Action Plan: A ‘good practice’ model for increasing private sector participation in Sub-Saharan rural electrification?

By

Rebecca Mawhood

A report submitted in partial fulfilment of the requirements for the MSc and/or the DIC.

October 2012

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DECLARATION OF OWN WORK

I declare that this thesis

The Senegalese Rural Electrification Action Plan: A ‘good practice’ model for increasing private sector participation in Sub-Saharan rural electrification?

is entirely my own work and that where any material could be construed as the work of others, it is fully cited and referenced, and/or with appropriate acknowledgement given.

Signature:..................................................................................................... Name of student (Please print): Rebecca Mawhood

Name of supervisor: Robert Gross

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AUTHORISATION TO HOLD ELECTRONIC COPY OF MSc THESIS

Thesis title: The Senegalese Rural Electrification Action Plan: A ‘good practice’ model for increasing private sector participation in Sub-Saharan rural electrification?

Author: Rebecca Mawhood

I hereby assign to Imperial College London, Centre of Environmental Policy the right to hold an electronic copy of the thesis identified above and any supplemental tables, illustrations, appendices or other information submitted therewith (the “thesis”) in all forms and media, effective when and if the thesis is accepted by the College. This authorisation includes the right to adapt the presentation of the thesis abstract for use in conjunction with computer systems and programs, including reproduction or publication in machine-readable form and incorporation in electronic retrieval systems. Access to the thesis will be limited to ET MSc teaching staff and students and this can be extended to other College staff and students by permission of the ET MSc Course Directors/Examiners Board.

Signed: __________________________ Name printed: Rebecca Mawhood

Date: __________________________

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I.

Abstract

Rural electrification (RE) is a necessary condition for development, but it is insufficiently funded. International donor organisations believe that it is imperative to increase the proportion of investment in RE deriving from the private sector, and have required liberalisation of the RE sector as a condition to funding in many countries of Sub-Saharan Africa. The Senegalese Rural Electrification Action Plan is a response to such a conditionality requirement. Launched in 2002, it was specifically designed to increase private sector participation in RE. Early reviews of the Plan noted that its innovative design had attracted extensive offers of finance from both donors and independent power providers. There is very little recent literature that gives an update on the Plan and that which exists notes simply that progress has been slow or considers only a pilot scheme. This thesis seeks to address this gap in the literature, providing a review of PASER’s achievements to date and investigating how the Plan has progressed and why. An extensive review of published and unpublished literature was combined with semistructured interviews with 26 key stakeholders, to produce a case study snapshot of the Plan’s status at summer 2012. It is found that the Plan’s progress has been much slower than initially anticipated. This is a threat to its on-going financial viability, although the Plan’s potential to start realising targeted RE levels in the near future is promising. There are many specific events which have caused delays to the Plan; most of these can be awarded to either political interference or the inherent difficulties of innovation. Overall the Plan is considered to be ‘good model’ for attracting donor and private sector finance, but it is too early to judge its effectiveness for increasing levels of RE. A number of lessons are drawn from the Senegalese experience, with the aim of aiding the development and implementation of new RE strategies for countries in a similar socio-economic, political and technical situation to Senegal.

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II.

Acknowledgements

This thesis would have never been possible without the help of a lot of people. I am incredibly grateful to everyone that has contributed in one way or another. The following deserve a special mention. A big thank you to Dr Rob Gross for being such a great supervisor. I probably wouldn’t have done a project this exciting without your support, and I would have certainly found the thesiswriting process a lot more daunting. Many thanks to the UK-UAE Renewable Energy Policy Collaboration, supported by DECC, for the generous bursary that funded my fieldtrip to Senegal. Thank you to all 26 of my interviewees, who are busy people, for finding the time to share your expertise, experiences and insights. Peter Wooders and Lucy Kitson at the International Institute for Sustainable Development were consultants to IRENA’s RRA for Senegal. Thank you for being the original inspiration behind the project, providing three very crucial contacts, sharing a wealth of background documents and offering guidance. Thank you to Mr Ousmane Fall Sarr at ASER for providing data and the contact details of interviewees. An immeasurable thank you goes to all the staff of SEMIS, for a big dose of Senegalese teranga, warm leads to unlock the rural electrification sector, a workplace, a chauffeur and great office chat. Particular thanks to Mr Bocar Sy for your help in selecting interviewees and your enthusiasm, support and guidance; and to Moustapha, Fati, Waly, Monsieur le Maire and Opa for your kindness and friendship. Thank you so much to all of the Sambou Bodian family and their friends, who for two months were the centre of my life in Dakar. Chérif, Natou, Aby, Ibou, Aliou, El, Lamine, Mabinta, Papis and Khadija: jërëjëf mille fois de la teranga cinq étoiles – neex na torop ! Huge thanks to Mum and Dad for encouraging me to do the MSc, your immensely generous support throughout the year, and proofreading at the last minute. Big thanks to Katy for inadvertently keeping me healthy during write-up, the mystery package and giving up your weekend to sort out my trip. Also massive thanks to all my friends in London. You have kept me happy and sane. In particular, thanks to Jack and Sarah for the deadline-friendly fests; and to Tara, Joe, Ryan, Maeve and Raf, for everything. This project has been an unforgettable, life-changing, brilliant experience.

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III.

Table of contents

I.

Abstract ...................................................................................................................... 5

II.

Acknowledgements ................................................................................................... 6

III.

Table of contents ................................................................................................... 7

III.i. IV. 1

2

3

List of figures ...................................................................................................... 9 Acronyms and abbreviations ............................................................................... 10

Introduction ............................................................................................................. 12 1.1

Subject selection and research aims ................................................................ 12

1.2

The relevance of Senegal as a rural electrification case study ........................ 13

1.3

Structure ........................................................................................................... 14

Methodology............................................................................................................ 16 2.1

Case study......................................................................................................... 16

2.2

Literature review .............................................................................................. 16

2.3

Semi-structured interviews .............................................................................. 17

Background .............................................................................................................. 20 3.1

Overview........................................................................................................... 20

3.2

The importance of energy access for development......................................... 20

3.3

The insufficiency of current investment flows and the argument for increased

private sector participation ......................................................................................... 23

4

3.4

Approaches to rural electrification in Sub-Saharan Africa ............................... 25

3.5

Summary........................................................................................................... 29

The Senegalese approach to rural electrification .................................................... 31 4.1

Overview........................................................................................................... 31

4.2

Context to the creation of a new rural electrification model .......................... 31

4.3

Senegal’s new approach to rural electrification: ASER and PASER .................. 36 7

4.4

Existing knowledge of PASER’s achievements ................................................. 44

4.5

An updated review of PASER’s achievements.................................................. 47

4.6

Summary........................................................................................................... 62

5

The factors slowing PASER’s development and implementation ........................... 63 5.1

Overview........................................................................................................... 63

5.2

PASER’s ‘slow’ development: the result of cumulative delays ........................ 63

5.3

Political interference ........................................................................................ 66

5.4

Innovation ........................................................................................................ 75

5.5

Summary........................................................................................................... 82

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Conclusion................................................................................................................ 83 6.1

The experiences of PASER to date and the Plan’s future outlook: an overview 83

6.2

Is PASER a “good practice” model for rural electrification? ............................ 86

6.3

Lessons to learn from PASER ............................................................................ 87

6.4

Limitations of the study.................................................................................... 91

6.5

Suggestions for further research...................................................................... 92

V.

References ............................................................................................................... 94

VI.

Appendices ......................................................................................................... 106

Appendix A.

Organisational grouping of interviewees ........................................ 106

Appendix B.

Design features and processes of PASER programmes ................... 107

Appendix C.

PASER’s achievements to date: survey of existing literature .......... 113

Appendix D.

Results of the winning bids for the first six PPER concessions ........ 117

Appendix E.

Problems causing delays to PASER’s implementation..................... 118

Appendix F.

Status of PASER projects at August 2012 ........................................ 120

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III.i. List of figures Figure 1 Average residential electricity prices in SSA and other regions, 2005. ............ 21 Figure 2 The status of human development around the world, 2011............................ 22 Figure 3 Global annual energy consumption per capita by region (toe/capita) ............ 22 Figure 4 Investment in energy access by source, 2009 .................................................. 24 Figure 5 Capital investment in SSA’s electricity sector by source. ................................. 24 Figure 6 Geographical limitations of the 10 PPER concessions ...................................... 41 Figure 7 Achieved level of RE in Senegal, 2002 - 2009. .................................................. 48 Figure 8 Comparison of cost per connection with percentage of additional connections proposed, for PPER winning bids .................................................................................... 56 Figure 9 Comparison of percentage of additional connections proposed with percentage of private finance proposed, for PPER winning bids ................................... 56 Figure 10 Comparison of new household connections targeted by 1998 PASER Action Plan with those realised and projected for PPER and ERIL at August 2012. .................. 59 Figure 11 Achieved and targeted RE levels in Senegal. ................................................. 61 Figure 12 Root cause analysis of delays and disruptions to PASER cited by interviewees. ......................................................................................................................................... 65

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IV.

Acronyms and abbreviations

AFD AfDB ASER CIMES

CRSE CSR DASER DCMP DPES DTM ECOWAS ERIL EU EUEI-PDF FER GDP ICA IEA IMF IPP IRENA ITT kWh LPDER LPDSE LV MD ME MV MW NGO ONE

French Development Agency (Agence Française de Développement) African Development Bank Senegalese Rural Electrification Agency (Agence Sénégalaise d'Électrification Rurale) Strategic Multi-sector Energy Committee (Comité Intersectoriel de Mise en œuvre des Synergies entre le secteur de l’Energie et les autres Secteurs Stratégiques pour la réduction de la pauvreté) Senegalese Electricity Sector Regulatory Commission (Commission de Régulation du Secteur de l'Électricité) Corporate social responsibility Senegalese Increase Access to Electricity and Services in Rural Areas Project (Diffusion des Accès aux Services d'Électrification Rurale) Senegalese Central Directorate of Procurement (Direction Centrale des Marchés Publics) Senegalese Economic and Social Policy Document (Document de Politique Économique et Sociale) Delegated transitional manager Economic Community of West African States Senegalese Local Rural Electrification Initiative (Électrification Rurale d'Initiative Locale) European Union European Union Energy Initiative Partnership Dialogue Facility Senegalese Rural Electrification Fund (Fonds d'Électrification Rurale) Gross domestic product International Consortium for Africa International Energy Agency International Monetary Fund Independent power provider International Renewable Energy Agency Invitation to tender Kilowatt hour Senegalese Political Letter for the Development of Rural Electrification (Lettre de Politique de Développement de l'Électrification Rurale) Senegalese Political Letter for the Development of the Energy Sector (Lettre de Politique du Secteur de l’Énergie) Low-voltage Managing director Ministry for Energy Medium-voltage Megawatt Non-government organisation Moroccan National Electricity Office (Office Nationale d'Électricité)

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PASER PER PERG PLE PPIAF PPP PREM Provis. RCA RE REA REEP REF RRA SSA SSER STEG TWh UNDP WAEMU WB

Senegalese Rural Electrification Action Plan (Plan d'Action Sénégalais d'Électrification Rurale) Chilean Rural Electrification Programme (Programa de Electrificatiòn Rural) Moroccan Global Rural Electrification Programme (Programme d'Électrification Rurale Globale) Senegalese Local Electrification Plan (Plan Local d'Électrification) Public-Private Infrastructure Advisory Facility Public-private-partnership Senegalese Multi-sector Energy Programme (Programme Énergétique Multisectoriel) Provisional Root cause analysis Rural electrification Rural electrification agency Senegalese Rural Electrification Emergency Programme Rural electrification fund Renewables Readiness Assessment Sub-Saharan Africa Senegalese Rural Electrification Company (Société Sénégalaise d'Électrification Rurale) Tunisian Electricity and Gas Company (Société Tunisienne d'Électricité et du Gaz) Terawatt hour United Nations Development Programme West African Economic and Monetary Union World Bank

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1 Introduction 1.1 Subject selection and research aims This thesis was inspired by a Renewables Readiness Assessment (RRA) for Senegal published by the International Renewable Energy Agency (IRENA) in January 2012 (IRENA, 2012). The RRA highlights the importance of affordable renewable technologies for Senegal’s development goals, and the difficulty of funding the additional cost of renewables compared to conventional technologies. It also notes two particular strengths of the Senegalese renewables environment: a widespread institutional commitment to renewables and the Senegalese Rural Electrification Action Plan (PASER, Plan d’Action Sénégalais d’Électrification Rurale), considered to be a model of “good practice” (IRENA, 2012, p18). Preliminary research into the issues discussed by the RRA indicated that there are already numerous studies that investigate low-cost renewables for Senegal and possible means for funding these (Sanoh et al., 2012, Thiam, Benders & Moll, 2012, European Commission JRC, 2011, Thiam, 2011, Thiam, 2010, Alzola et al., 2009, Camblong et al., 2009). However there is a distinct lack of up-to-date information on PASER. IRENA’s RRA notes that PASER has attracted significant bilateral funding and that it has the potential to increase private sector participation in rural electrification (hereafter referred to as RE), but the brief discussion does not explain these assertions (IRENA, 2012). Regarding wider literature, early studies of the Plan were very positive of its potential to increase private sector investment in RE, helping to combat financing difficulties (De Gouvello & Durix, 2008, De Gouvello & Kumar, 2007, ESMAP, 2007, Sow, 2006, Sow, 2004). Several suggested PASER could offer an internationally significant RE model. However, extensive internet and journal searches have not identified any recent works providing a detailed update of PASER’s overall progress (although there some updates for a pilot programme (Ndiaye, 2011, PERACOD, 2010a, PERACOD, 2010b)). There are several documents that refer to the slowness of PASER’s implementation (AFD, World Bank, 2012, DECRS, 2009, Gihr, 2009), but only one that addresses possible causes in a single sentence and gives a high-level update of results 12

achieved (World Bank, 2012). An email enquiry about PASER’s state of progress to the Senegalese Rural Electrification Agency (Agence Sénégalaise d’Électrification Rurale, ASER) ascertained that the Plan, inaugurated in 2002, has now started electrification installations (Sarr, 2012). This thesis seeks to address the gap in the literature. If PASER is to be considered an exemplar RE model for other countries it is important to understand the real achievements of the Plan, and the form and causes of any difficulties or delays encountered, so that future schemes can build on and learn from it. The thesis aims to provide an informative critique of PASER’s progress to date, with the following distinct objectives: 

to review PASER’s implementation status, coherently and comprehensively;



to measure PASER’s achievements against its original progress targets, with a view to assessing its effectiveness;



to understand the causes for any discrepancies between targeted and realised achievements;



to identify lessons that other countries – particularly those in SSA – can learn from Senegal’s experiences.

The thesis’ findings are based on information gathered directly from PASER’s stakeholders and other actors in the Senegalese RE sector. The thesis bolsters IRENA’s RRA analysis, by explaining the extent to which PASER is a model of “good practice” and why.

1.2 The relevance of Senegal as a rural electrification case study The relevance of a case study assessing Senegal’s approach to RE is justifiable in its own right, quite aside from the interest in supporting IRENA’s on-going work with the country. In many respects Senegal could be considered an ‘average’ country in Sub-Saharan Africa (hereafter referred to as SSA), albeit one with good economic prospects. Its 13

area, population and GDP per capita are all close to the median for African countries 1, as is the ‘ease of business’ rating accorded to it by the World Bank (World Bank, c). The IMF categorises countries according to their economic conditions, prospects and risks. In October 2011 Senegal was promoted from the classification of a low-income, non-fragile country to a middle-income country, in response to the increasing threeyear average of its gross national income per capita (IMF, 2011). As a politically-stable nation with an improving economic outlook, Senegal offers a fair test-ground for innovative development policy. The fact that it was until very recently considered lowincome suggests that its achievements are not beyond the grasp of other poor but non-fragile nations. Like the majority of countries actively pursuing rural electrification in SSA, Senegal’s approach to RE was developed as a result of reforms to its energy sector as requested by donor organisations. Its RE model has been designed to address the difficulties of encouraging private sector finance, which is widely regarded as key for progressing energy access globally (World Bank,c, IEA, 2011, Hamilton, 2010). Several interviewees noted that Senegal’s RE programmes are more advanced than others in West Africa, and so of particular interest to neighbouring countries in the preparation or early implementation stages of similar models (DO1, 2012, NIGA2, 2012, NIGA4, 2012).

1.3 Structure Chapter 2 details the methodology employed for the study. Chapter 3 explains the importance of developing energy access and the insufficiency of funding available for this in Sub-Saharan Africa (SSA). It outlines the arguments for increasing private sector involvement to meet this deficiency (a defining feature of PASER) and discusses how rural electrification in SSA is split according to private sector participation.

1

Based on data from (CIA, 2012).

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Chapter 4 provides a detailed case study of PASER and its achievements to date. A brief overview of Senegal and its electricity sector is provided, together with the historical context that led to the Plan’s introduction. The purpose and design of this new approach to rural electrification is explained. A survey of literature discussing PASER investigates the extent of existing knowledge of the Plan and opinions towards it. Finally, the chapter provides a detailed snapshot of PASER’s state of development in the summer of 2012, a decade after it first became operational. This is compared with targets set at PASER’s conception, and it is noted that the Plan’s progress has been considerably slower than initially hoped. The potential for the Plan to realise its outstanding future targets is discussed. Chapter 5 explores the reasons for PASER’s slow progress. Root Cause Analysis of stakeholder interviews suggests that the underlying causes for the majority of delays are political interference and innovation. This judgement is explained with reference to specific examples of delays. Chapter 6 provides a holistic overview of PASER’s experiences to date and its future outlook. It examines whether PASER really is a “good practice” model for RE and details lessons to be learned from Senegal’s experiences with the Plan. The thesis’ limitations are noted and a list of topics worthy of further investigation is proposed.

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2 Methodology 2.1 Case study As a whole this thesis represents an exploratory case study of PASER. The reasons for selecting the Plan as a focus and an explanation of its wider relevance are provided in chapter 1. This chapter details how data was gathered through a literature review and semi-structured interviews, and the analysis applied.

2.2 Literature review Three phases of literature review2 were conducted: 

For Chapter 1 a narrative literature review clarified understanding of background issues. The review focussed on academic articles and reports by international organisations.



An investigative review of Senegalese literature provided a basis for the review of PASER’s design and achievements in Chapter 4, helping to identify issues for exploration as well as potential interviewees. The review included presentations, reports, policies and procedural documents produced by PASER’s stakeholders, and media reports. Much of this is not available in the public domain but was gathered directly from stakeholders.



Sub-chapter 4.3 summarises the results of an extensive survey of existing published knowledge of PASER’s progress. This shared some of the characteristics of a systematic review (Cronin, Ryan & Coughlan, 2008). Inclusion criteria were that documents should detail PASER’s achievements or provide an assessment of its progress or effectiveness, and that they should be available in Imperial College’s library or on the internet. Documents to be

2

A mixture of English and French language sources were consulted. All quotations from French sources have been translated by this author. Where different meanings could be understood, the original wording is provided.

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considered were identified using key search-terms. Literature were categorised by their overall judgement of PASER and the depth of analysis. Limitations to the literature review are that: academic French-language search engines were not accessed; the survey of existing knowledge was not fully systematic due to time constraints.

2.3 Semi-structured interviews Semi-structured interviews were the primary data collection method. Their purpose was two-fold: 

To gather and verify factual data about PASER’s design and achievements.



To gather qualitative information about interviewees’ experiences, particularly their views of PASER as a concept and in practice, the extent and rate of achievements realised, the difficulties and successes experienced and the causes thereof.

Semi-structured interviews were considered suitable because: they allow exploration of matters resistant to direction observation; they often involve the reconstruction of events; they allow broad coverage of individuals and situations. Further their flexible character allows questions to be tailored to interviewees’ responses, enabling iterative collection and analysis of data during the interview (Bryman, 2008). 2.3.1 Interview technique Twenty interviewees were selected by purposive sampling, six by snowball sampling. Interviewees were selected from the full spectrum of PASER’s stakeholders: national and international government agencies; donors; independent power providers (IPPs) and project managers; independent consultants and researchers; beneficiaries. Appendix A notes the organisational grouping of interviewees. Care was taken to represent all the organisation-types that play a major role in PASER, including the separate government bodies and entities involved with the different programmes. A minimum of two representatives were interviewed from all but one of the 17

organisation-types. This helped to identify and differentiate between personal and organisational bias. Questions were tailored according to the interviewees’ involvement in PASER and the organisation they represented. Interviews with representatives of different organisation-types were conducted in a purposefully jumbled order, allowing different perceptions of key issues to be captured in early interviews for exploration with representatives of other organisation-types later. This was crucial because the premise of the study was the lack of existing available information about PASER, which impeded the identification of key issues in the early stages of research. All interviews were conducted face-to-face. Twenty-one were in French, two in English, and three in languages of African origin via an interpreter3. 2.3.2 Data analysis Qualitative analysis was utilised in a three-step process: rationalisation of data; presentation of data to be relevant to the research objectives; identification of key themes and patterns from which to draw conclusions (Jupp, 2006). This was supplemented with root cause analysis (RCA) to identify the underlying causes of delays. RCA is usually conducted in three phases: target problems detection; root cause detection; corrective action innovation (Lehtinen, Mäntylä & Vanhanen, 2011). Since this thesis does not aim to resolve problems experienced, the final phase was substituted with the formulation of lessons to learn. 2.3.3 Limitations Bias is a significant limitation of semi-structured interviews, particularly consistency motif, social desirability bias and acquiescence bias (Bryman, 2008). False information bias can also be problematic, especially if interviewees think their comments can be

3

See footnote 2.

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traced back to them. To minimise the impact of these risks the responses of interviewees were triangulated with each other and with the literature, and interviewees were offered anonymity. Snowball sampling may have led to the selection of interviewees with similar views, limiting the diversity of responses.

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3 Background 3.1 Overview This chapter explains the importance of RE and the drivers for increasing private investment, particularly in Sub-Saharan Africa (hereafter referred to as SSA). 

The importance of energy access for development is outlined with the particular needs of SSA explained.



The insufficiency of investment flows for increasing energy access and the low level of private investment are noted. Arguments in favour of increasing private sector contributions are discussed, acknowledging barriers to achieving this.



RE models utilised in SSA are categorised bipartitely, explaining the reasons for the division. Critiques of donor conditionality related to the division are presented

3.2 The importance of energy access for development Modern energy services are widely considered necessary for development. Increasing access to modern energy services is linked to improved provision for basic human needs as well as better economic performance (Practical Action, 2012, IEA, 2011, Kouassi & Pineau, 2011, Barnes, 2007, Wilkinson et al., 2007). The need to develop modern energy services in SSA is huge. 45% of the 1.3 billion people globally without electricity access live in SSA, despite the region being home to just 12% of the world’s population (IEA, 2011). The situation is most acute for SSA’s rural population, 90% of whom are without electricity (AfDB, 2010). Most householders and many small businesses are dependent on inefficient traditional energy sources (Kebede, Kagochi & Jolly, 2010, Anon.). Companies operating in SSA identify lack of electricity access as one of the primary barriers to business (Gelb et al.,

20

2007). Even where electricity is available, the high cost of consumption (between $0.08-$0.016/kWh)4 limits the ability of many to access it (Eberhard et al., 2011). The average cost of power in SSA is over a third higher than in other developing regions, illustrated for residential prices in Figure 1. Eberhard et al. (2008) attribute the expense of SSA’s electricity to the small size of many countries’ power systems, the utilisation of inefficient technologies and the widespread need for back-up generators.

Figure 1 Average residential electricity prices in SSA and other regions, 2005. Source: Eberhard et al, (2011).

SSA’s weak electrification rates are accompanied by the world’s lowest levels of human well-being (UNDP, 2012). Comparison of Figure 2 and Figure 3 indicates a strong correlation between consumption of modern energy services per capita (partly a product of energy access) and human development across the globe.

4

$ refers to USD throughout this report. Where references provide financial figures in CFA francs or euro the following conversion rates have been applied: 1 CFA franc = $0.00199955; €1 = $1.31024 (XE The World's Favorite Currency and Foreign Exchange Site ).

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Figure 2 The status of human development around the world, 2011. Source: UNDP (2012).

Figure 3 Global annual energy consumption per capita by region (toe/capita) Source: Sims et al. (2007)

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3.3 The insufficiency of current investment flows and the argument for increased private sector participation Energy investment flows in SSA are grossly insufficient to achieve universal energy access. The IEA (2011) estimates that over $389 billion would be required for SSA to achieve this by 2030, equivalent to more than $19 billion per annum. At present spending across the whole power sector is $11.6 billion per annum, of which just $4.6 billion is capital investment ( AFD & World Bank, 2010). The majority of this falls to the richest countries, e.g. in 2009 South Africa received over 50% of SSA’s total energy investments, and historically it has attracted much more finance than other countries (Kouassi & Pineau, 2011). Yet it is the poorest that are most in need. Current expenditure is insufficient even to maintain reliable electricity services on the existing grid infrastructure of many countries. Serious power cuts are commonplace, with associated costs in terms of both lost sales and emergency generation (AFD & World Bank, 2010). Extending services to rural populations can by default become a secondary priority. The African Development Bank (AfDB) (2010) has calculated the funding gap required to address SSA’s existing and future electricity demands at $23 billion annually (3.6% of GDP). Globally most investment in energy access derives from public sources; just 22% coming from the private sector in 2009 (Figure 4). The picture is similar for SSA (Estache, 2006), whose wider electricity sector has an even lower proportion of private sector capital investment (Figure 5). Low levels of private investment in the electricity sector have been problematic for SSA governments that had hoped private finance would make up for falling public expenditure in the 1990s, manifested in several countries by a reduction in spending on infrastructure (Kebede, Kagochi & Jolly, 2010).

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Figure 4 Investment in energy access by source, 2009. Source: IEA (2011.)

Total: $4.6 billion 11%

15%

Official Development Assistance Non-OECD financiers 23%

Public sector Private sector

51%

Figure 5 Capital investment in SSA’s electricity sector by source. Data source: Anon (2010) Note: percentages may not be completely accurate due to rounding in the source data.

Several authors have suggested that the percentage of energy access funding from the private sector needs to increase considerably (World Bank, c, IEA, 2011, Hamilton, 2010). The potential to increase investment from public sources is limited in the current global financial crisis. The IEA (2011) suggests that private sector contributions should rise to 31% of total funds, representing $15 billion worldwide, compared with the 2009 private investment of approximately $2 billion. This view is shared by the World Bank (World Bank, c), who see increasing private sector participation as ‘critical’ for poverty reduction. 24

However, the business case for energy access projects can be difficult to justify (Wimmer, 2012, Niez, 2010). The potential customer base is often widely dispersed, difficult to access and has low demand. This increases the relative costs of investment whilst reducing the potential revenues (as compared with urban areas) (Anon., Gaye, 2010, Diop, 2009). The issue is acute for the poorest communities, who may be unable to pay for consumption. Political and regulatory risks and the technical novelty of some projects present further barriers, although mitigation mechanisms exist (UNEP Finance Initiative, 2012). Strong public sector commitment, including good governance, is considered important to assure the private sector of the security of investments (Ajakaiye & Ncube, 2010). Currently many private investors in energy access are motivated on the grounds of corporate social responsibility (CSR) (IEA, 2011). The private sector cannot be expected to invest heavily in energy access unless conditions for commercially viable business models are developed and deployed at scale. Until this is achieved the public sector will inevitably remain the primary investor (IEA, 2011).

3.4 Approaches to rural electrification in Sub-Saharan Africa CLUB-ER5 divides African RE models into two categories6: 

Centralised, internal primary investor. RE is implemented by the publically-owned national electricity company, using equity-initiated investments.



Decentralised, external primary investor. RE is liberalised as a result of reforms. The electricity sector is unbundled,

5

The Club of National Agencies and Structures in charge of Rural Electrification (CLUB-ER) is an active consortium of more than thirty public sector organisations that lead rural electrification in Africa. It has been responsible for numerous workshops and publications that bring together the expertise of RE professionals from across the continent (CLUB-ER, 2012). 6

Categories renamed by this author for clarity.

25

including the creation of a rural electrification agency (REA) and/or rural electrification fund (REF) and a regulatory body (Massé, 2010). The former model was prevalent historically, but since the 1990s the latter has become dominant. The split is largely due to differing levels of financial and professional capacity within national electricity sectors, which determine dependence on support from donors, and so the pressure to implement reforms requested by these (Massé, 2010). Mostert (2008)7 categorises global RE models on a similar basis. A key difference is that centralised RE need not be publically-owned and could involve more than one large-scale power provider. 3.4.1 Centralised, internal primary investor Some countries have successfully implemented RE through their national electricity company. These tend to have a professionally and organisationally robust electricity sector and sufficient state resource to provide a significant proportion of the investment required (Massé, 2010). E.g. Morocco’s Global Rural Electrification Programme (PERG) raised the national electrification rate from 18% in 1995 to 95% in 2008, with the majority of installations conducted by the National Electricity Office (ONE). Its $1.8 billion cost was split between the ONE (55%), local authorities (20%) and beneficiaries (25%) (Massé, 2010, Abdessamad, 2009). Algeria and Tunisia have followed similar models (Massé, 2010, Cecelski et al., 2005). 3.4.2 Decentralised, external primary investor Most countries in Africa have not been able to follow the centralised model, the financial and professional capacity of their electricity sector being insufficiently developed to support the long-term investment required. Senegal is one such example. Commonly electricity sectors in SSA were (are):

7

(Mostert, 2008) is believed to have been the first comparative analysis of several REA/REF models. The report examines twelve countries, not including Senegal.

26



Composed of a single national electricity company.



Dependent on conventional electrification technologies.



Subject to serious infrastructural problems with energy supply/demand deficit, maintenance and replacement of production plant, transportation and distribution, etc.



Dependent on public resources and donor funds for investment (and in some cases, operating costs) despite these resources being limited themselves. Private sector involvement was (is) typically very low.



Unable to provide the guarantees required to access major international loans. (Kebede, Kagochi & Jolly, 2010, Kouassi & Pineau, 2011, Massé, 2010, Sow, 2006).

Countries in this situation have had to turn to donors to finance large-scale electricity investments, including RE programmes. Consequently they have had to abide by donor-imposed conditions, which commonly involve encouraging private sector participation. The rational proposed for introducing the private sector is three-fold: 

To improve professional capacity and efficiency, allowing better service operation and a speedier electrification rate;



To raise private finance. By subsidising the costs of investment, donor support can act as a leveraging mechanism.



To allowing new actors to identify and implement ‘bottom-up’ projects, increasing the total number of projects initiated. (IEA, 2011, Massé, 2010, Mostert, 2008).

The reforms enacted vary, but most countries in SSA have altered their electricity legislation, introduced a specific rural electrification agency and/or fund and a regulatory body, and instigated a national RE strategy based on liberalisation (Massé, 2010, Sow, 2006).

27

3.4.3 The relative effectiveness of the two models Both Mostert and CLUB-ER note the slow progress of electrification efforts following the decentralised model (Massé, 2010, Mostert, 2008). Mostert’s analysis suggests that decentralised models with small concessions are effective only for off-grid applications, and only in the early stages of electrification, but is inconclusive about regional-scale concessions (used in Senegal). Centralised models appear to have been far more effective, reflecting economies of scale and scope (Mostert, 2008). A review of ten highly successful RE programmes by Barnes suggests that success is not decided by the organisational model employed, but rather by the social, economic, political and cultural environment (Barnes, 2007). Nevertheless, agencies implementing RE are more likely to have control over the model they select than the situation in which they find themselves, so comparison and assessment of the relative effectiveness of different approaches is still worthwhile. 3.4.4 Critiques of the development funder reform requirements The potential benefits and risks of electricity market liberalisation in developing countries are widely-documented (Zhang, Parker & Kirkpatrick, 2008, Hall, Thomas & Corral, 2009, Bacon & Besant-Jones, 2001). Competitive market structures are associated with increased efficiency, but the infrastructures offering the lowest overall cost-per-unit of power tend to involve capital-intensive, long-term investments, which can be difficult to justify and/or incentivise. The effect is increased for RE, an unprofitable but socioeconomically desirable service. Such arguments support centralised, public control, however this conflicts with concerns of government corruption and the need to prioritise cost efficiency. Even in developed countries the benefits of liberalisation are questionable. Several governments have reregulated or recentralised their electricity markets (Grimston, 2012). (Angelier, 2006) differentiates between the liberalisation of mature network industries and those whose infrastructure is still under development. Noting that liberalisation in developed countries occurred after infrastructure had been built, the author explains that the efficiencies of competition are unlikely to promote the 28

development of new infrastructure for poor or remote populations. Angelier even suggests that donor-enforced liberalisation deprives developing nations of a tool that was key to the socio-economic growth of now-developed countries. Regarding this, there is a concern that conventional donor requirements afford little choice to poor countries with ambitious development strategies, if the alternative is to limit electrification to a rate affordable with state funds (Kouassi & Pineau, 2011, Massé, 2010). Whilst some governments have embraced market liberalisation, others might have preferred to follow an alternative route (Estache, 2006). Attaching conditions to funding can backfire if the recipient government is not wholly supportive but has formally accepted them to access finance. E.g. the Zimbabwean Government blamed difficulties perceived to arise from its 1998 economic reforms on the IMF, making it easy to garner public support for their reversal (Collier, 2008). Weaker resistance may not have such dramatic impacts, but can nonetheless hinder progress. Another potential problem with conditionality is that conditions designed to mitigate risk can inadvertently impede the progression of the very projects they support. This is recognised by the International Consortium for Africa (ICA), whose 2009 annual report noted that ‘the more complex the projects become […] the more Conditions Precedent the borrowers have to satisfy, and the slower the disbursement rate becomes’ (ICA, 2010). Just 54% and 38% of ICA members’ funding commitments were disbursed in 2009 and 2010 respectively (ICA, 2011, ICA, 2010).

3.5 Summary Global investment in energy access is insufficient. Most is derived from public sources, which have limited potential to be increased. Private investment must therefore increase dramatically. This will not be straightforward, since there are multiple investment barriers to overcome. SSA has the world’s lowest levels of development and electrification, low private investment in electricity and an electricity sector funding shortfall of $23 billion annually. Most RE models in SSA are either implemented as: (1) centralised schemes 29

by the national electricity company, using equity-initiated investment, or; (2) decentralised schemes by the private sector, following liberalisation. Countries with sufficient professional resource and State finance have mostly opted for type (1). Others have defaulted to type (2), often undertaking reforms at donors’ requests. Type (1) models have so far proven themselves to be the more effective. The common requirement of donors for RE liberalisation has been criticised. Since RE is inherently unprofitable and a social service it would suit public control, but this conflicts with known governance difficulties in many countries and the need for cost efficiency. Some authors are concerned that many countries have not had a genuine choice as to accepting donor conditions. Limited political support for these conditions can impede the achievement of their objectives. This thesis does not assess whether liberalisation is a suitable solution to the challenges of RE in SSA, nor is it a critique of donor conditionality. However, in examining PASER it will investigate whether the RE goals of Senegal’s reforms have been achieved, as well as considering the reforms’ impacts. The next chapter provides a detailed case study of the Plan, an example of the type (2) RE model that is most common in SSA.

30

4 The Senegalese approach to rural electrification 4.1 Overview This chapter provides a detailed case study of the Senegalese approach to RE, focussing on PASER. 

Context to PASER’s development is provided with an introduction to Senegal and its electricity sector. Senegal’s historical approach to RE and the decision to undertake electricity sector reforms in 1998 are discussed.



The approach to RE resulting from the reforms is explained, focussing on the development of new organisational structures, PASER, and individual RE programmes.



A survey of existing literature discussing PASER is presented, highlighting the lack of a recent, detailed review and the stark differences of opinion regarding PASER’s success.



An up-to-date review of the Plan’s state of development is conducted. The Plan’s progress is compared with early expectations, and its potential to realise Senegal’s future RE targets is discussed.

4.2 Context to the creation of a new rural electrification model 4.2.1 An introduction to Senegal Located in the West African Sahel, the Republic of Senegal has an area of 197,712km2 and an estimated population of 12.9 million (ANSD). Its long-standing multi-party political system is widely regarded as a model democracy in Africa (BBC). Senegal is part of the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (WAEMU). Purchasing power parity GDP was $25.1 billion in 2010 ($1,850 per capita), driven by private consumption and funded largely by the services (62% of GDP) and industry (23%). Senegal’s rate of real GDP growth average 4.4% over 2000-2005, but this fell to 3.4% over 2006-2010. The drop is attributed to a combination of external factors such as unfavourable rains, 31

international oil and food price shocks and the global financial crises, and internal factors such as shortcomings in fiscal policy, poor management of public finances and on-going electricity shortages (World Bank, c). Senegal’s over economic prospects are improving, as noted in chapter 1.2. Nevertheless, recent improvements to its economic situation should not be taken to mean that socio-economic development is not a critical issue. In 2011 Senegal was classed by the UNDP as a least developed country (UNDP, 2011). 51% of its national population, and 63% of its rural population, were considered to be living in poverty in 2009 (IMF, 2010). Poverty and limited provision of infrastructure and basic services in rural areas has driven migration to urban areas (World Bank,c). 4.2.2 Senegal’s electricity sector In 2009 the installed capacity of Senegal’s plant was 690 MW and electricity production was 2.5TWh. Oil accounts for 86% of production, followed by hydro (9%), biomass (3%) and gas (2%), with a very small amount produced by non-hydro renewable technologies (Enerdata, 2011). This mix is expected to remain stable in the near future, with fuel projected to account for 63% of all operating costs over the period 2010-2013 (CRSE, 2011). Senegal has limited off-shore fossil fuel reserves, but good renewable energy resources, particularly for solar technologies (IRENA, 2012, European Commission JRC, 2011). Senegal currently spends $396 million per annum on power; like many countries in SSA, this figure is much lower than the sector’s expenditure needs. Assuming that $219 million could be saved through efficiency gains, Briceño-Garmendia, Torres & Dominguez (2011) have estimated an additional gap between realised and needed spending of $447 million annually. Electricity production, distribution and transmission were partially opened to the private sector following reforms in 1998 (see 4.2.4 for more detail). However the national electricity company, SENELEC, still accounts for 70% of production (Enerdata, 2011). SENELEC has been in poor financial health since before the reforms. The company has over 800,000 customers (Fritsch, 2011), the majority of whom are linked 32

to its national grid which suffers from frequent, prolonged blackouts (Fofana, 2011, Dabo, 2006, Dioh, 2003). SENELEC has an annual revenue of approximately $500 million and assets worth around $1 billion. It is heavily dependent on state subsidies: in 2008 its contribution to GDP was -0.4%. Analysis suggests the company’s problems are due to poor management of working capital, oil price shocks, a low ratio of kWh billed to those produced and electricity prices that are set too low8 (Sanoh et al., 2012, Fritsch, 2011, Eberhard et al., 2008). These make it very difficult for SENELEC to maintain or invest in plant, and may prevent it from paying suppliers on time, all of which have severe effects on service provision. Besides SENELEC, organisational actors in the electricity sector include independent power providers (IPPs), a regulatory commission, organisations specific to RE and government ministries. Senegal’s national electrification level is 54%. There is a large disparity between the rate of electrification in urban (90%) and rural areas (24%) (Niang, 2011). Senegal’s Economic and Social Policy Document (DPES) for 2011-2015 highlights the development of RE as a priority action (DPES 2011). In 2009 the investment needed to increase the RE level to 50% from the then current level of 20% was estimated at $476 million (Sow, 2009). 4.2.3 Senegal’s historical approach to rural electrification Until 1998 SENELEC held a public monopoly over electricity production, transmission and distribution. There were no incentives to attract private sector participation. A single electricity tariff structure was applied across the country (Niang, 2006, Sow, 2004). State-sponsored RE was managed through covenants between the Government and SENELEC, but without a long-term plan for its development (Niang, 2006). Like other countries in SSA, Senegal’s historical approach to RE was focussed on medium-voltage

8

Although prices are high relative to other West African nations, at $0.219/kWh – not including a $0.064 subsidy – this is thought to be below the local ability to pay and not reflective of rising oil prices (Fritsch, 2011).

33

grid expansion with a few villages electrified by diesel, solar or hybrid generators, either standalone or as part of a mini-grid (Ngom, 2009, Hoang-Gia, 1998). Although production, transportation and distribution infrastructure were largely state-funded (NIGA6, 2012), connection fees and internal installation costs (for wiring, bulbs, etc.) were passed directly to consumers (De Gouvello & Kumar, 2007). By the late 1990s it was understood that this model was ineffective for increasing household electricity access, and that its impacts on poverty reduction were sub-optimal (Niang, 2011). Notably: 

The RE level was just 5% by 1997 and at risk of decreasing: the rate of new electrifications was lower than population growth (Hoang-Gia, 1998).



Both SENELEC and its potential customers had limited ability to pay for the high upfront investment costs (De Gouvello & Kumar, 2007). The single national electricity tariff did not cover the full costs of RE (Sow, 2004). In some locations it took over a decade to achieve a 10% access level because households could not afford connection fees (ICR4, 2012, NIGA8, 2012).



Private sector involvement was not incentivised (Ngom, 2009).



There were difficulties in supplying fuel to and managing remote plant (Ndiaye, 2011).



Expansion was often limited to villages close to the existing network, or the selection of villages was politically motivated (NIGA3, 2012).



Electrification efforts were not integrated across sectors, missing opportunities to maximise the effects of electrification on poverty reduction (Ngom, 2009, Sow, 2004).



Alternative solutions to grid extension were marginalised, even when these would have been the most technically and financially viable. There was a ‘phobia about alternative low cost distribution techniques’ and poor quality installations had damaged the reputation of renewable and decentralised systems (Anon., Niang, 2006, Sow, 2004).

34

The problems were not limited to RE: SENELEC was suffering from issues such as those described in 4.2.2. The government elected to overhaul the structure and functioning of the electricity sector in a bid to improve the situation. 4.2.4 The 1998 Senegalese energy sector reforms In 1998 the Senegalese Government undertook major reforms to liberalise the entire energy sector. For electricity, the reforms involved the (attempted) privatisation of SENELEC9, as well as the removal of both regulation and RE from SENELEC’s responsibilities. Regarding RE, the principal aims of the reforms were to: 

Accelerate the RE process.



Provide good quality, competitively priced electricity to domestic and industrial users, in sufficient quantity to meet demand.



Liberalise the RE market and create an attractive framework for PPPs in order to increase both power generation and sources of finance. (Gaye, 2010, Niang, 2006).

Law N° 98-29 was passed on 14 April 1998 to reform the electricity sector. Implementation of the law and its decrees would lead to the creation of two new institutions affecting RE: 

The Senegalese Rural Electrification Agency (Agence Sénégalaise d’Électrification Rurale, ASER), an independent agency charged with facilitating the advance of RE (Niang, 2006, Law n° 98-29 1998), discussed in detail the following chapter.



The Electricity Sector Regulatory Commission (Commission de Régulation du Secteur de l'Électricité, CRSE), an independent regulator for the production, transport, distribution and sale of electricity. Amongst other responsibilities,

9

The Government tried twice to privatise SENELEC, in 1999 and 2001. Although both counts failed the option of privatising the national electricity company in the future has not been ruled out (NIGA8, 2012). However production, distribution and sale of electricity have been partially opened up to the private sector, for regions not already serviced SENELEC’s existing infrastructure (Enerdata, 2011).

35

the CRSE determines the structure and composition of electricity tariffs (Niang, 2011, Ngom, 2009, Sarr, 2009).

4.3 Senegal’s new approach to rural electrification: ASER and PASER 4.3.1 ASER: The Senegalese Rural Electrification Agency The Senegalese Rural Electrification Agency (ASER) was formally created by decree in 1999 (Decree n° 99-1254 1999). Its sole aim is to promote the development of RE in Senegal. The Agency is autonomous, however it functions as an arm of the Ministry for Energy10 (ME), with its General Director being considered a member of the ME itself (ICR3, 2012). Descriptions of ASER’s functions vary between sources, but generally include the following: 

Development of RE programmes in line with Senegal’s national RE plan.



Provision of financial and technical assistance to support RE initiatives.



Encouragement of ‘bottom-up’ proposals for RE projects from private operators.



Organisation of annual invitations to tender (ITTs) for ‘top-down’ electricity distribution concessions.



Supervision of the contracted installations resulting from these activities. (Niang, 2006, Law n° 98-29 1998, Hoang-Gia, 1998).

4.3.1.1 FER: The Rural Electrification Fund The Rural Electrification Fund (Fonds d’Électrification Rurale, FER) was created by decree in 2006. Managed by ASER, it is an investment fund for all finances relating to Senegalese RE (Massé, 2010).

10

The full title of the Ministry overseeing Senegal’s energy sector has changed several times. For the purpose of this thesis, ‘Ministry for Energy’ or ‘ME’ will be used to designate the Ministry that was in charge of energy at any given time, irrespective of its full title.

36

Resources available to the FER are intended to include: ASER’s annual budget from the State; finance from development partners and State match funding; and RE tax payments that should be collected from electricity bills by power providers11. Approved uses of the fund include: loans and guarantees for RE IPPs; concessional loans for productive electricity uses; the Rural Electrification Emergency Programme; and investment of resources not currently in use. The fund may be used to subsidise the initial investment cost of projects and feasibility studies, but not operational costs, replacement materials, or grid densification in villages that have already been electrified (ESMAP, 2007, World Bank, 2004). 4.3.2 PASER: The Senegalese Rural Electrification Action Plan One of the issues the reforms sought to address was the lack of a long-term RE strategy. The result is the Senegalese Rural Electrification Action Plan (Plan d’Action Sénégalais d’Électrification Rurale, PASER), a 20-year strategy focussed on mobilising the private sector to increase RE rates. PASER came into force in 2002 and it is administered by ASER. It was developed in collaboration with the WB as part of a wider project, DASER (Increase Access to Electricity and Services in Rural Areas, Diffusion des Accès aux Services de l’Électrification Rurale), for which the WB contributed major funding (ESMAP, 2007). Subsequent PASER funders have adopted the framework developed with only minor adjustments (DO1, 2012). When established, PASER had two principle objectives: 

To make electrification services available in 80% of rural communities by 2015.



To increase the national RE level from the 1997 baseline of 5% to 8% by 2005, 30% by 2015 and 60% by 2022 (Hoang-Gia, 1998).

The second of these objectives has received much more political attention than the first, with the result that the official RE targets have varied considerably over time

11

In practice the such payments have yet to materialise. To date SENLEC has refused to provide RE payments to ASER. See chapter 5.3.2.2.

37

(Table 1). Variations on PASER’s original targets (shaded grey in the table) have been a recurrent theme. They are specified in Senegal’s 5-year plan for social and economic policy12, and a Political Letter for the Development of RE (LPDER, Lettre de Politique de Développement de l’Électrification Rurale). More ambitious targets were stipulated in a decree and political letters for the development of the energy sector (LPDSE, Lettre de Politique de Développement du Secteur de l’Énergie). The 2006 ECOWAS White Paper decided a single target for all member states. Table 1 Senegal’s RE targets since 1998. Note: [A] The 1999 target to achieve 50% RE by 2012 was later postponed by government to 2014. Source data: (SIE, , Faye, 2012a, DPES 2011, Brew-Hammond, 2010, ENDA, 2007, SIE, 2007, DSRP II 2006, Sow, 2004, Decree n° 99-1254 1999, Hoang-Gia, 1998)

Year to achieve target

2000 2005 2006 2007 2010 2012 2014 2015 2017 2022

1998

1999

Original PASER targets

Decree 99-1254 of 30/12/1 999

Policy and year in which target set 2003 2004 2006 2006 2007 ECOWAS / WAEMU White Paper DSRP LPDSE LPDER LPDSE Decision II A/DEC.24/ 01/06 (12/1/06)

2011

2012

DPES

LPDSE

6% 8%

15% 16%

15% 17% 20%

50%[A] 50%[A]

50%

30%

36%

30%

32% 60%

60%

62%

62%

Government officials and major actors in Senegalese RE continue to cite a range of different targets. As late as 2011 the government target was stated as being 50% by 2012 (PERACOD, 2011) whilst in November 2011 the (former) government set back the date to achieve 50% RE to 2014 (Agence de Presse Sénégalaise, 2011). Evidently there

12

The current plan, known as the Social and Economic Policy Document (DPES, Document de Politique Économique et Sociale) covers the period 2011-2015. This is a replacement for the former Strategic Document for growth and Poverty Reduction (DSRP, Document de Stratégie pour la croissance et la Réduction de Pauvreté).

38

is considerable confusion as to what the ‘official’ target is. The majority of interviewees referred to the ‘original’ figures when talking about targets, with one senior figure suggesting the 50% targets were unrealistic (NIGA8, 2012). 4.3.2.1 PASER’s programmes PASER is divided into three programmes, addressing different challenges of RE: the Rural Electrification Priority Programme (Programme Prioritaire de l’Électrification Rurale, PPER), the Multi-sector Energy Programme (Programme Énergétique Multisectoriel, PREM) and the Local Rural Electrification Initiative (Électrification Rurale d’Initiative Locale, ERIL). The key points of each are summarised below. Further detail is provided in Appendix B. 4.3.2.1.1 Rural Electrification Priority Programme (PPER) PPER is PASER’s principal mechanism for increasing electrification; it is projected to result in at least 163,571 new household connections by 2017, of which at least 153,601 will be contractual requirements of the Programme (Sarr, 2012). PPER aims to make RE a commercially viable venture.

PPER is a ‘top-down’ scheme, which divides Senegal into regional RE concessions (Figure 6). Twenty-five-year rights to provide electricity services in each concession are awarded to IPPs by technology-neutral competitive tender, with the winner being the IPP that proposes to connect the greatest number of households during the concession’s first three years, in return for a predefined output-based subsidy. This is expected to encourage IPPs to seek supplementary finance so that they may increase their bid. An additional subsidy is available for renewable technologies to level the playing field with conventional solutions. Other important aspects of PPER’s design include: 

Concessions have been sized with major IPPs in mind. Importing international expertise is hoped to improve the professional capacity of the Senegalese power sector, particularly if local companies partner to implement the works.

39



Pre-financing of internal installations and connection fees by the IPP. This removes high upfront costs as an investment barrier to customers and incentivises the IPP to maintain the electricity service.



Tariffs have been designed to maximise affordability and consumer control: prices are set according to the capacity-to-pay of the local population; flat-rate tariffs including maintenance and bulb replacement are available; bills are prepaid. The last point also minimises the risk of non-payment to IPPs. (IRENA, 2012, De Gouvello & Kumar, 2007, ESMAP, 2007).

After a concession’s initial three years RE efforts are expected to focus on network densification. It has been suggested that ASER will seek additional output-based subsidies to increase the number of households electrified during this period (NIGA9, 2012). Early reviews of PPER commend its design for: increasing the efficiency of subsidy funds (leveraging private sector finance to maximise the number of connections); creating model RE markets with a sufficient customer-base, geographical compactness and lifetime to attract major IPPs; and providing an incentive to deliver electricity connections that otherwise would not have been commercially viable (De Gouvello & Kumar, 2007, ESMAP, 2007). A more recent presentation by KfW considers the technology-neutral concession model employed by PPER to be theoretically the most cost-efficient approach to RE, minimising the need for subsidies (Gihr, 2009).

40

Figure 6 Geographical limitations of the 10 PPER concessions. Source: (ASER & DESI, 2012).

4.3.2.1.2 Multi-sector Energy Programme (PREM) PREM aims to maximise the effects of RE on poverty reduction, by promoting the electrification of revenue-generating activities and social facilities and by encouraging knowledge-sharing across sectors. It links PPER to existing programmes in other sectors supplying technical and financial assistance to projects that need electricity access in order to achieve their social or economic targets. IPPs awarded PPER concessions are required to support a set number of PREM projects (known as PREMs) as part of their contract. Local businesses, community organisations and NGOs may also apply to ASER for support to develop a PREM outside of the IPP’s contractual requirements or even outside of an operational PPER concession (NIGA4, 2012, De Gouvello & Kumar, 2007, ESMAP, 2007). PREM has been praised as an innovative method of increasing the positive impacts of RE (De Gouvello & Durix, 2008, ESMAP, 2007, Sow, 2004). The benefits are doubly advantageous since PREMs themselves increase electricity demand, augmenting the potential financial gains of electricity providers and so the viability of RE. However, as 41

will be noted in 4.5.1.3, PREM has so far developed very little in practical terms. As there is relatively little to add to the wider discussion at this time, PREM will not be a focus of this thesis. 4.3.2.1.3 Local Rural Electrification Initiative (ERIL) ERIL is a ‘bottom-up’ scheme for the development of community-scale, locally initiated RE projects (known as ERILs), complementary to PPER’s ‘top-down’ approach. It provides a fast-track route to electrification for mobilised communities that would otherwise not be prioritised. To qualify, communities must either be located in a region in which a PPER concession has not yet been awarded, or they should be villages which are not expected to be electrified within the first three years of the PPER concession’s operation. ERILs within a PPER concession must be approved by the PPER IPP, who has the option to purchase the ERIL from its operating company. ASER holds biannual calls for ERIL proposals, which may be put forward by local authorities, community groups, businesses or NGOs. Promising proposals are awarded a grant to cover 50% of feasibility study costs. Subject to the results of the feasibility study, the projects selected for technical and financial support with implementation are those proposing the greatest number of connections (up to a limit of 200 per ERIL concession). The implementation and operation of the ERIL is tendered to IPPs. Unlike PPER, the subsidies attached to ERIL projects are not output-based. (IRENA, 2012, De Gouvello & Kuma, 2007). Technical support is also available to projects that have secured funding independently of ASER. The financing and tariff structure of ERILs is similar to that for PPER: pre-financed internal installation and connection costs; flat-rate tariffs adjusted to local conditions; pre-paid electricity services. As for PPER, the tariff rates for each ERIL are set separately by CRSE (IIC1, 2012, NIGA4, 2012). 4.3.3 Other ASER-led rural electrification initiatives Alongside PASER, ASER has continued conventional RE initiatives. Although not the focus of this thesis, an awareness of these provides important context to understand 42

the relative benefits of the PASER programmes, as well as some of the difficulties that have been faced (discussed further in chapter 5.3.3). 4.3.3.1 Covenants (1999-2007) Senegal’s historical approach to RE based on state-funded13 covenants is still in use. Materials and works (rather than managed concessions) are sub-contracted to private companies. Once installations are complete their operation is assigned to private sector Delegated Transitional Managers (DTMs), until such time as a PPER concession becomes operational in the area (NIGA5, 2012). The majority of covenants implemented since ASER’s creation have been coordinated by ASER; (NIGA5, 2012). However in recent years SENELEC seems to have fallen back into favour for implementation of covenants, as several have been awarded to the company (NIGA6, 2012, Sylla, 2011). ASER was awarded seven covenants in the period up to 2007, electrifying 242 villages at an approximate cost of $18.5 million14 (Sylla, 2011). 4.3.3.2 Rural Electrification Emergency Programme (REEP) (2008-2012) At the time of writing REEP is one of ASER’s major RE programmes. It was launched in 2008 with official aims of resolving social equity issues arising from former programmes, and improving the geographic coverage of RE infrastructure (Diop, 2009). Like the covenants, REEP is state-funded, villages are state-selected and on-going operations are managed by DTMs until the arrival of a PPER IPP. A key difference is that the cost of internal installations and connections fees are pre-financed (as under PPER), making electricity access more readily affordable (NIGA8, 2012).

13

For covenants administered by SENELEC an estimated 3% of the project cost is raised through crosssubsidising urban clients (NIGA6, 2012). 14

See footnote Error! Bookmark not defined..

43

REEP aims to electrify 473 villages, 100 by ASER (cost $4.7 million) and 373 by SENELEC (approximately $19.6 million). 4.3.3.3 Individual projects ASER has coordinated various other RE projects with NGOs and private companies, worth $58 million at July 2011. These have been financed predominantly by international development funds, with some Senegalese state funds. Spain, India, Germany and the Netherlands have all made significant contributions (Sylla, 2011).

4.4 Existing knowledge of PASER’s achievements An extensive survey of documents available in the public and academic domain identified many papers which describe aspects of PASER’s design, however very few comment on its achievements to date or its effectiveness. Those that do are listed in Table 4-2, categorised by the depth of discussion provided and the overarching view expressed of the Plan.

44

Table 2 Categorisation of literature discussing the progress and effectiveness of PASER, grouped according to depth of discussion and overall view expressed of PASER.

Overall view of PASER

Positive

Depth of discussion of PASER In-depth Four discursive papers by members of the World Bank Group (PPIAF, 2010, De Gouvello & Durix, 2008, De Gouvello & Kumar, 2007, ESMAP, 2007). One journal article and one technical briefing, both (co)authored by Amadou Sow, a Senegalese energy professional, in conjunction with IEPF (Sow, 2006, Sow & Vasse, 2004).

Brief

A Renewables Readiness Assessment for Senegal published by IRENA (IRENA, 2012).

Negative

N/A.

Undecided

Two reports and one presentation by PERACOD (Ndiaye, 2011, PERACOD, 2010a, PERACOD, 2010b).

N/A.

Short project reviews published by some of PASER’s funders (AFD, World Bank, 2012, DECRS, 2009, Gihr, 2009). A comparative study of RE Agency models written for the EUEI-PDF (Mostert, 2008). Senegalese Government documents (various). Senegalese media reports (various).

A summary of the content of each of these documents regarding PASER’s progress and effectiveness is provided in Appendix C. Analysing the documents’ contents, several trends emerge: 

All of the documents discussing PASER’s progress in-depth offer a very positive view of PASER.



Apart from the PERACOD documents, PPIAF (2010) and IRENA (2012) all of the positive reviews were written over the period 2004-2008. They describe the then-recent developments to PASER as a model and to its implementation.

45



The PERACOD documents are the only ones to provide a detailed update of part of PASER. They detail the achievements of PERACOD’s pilot programmes for ERIL.



PPIAF (2010) and IRENA (2012) are different in their treatment of the subject to the other positive, in-depth documents; rather than concentrating on the progress of PASER per se, the former focuses on PPIAF’s contribution to PASER’s conceptualisation; the latter notes that significant donor and private sector finance has been attracted and lists lessons to learn from the Senegalese experience, but does not provide explanatory context.



The negative reviews are all written by PPER funders. They all note that PASER has been ‘slow’ (AFD, DECRS, 2009) or ‘time-consuming’ (Gihr, 2009) but offer little, if any, explanation for this.



The only detailed comparison of multiple RE models is inconclusive about the effectiveness of regional-scale RE concessions as employed by PASER.



Government and media reports are primarily concerned with quantitative progress updates and policy developments; they do not offer a qualitative judgement on effectiveness.



There is no detailed review of the whole Plan.



There is no recent detailed review of implementation progress.

There is evidently some disagreement concerning PASER’s progress and effectiveness. The early and detailed reviews of PASER suggest it is an exciting and innovative, wellsupported scheme that made good initial progress towards increasing RE substantially in Senegal. They are particularly impressed by the interest shown by development funders and the private sector, and the potential of PREM to maximise the socioeconomic impacts of RE. Shorter, more recent reviews view the scheme’s progress as slow but without explaining this judgement. The reasons behind the stark change in popular opinion of the Plan are far from clear. The literature indicates that considerable time and resource was spent developing the PASER concept a decade ago, and that the Plan continues to be considered a potential exemplar model for RE by some parties. However, to this author’s knowledge no 46

holistic analysis of PASER’s progress has been conducted since its implementation began to materialise in 2007, when the first PPER concession was awarded to ONE. Correspondence between members of the World Bank, ASER and this author also hints at this (De Gouvello, 2012), and the assertion was supported by an ASER representative and a member of Senegal’s private RE sector (ICR3, 2012, NIGA1, 2012).

4.5 An updated review of PASER’s achievements It is difficult to gauge the success of PASER’s progress since its inauguration ten years ago. The most obvious quantitative indicator for the Plan, and the only one relating to its formal objectives – Senegalese RE levels – is not actually reflective of PASER’s achievements. To this author’s knowledge PASER has resulted in only 6,121 new household connections at the time of writing, a small figure compared with the estimated total of 730,000 rural households in Senegal (Gueye, 2009), of which approximately 180,000 have electricity connections15. The numbers imply that of the 24% of rural households currently electrified, PASER is responsible for just 0.08%. This is not an impressive achievement for a RE Plan that has been operational for a decade; Chile’s Rural Electrification Programme (PER, Programe de Electrificatión Rural) and Morocco’s Global Rural Electrification Programme (PERG, Programme d’Électrification Rurale Globale) managed increases of around 40% and 75% respectively over a similar timeframe (Massé, 2010, Barnes, 2007). Figure 7 illustrates the rising level of RE in Senegal during PASER’s lifetime. Accepting that 11% of homes were already electrified before PASER became effective in 2002, we can estimate that around 7% of the new connections achieved during PASER’s lifetime were a result of PASER16. The remaining 93% must therefore have been achieved by auxiliary programmes, e.g.: covenants managed by SENELEC, and later ASER (as part of REEP), and independent projects led by NGOs and others. The small contribution of

15

Estimate by author, based on data from Gueye (2009) and current level of RE.

16

Senegal’s RE level has increased by 12.7% over the period, from a 2002 baseline of 11.1% to the 2009 level of 23.8%. Assuming that the number of households has remained constant at 730,000, this implies that 92,710 new connections have been achieved, of which 6,121, or 7%, by PASER.

47

PASER to rising levels of RE during its lifetime indicates that – for the moment – Senegal’s overall RE levels are inappropriate as an indicator of the Plan’s achievements.

Achieved levels of RE in Senegal, 2002 - 2009 Rural electrification level (%)

25 20 15 10 5 0 2002

2003

2004

2005

2006

2007

2008

2009

Year

Figure 7 Achieved level of RE in Senegal, 2002 - 2009. Note: Achieved levels of RE compiled from multiple sources which may not have used the same parameters. No reliable data were available for 2010-2012. Source data: (SIE, , DPES 2011, Dufail, 2010, Gaye, 2010, Sokona, Sarr & Wade, 2004)

PASER is intended to be Senegal’s primary RE mechanism, but clearly this has not been the case over the last decade. To understand the reasons for this, and to evaluate the Plan’s other achievements, it is necessary to consider qualitative, as well as quantitative, results. Obviously it is important to conduct a review of the development of each of PASER’s programmes including the status of installations underway. The existing literature on the programme suggests further issues for exploration: the interest and financial participation of international development funders and private companies . These data can be compared with the temporal projections set when the Plan was first created to assess the differences between initial expectations and realised achievements, and so to judge the pace of the Plan’s progress and the likelihood of realising Senegal’s outstanding RE targets. The remainder of this chapter seeks to conduct such an evaluation.

48

4.5.1 The development of PASER’s programmes and the status of installations underway Each of PPER’s three programmes are at different stages of development with regard to organisational structures and processes, tariff structures and installations planned or underway. None of the programmes are yet fully operational and no ‘official’ PASER electricity connections have yet been realised. A summary of the development status of each programme is provided below, with the details of individual PPER concessions and ERIL projects detailed in Appendix F. 4.5.1.1 PPER The organisational and legal frameworks for PPER have now been finalised, as have most of the documentation and processes. This has allowed contracts to be signed between IPPs, ASER and development funders for three of the concessions, with financial commitments and expected installation numbers as detailed in Table 6-5. However some technical specifications and particularly the structure of concession tariffs are still under negotiation between IPPs and the CRSE. Consequently, although the installation works for 5,000 households in the first concession had been completed by August 2012, the finalisation of connections was on hold pending the resolution of tariff negotiations between the IPP and CRSE; it is hoped these will be resolved in the very near future. Installation works have not commenced for any other concessions. Contracts are expected to be signed for a further three concessions by the end of 2012, and initial studies and fundraising are underway for the remaining four concessions. (ASER, ASER & DESI, 2012, ASER, 2012c, DO1, 2012, DO3, 2012, IIC3, 2012b, IIC4, 2012, NIGA7, 2012, NIGA9, 2012, Sarr, 2012, Niang, 2011) 4.5.1.2 ERIL Officially ERIL projects have not yet commenced. The organisational and legal framework for ERIL is still under development and there have been delays in attracting funding for projects. Although part-funding for ERILs was included as part of the WB 49

DASER programme, match funding for the first official ERILs was only recently secured (from Daey Ouwens). However, a pilot ERIL scheme was conducted by PERACOD, a German-Senegalese cooperation, and resulted in an estimated 1,89417 new household connections. A second, refined PERACOD pilot is currently underway, which will result in approximately 8,66318 additional household connections. The experiences of the pilot schemes are contributing significantly to the development of the full ERIL framework. There have been difficulties in establishing truly ‘bottom-up’ ERIL projects, with only a small number under preparation so far. It has been noted that rural communities do not necessarily have the organisational capacity to initiate local RE projects, and even those that do may be unaware of ERIL’s existence. This is partly blamed on insufficient publicity efforts by ASER: according to interviewees ERIL has only once been promoted (despite early plans to hold multiple information campaigns), and even this was targeted at potential project operators rather than rural communities themselves. There are hopes that third parties will spur the initiation of ERIL projects, using a similar approach to PERACOD19. (ASER, 2012a, IIC1, 2012, IIC5, 2012, NIGA5, 2012, Ndiaye, 2011). 4.5.1.3 PREM PREMs that fall under PPER must follow the development of their parent concession; consequently very little material progress has been made to date, although the PREMs for the first concession are all expected to be installed by April 2013.

17

Number of households estimated based on stated number of persons benefiting in (Ndiaye, 2011), assuming an average of 9 people per household as stated by (Fall, 2011) 18

See footnote 17.

19

PERACOD’s approach is focussed on maximising the participation of local communities. The NGO has worked closely with local authorities (collectivités locales) to educate local residents about the scheme and to enable authorities to shortlist eligible villages, which are then ranked by PERACOD and passed to ASER for final selection. PERACOD has also developed a social framework to facilitate communication between ERIL stakeholders at all levels.

50

No PREMs have yet been officially developed as part of ERILs, however PERACOD conducts PREM-style projects systematically alongside its ERIL pilot scheme. Seven PREMs not linked to PPER or ERIL have secured development funder support. Feasibility studies for these are being conducted to identify the final projects. (IIC1, 2012, NIGA4, 2012, NIGA9, 2012). 4.5.2 The participation of international development funders and private companies One of the key aims of the 1998 reforms was to ‘liberalise the RE market and create an attractive framework for PPPs in order to increase both power generation and sources of finance’ (chapter 4.2.4). Although PASER has yet to increase power generation significantly, opening RE to private participation through PPER has resulted in several new PPPs, using donor finance to leverage private sector interest. PASER’s success at bringing-in funding from both development organisations and the private structure is undisputed amongst the interviewees and the literature which this author has consulted. 4.5.2.1 Development funders Six of PPER’s ten concessions have secured finance from development organisations. Some, but not all, of the funders are also funding ERIL and/or PREM (e.g. WB, EU, AFD) (NIGA4, 2012). ERIL has also been separately financed, e.g. by GTZ and Daey Ouwens. At May 2011 $145 million had been offered to PASER by development funders (NIGA8, 2012); this figure has since increased. The extent of donor funding offered and the number of development organisations keen to participate in the PASER is clearly considered unusual for RE (DO1, 2012). Whilst ASER has been proactive in seeking this support, one ASER representative suggested that the strong enthusiasm of donor organisations for the Plan meant that in practice attracting donor funding has not been difficult (NIGA9, 2012). Representatives from funding organisations and ASER attribute the interest of donors

51

to their “belief” in the PPER/ERIL concept and their desire for the model to work, allegedly a widely-shared view (DO1, 2012, DO3, 2012, NIGA9, 2012). 4.5.2.2 Participation of leading international IPPs PPER has succeeded in attracting leading international IPPs. Three concessions have confirmed private sector partners, and a further three have provisional partners. These first six concessions were awarded to four companies: 

ONE and STEG – respectively the national electricity companies of Morocco and Tunisia, both of whom have strong RE credentials from domestic programmes (Massé, 2010);



EDF – the world’s largest electrical utility company (Nationwide Utilities);



Isofoton - a Spanish solar energy company with a turnover of $139 million in 2011, which operates in over 60 countries (Recio, 2012).

Representatives from both ASER and SENELEC have indicated their satisfaction with the IPPs selected, being confident of their experience and professionalism (NIGA4, 2012, NIGA6, 2012, Niang, 2011). As noted in chapter 4.3.2.1.1, PPER’s reverse competitive tender has been designed to encourage IPPs to seek supplementary funding, to allow them to increase their bid for the number of connections they will implement in return for a predefined subsidy. The winning bids for the first six concessions are summarised in Appendix D. In total $43 million of private finance has been offered by IPPs, with the proportion of private investment for individual concessions ranging from 22% to 65%. The mean proportion is 45%, significantly greater than the minimum 20% private investment required by the invitation to tender (ITT). It is also above average for RE in general: as previously discussed, the private sector only covers 22% of energy access investments globally (IEA,2011), and Mostert (2008) estimates that the private contribution for RE Agency models is usually limited to one-third, due to the commercial difficulties of RE. Winning IPPs have also proposed twice the minimum number of connections required on average, although again this varies considerably between concessions; from around 52

one-third additional connections to more than three times the minimum number required. It appears that the ITT’s design aims are being realised, reducing the relative strain of RE on Government finances. The State does continue to contribute a minimum of 10% toward PASER’s projects (NIGA9, 2012), but this is small compared to the more conventional covenant and REEP models installations which are almost entirely subsidy-funded. 4.5.2.3 Threats to the sustainability of participation by donor funders and IPPs Although PASER has succeeded in attracting the interest of donor funders and IPPs, there is cause to believe that this may be under threat. The dissatisfaction of donors is hinted at in the existing literature (all PPER funders complained of the “slow” progress of PASER), and the extent of their discontent and potential limitations to IPPs’ interest – as well as the potential implications of these – became much more apparent during stakeholder interviews. 4.5.2.3.1 Donor dissatisfaction The WB, AfDB, KfW, EU and AFD are all noted to have been disappointed with PASER’s slow progress (DO1, 2012, DO3, 2012, KfW Entwicklungsbank, 2010, DECRS, 2009). The disbursement deadlines for the first concessions (funded by the WB and AFD) have had to be extended by several years, but even this may not be sufficient to ensure that PASER can access the full level of funding promised. E.g., a revised disbursement strategy has been agreed for the first PPER concession to maximise the funding that can be claimed before the current deadline of 31st December 2012. Despite this only 40% of the finance offered is expected to be disbursed on time, and there are fears that additional unforeseen delays could prevent even this level of disbursement from being achieved (DO1, 2012). This obviously brings the future financial viability of the concession into question, particularly given that interviewees do not expect the WB to provide an additional extension (DO1, 2012, NIGA8, 2012). The Bank is known to have

53

been frustrated by the slow rate of PASER’s development20, which has tied-up funds that could otherwise have been used for projects elsewhere (DO1, 2012). This may impact the Bank’s attitude towards funding additional ASER projects. If the rate of PASER’s implementation is not accelerated , it may become more difficult to secure donor funding in general: the AFD has already refused to finance a second concession because of the slow progress (DO3, 2012). ASER is conscious of the threat its delays are posing to funding, and is evaluating different possible solutions. Additional government funding has been promised to cover part of the shortfall for the first concession in the event that the WB funds are lost. For other concessions, one representative suggested that the IPP prioritisation criteria could be reversed to manage the shortfall (NIGA8, 2012). Rather than competing on the number of households they would electrify, applicants would simply be judged on the extent of private finance they were prepared to contribute for a fixed number of connections. Another option being considered is to merely ask IPPs to compete for operation of the concessions, and not installation (which, presumably, would be undertaken by the State). In either case any surplus funding would be used to finance under-funded existing concessions. Although such suggestions could help to secure the future of concessions already underway, they are radical departures from the current tender design. Importantly, they would not encourage the maximisation of connections per unit of subsidy. The efficiency of subsidy achieved by the PPER model – which could help to address the insufficiency of finance for RE globally, by leveraging private sector investment – is one of the main reasons that PASER has managed to attract so much donor funding to date. Changing this one aspect of the scheme’s design could severely undermine its ability to attract further donor finance, potentially jeopardising the viability (or at least the scope) of future

20

The WB downgraded its portfolio for Senegal in July 2012, with DASER cited as one of four problem projects. ASER was criticised for failing to complete its manual of procedures (to ensure compliance with legislation) or to implement a management information system on the progress of installations. The Bank also asked ASER to redouble efforts to finalise its organisational procedures as soon as possible and to improve its organisational efficiency, including reducing its operating budget and its 20 personnel (Faye, 2012b, SeneWeb News, 2011).

54

concessions. It is however important to note that these are just some of the solutions under consideration; at the point of interview no definitive option had been selected. 4.5.2.3.2 Limitations to IPP interest The design of PPER’s ITT is expected to maximise the level of private sector investment in the programme, as bids are judged on the number of connections to be installed for a predefined subsidy. Unsurprisingly, winning bid results indicate that companies seem to be prepared to offer a greater number of additional connections where the cost per connection is lower (Figure 8). However, there is no clear relationship between the percentage of additional connections proposed and the proportion of private sector finance offered (Figure 9). Since the dataset is very small it is imprudent to make generalisations, however the lack of correlation may be partly explained because some IPPs are offering disproportionately attractive bids in order to gain a foothold in Senegal’s RE sector. ONE and Isofoton – the only IPPs to hold two concessions – both provided a more attractive bid for their first concession, with the difference between ONE’s two winning bids being particularly stark. Mostert suggests that’s ONE’s “sensationally low” (Mostert, 2008, p.12) initial bid was intended to secure market entry. The idea is supported by one IPP interviewee, who inferred that their organisation had bid below cost for this reason (IIC4, 2012). Obviously belowcost bids are not viable if repeated widely, so as the remaining concessions are awarded the scale of private contribution may decrease.

55

250%

Additional connections

200%

150%

100%

50%

0% 0

200

400

600

800

1,000

1,200

1,400

1,600

Cost per connection ($)

Figure 8 Comparison of cost per connection with percentage of additional connections proposed, for PPER winning bids. Source data: as for Appendix D.

% additional connections

250%

200%

150%

100%

50%

0% 0%

10%

20%

30%

40%

50%

60%

70%

% private finance

Figure 9 Comparison of percentage of additional connections proposed with percentage of private finance proposed, for PPER winning bids. Source data: as for Appendix D.

Quite aside from the financial viability of individual concessions, the number of responses received to ITTs suggest that the private sector interest in the PPER overall may be limited. While ASER representatives are satisfied with the quality of winning 56

tender responses for PPER, it is worth noting that of the six concessions awarded to date, two had only two applicants for the second stage tender, and four had only one applicant. Further, the first-stage ITT had to be relaunched for two concessions as initial interest was insufficient (NIGA10, 2012a). Insufficient or ineffective marketing, low profitability and the delay between the first and second phases of the tender process have all been suggested as possible reasons for the lack of respondents (ICR3, 2012, NIGA10, 2012a, NIGA4, 2012, NIGA5, 2012). The situation may worsen if the PASER gains a reputation as being difficult to work with; like donors, IPPs already involved with PASER are frustrated by its slow development (IIC3, 2012a, IIC4, 2012). Additionally, both the IPP representatives interviewed stated that their companies had not been motivated to participate in the programme on financial grounds, but for reasons of corporate social responsibility (CSR) and improving relations between Senegal and their home country (IIC3, 2012a, IIC4, 2012). Although their total investments in Senegalese RE projects should pay for themselves, their profits are not expected to compete with those of other business activities. This attitude is evidently beneficial for Senegal at present, however not all companies are motivated by CSR, and the perceived marginal value of improving international relations and enhancing company image may decrease as private investment in RE increases – both in Senegal and abroad. There is a risk that concessions and countries may find it increasingly difficult to attract such high levels of private finance as time goes on. 4.5.3 Comparison of PASER’s achievements with early temporal projections Early expectations for PASER’s development envisaged RE levels achieved by the Plan increasing in line with national RE targets (see Figure 10). It is therefore reasonable to conclude that at its outset PASER was intended to be the primary driver of RE in Senegal, even though – as discussed at the start of this chapter – the Plan has yet to assume this status. Table 1-1 summarises an early roadmap for PASER. The plan’s development over 1999-2015 is split into three phases: a period of preparation, when ASER’s internal functions would be developed and stakeholders prepared for the programme; a launch phase when RE installations would be commenced; and a consolidation phase, 57

representing a ramping-up of the rate of new electrifications. According to the roadmap 53,000 new household connections should have been achieved through PASER by 2005, and a further 190,000 by 2015. However, as Figure 10 illustrates, the realised and projected PASER installations at the time of writing fall short of the temporal projections of the early roadmap21. In fact, the roadmap’s 2005 target is not expected to be achieved until 2013 (ASER, 2012a, ASER, 2012c, Hoang-Gia, 1998). Table 3 Summary of early roadmap for PASER implementation. Source data: Hoang-Gia (1998)

Phase

Objectives Implementation of the different operational components of the new RE framework:  Development of ASER’s internal tools and procedures; Preparation: 1999 – 2000  Initiation of support services for local authorities;  Reinforcement of national professional/institutional capacity;  Preparation and launch of the programme in 2001. Launch: 8% RE level achieved, representing 80,000 households (including 27,000 2001 – 2005 existing SENELEC connections and 53,000 new connections). Consolidation: 30% RE level achieved, representing 270,000 households (190,000 new 2006 – 2015: connections).

21

All of the connections realised to date have been achieved through ERIL. Mostert suggests that Senegal should have prioritised ERIL’s development at an earlier stage to increase the realised number of electricity connections by PASER whilst the more complex PPER programme was being developed. Mali’s RE strategy also combines large and small concessions. In its early years Mali’s strategy prioritised the development of small concessions, with the effect that by 2008 Mali’s strategy (launched in 2005) had achieved many more connections than PASER, despite finding it harder to attract funding (Mostert, 2008).

58

Comparison of new household connections targeted by early PASER roadmap with those realised and projected for PPER and ERIL at August 2012 New household connections

300000 250000 200000 150000 100000 50000 0 2004

2006

2008

2010

2012

2014

2016

2018

Year PPER and ERIL connections (realised and projected at August 2012) New connections targetted in 1998 action plan

Figure 10 Comparison of new household connections targeted by 1998 PASER Action Plan with those realised and projected for PPER and ERIL at August 2012. Source data: ((ASER, 2012a, ASER, 2012c, Hoang-Gia, 1998). Notes: PPER projected connections include an assumed annual 2% increase in RE levels after the initial 3-period of each concession. For concessions which have yet to be awarded to an IPP, it is assumed that the minimum number of connections required to be stipulated in the ITT will be achieved. ERIL projections are for confirmed projects at the time of writing only.

4.5.4 The likelihood of achieving Senegal’s outstanding RE targets Figure 11 compares the realised level of RE in Senegal from 1990 to 2009 with the different target levels detailed in Table 1, the levels formerly projected by the roadmap discussed in section 4.5.3, and the installations projected to be realised by PPER and ERIL at the time of writing. ASER’s original and 20007 DPES target RE levels and the early roadmap projections have so far been realised in Senegal, even if - as previously discussed - this is not an achievement of PASER itself. The on-going rate of electrification is broadly in line with the pathway needed for Senegal to continue meeting targets, notably to achieve a RE level of 62% in 2022. The projected rate of future PPER and ERIL connections is a little slower, but could be increase if ERIL’s legal framework is finalised, allowing 59

development of full projects. Both trends suggest that the more ambitious targets set by decree and energy sector political letters (LPDSE) are unlikely to be realised. Interviewees and the Senegalese media recognise that the 2012 50% target will be missed. The average annual rate of RE would need to more than double to 4.5% to meet the 2017 target of 60%. There could be potential to increase the pace of electrification if both PPER and ERIL projections are realised and if non-PASER programmes such as REEP are continued beyond 2012. The contrast between Figure 10 and Figure 11 is striking. Although the achievements of PASER itself fall far short of the RE rate required to realise its original targets, the Senegalese RE sector as a whole has managed to keep on-track for these, increasing the average new electrification rate from 0.8% before PASER’s creation in 2002 to 2% since. Further, the rate of PASER installations currently projected appears sufficient to maintain this trend. One might suggest that ASER’s history of revising projections could draw into question the validity of the current forecasts. After all, these are still highly dependent on the finalisation of official documentation. A key difference may be that the current projections have been drawn-up in collaboration with IPPs, some of whom have already significantly developed their installation plans. In interviews IPPs demonstrated themselves to be wary of publicising unrealistic schedules, or indeed schedules dependent on third parties (IIC3, 2012a, IIC4, 2012). If administrative procedures can be completed in a timely fashion, if replacement funding for any WB finance that is not disbursed on time can be sourced, and if the forecasts of the IPPs themselves are respected, it may well be possible to follow projection plans more closely than in the past. PASER may soon at last be sufficiently developed to independently realise RE at a rate comparable to that achieved over the last decade, which would allow its original targets to be achieved.

60

Achieved, projected and targetted RE levels in Senegal 100 90

Rural electriciation level (%)

80 70 60 50

Targets: original & DPES Path from 2009 level Targets: 1999 decree & LPDSE 2007-2012 Path from 2009 level Target: LPDSE 2012 Path from 2009 level Former projection: Early roadmap Current projection: Results of PPER & ERIL in 2013 Path from 2009 level Achieved levels of RE

40 30 20 10

0 1990

1995

2000

2005

2010

2015

2020

Year

Figure 11 Achieved and targeted RE levels in Senegal. Source data: (SIE, , ASER, 2012a, ASER, 2012c, Faye, 2012a, Niang, 2011, DPES 2011, Dufail, 2010, Gaye, 2010, Niang, 2006, Sow, 2006, DSRP II 2006, Sokona, Sarr & Wade, 2004, HoangGia, 1998). Notes: Achieved levels of RE compiled from multiple sources which may not have used the same parameters. 2014 projection calculated from expected household connections using assumptions stated in footnote 17.

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4.6 Summary Senegal is a poor but politically stable West African country with improving economic prospects. Spending on the electricity sector is insufficient. Historically RE was conducted by the national electricity company, funded almost entirely by the State, and focussed near-exclusively on extension of the national grid. This approach had limited success. In 1998 Senegal’s electricity sector underwent major reforms to address these and other issues. ASER was one result of the reforms. It is autonomously and solely responsible for promoting RE in Senegal. ASER’s strategic plan, PASER, aims to accelerate the rate of RE, provide effective electricity services to rural populations, and increase the extent of finance available for RE through PPPs. The concept of its flagship programme, PPER, has been widely praised for its innovative combination of output-based subsidies, technology-neutral electrification concessions and reverse-auction tenders. In combination these have succeeded in attracting levels of private investment far greater than is common for RE programmes, and much higher numbers of promised new household connections than originally hoped. Unfortunately, implementation of PASER has been much slower than expected. This is a threat to the Plan’s future viability as financiers are frustrated with its lack of material progress. Nonetheless, the level of RE in Senegal has grown in line with PASER’s original targets, due to the achievements of subsidy-inefficient auxiliary programmes. PASER is now close to being able to take-over the leading role for RE in Senegal, but its success will depend on the resolution of negotiations and on securing substitutes for funds that are currently at risk. The following chapter analyses why the development and implementation of PASER has been so much slower than expected.

62

5 The factors slowing PASER’s development and implementation 5.1 Overview This chapter investigates the factors that have prevented PASER from developing and being implemented at the pace originally hoped. 

The delays experienced are noted and grouped by type. Root cause analysis (RCA) identifies political interference and innovation as the primary underlying causes.



The motivations for political interference and its manifestations are discussed.



ASER’s management of innovation and delays arising are explored.

5.2 PASER’s ‘slow’ development: the result of cumulative delays All of the stakeholders interviewed commented on the slowness with which PASER’s processes, structures and projects have been developed, most expressing either their disappointment or frustration. Many cited specific problems that have blocked progress, in some instances causing severe delays. E.g. the novelty of concession procurement in Senegal meant documentation and processes had to be developed from scratch (this took four years), while differing perspectives over acceptable tariffs and the need to guarantee service quality for bulk energy sales contributed to five years of negotiations before a contract between SENELEC and IPPs could be agreed. Shorter delays have been caused by issues such as: disagreements over the technical specifications for medium tension electricity cables, the introduction of prepayment meters, and finding a replacement PREM project leader. These have held-back the development of PPER installation. The majority of delays cited by interviewees arise from protracted negotiations, rather than physical or financial difficulties. Appendix C provides a more detailed overview of the problems blocking progress as discussed by interviewees. RCA has been used to group individual problems according to type, and in turn to categorise these event types according to their underlying causes. A summary of this analysis is illustrated in Figure 12. (In some instances interviewees directly discussed types of problem that had occurred repeatedly, rather 63

than specific problem events; these have also been included.) The analysis identifies that the majority of problems result from two underlying causes: political interference and innovation. One problem cited was caused by external factors. The remainder of this chapter presents a top-down investigation of the two internal root causes identified and their impacts on different aspects of PASER’s development. The aim is to improve understanding of the difficulties experienced so that lessons may be drawn for future RE efforts, in Senegal and abroad. The problem provoked by external factor is not examined in depth because it was beyond the control of the Agency. It should be noted that the problems examined are just those mentioned by interviewees; there may have been other problems causing delays, possibly with different root causes, that are not included in the analysis.

64

Figure 12 Root cause analysis of delays and disruptions to PASER cited by interviewees. Source data: (DO1, 2012, ICR3, 2012, ICR4, 2012, IIC3, 2012a, IIC4, 2012, NIGA10, 2012a, NIGA1, 2012, NIGA5, 2012, NIGA8, 2012). Note: Details of target problems are provided in Appendix A. Target problem groups are as cited by interviews and discussed in text; specific target problem events were not cited for all of these.

65

5.3 Political interference Government policies are inevitably influenced by the changing political situation around them. As a long-term, strategic plan, one might expect PASER to be less susceptible to such influences than shorter-term programmes. However five interviewees commented that a lack of governmental support for PASER has been a major hindrance to its development (DO3, 2012, ICR4, 2012, ICR5, 2012, IIC5, 2012, NIGA8, 2012). This section will explain why some delays to PASER are politically grounded and how they have affected the Plan, through examination of three key themes: the lack of consistent government-level support for ASER; ASER’s potential as a political tool; and the politically-motivated recruitment of ASER staff. 5.3.1 The inconsistency of government-level support and RE’s potency as a political tool Reasons behind the inconsistency of government-level support for ASER may be explained in terms of three factors: 

The high public profile of the electricity sector and ASER.



Limited political pressure arising from rural populations themselves



Numerous changes to the political personnel responsible for ASER

The high public profile of the electricity sector and ASER Electricity has long been a hot topic in Senegalese current affairs. Press reports detail the continuation of frequent, long-duration power-cuts since the 1998 energy sector reforms (Fofana, 2011, Dabo, 2006, Dioh, 2003), which in 2011 led to violent protests on the streets of Dakar (Jeune Afrique, 2011) and were a key issue leading up to the 2012 presidential elections (Agence France Presse, 2012, Carayol, 2011). RE does not receive as much attention, but is still important in political discourse, as is demonstrated by repeated government commitments to ambitious, highly-publicised and often unrealistic RE targets (see chapter 4.3.2). Further, RE programmes have been kept in the public eye by the media’s scrutiny of ASER following allegations of fraud brought against some of its employees and the World Bank’s criticism of PASER’s slow progress (Diatta, 2012, Faye, 2012b, Guèye, 2012, Kane, 2012, SeneNews, 2011, 66

SeneWeb News, 2011, SeneNews, 2010). On a personal level, RE – and the everyday benefits it brings – is an issue that interests many people, including city-dwellers22. This high public profile lends itself to exploitation by politicians wishing to increase their popularity, or affect that of others, since it is likely that discourse related to the subject will be published. Limited political pressure arising from rural populations themselves Interviewees noted that rural populations have not historically been as politically active on energy issues as their urban counterparts. Consequently, some politicians have attached more weight to resolving the energy issues of demanding urban populations (i.e. the failures of the national grid) than those of placid rural ones. Insufficient motivation to ensure RE improvements promised are achieved does not however negate the attraction of a positive public RE discourse: interviewees suggested that conception of policies may count more than results delivered. The situation is now beginning to change, with rural populations becoming more politically active, so political interest in achieving improvements to RE levels may also grow (DO3, 2012, ICR4, 2012, IIC3, 2012a, NIGA8, 2012). Numerous changes to the political personnel responsible for ASER Senegal has had six Energy Ministers (EMs) since ASER’s creation, more than one of whom are considered to have been sceptical of the privatisation of RE, with Samuel Sarr (EM 2007-2010) being singled out as an opponent to the model (ICR4, 2012, NIGA8, 2012). This is not to say that ASER has had no political supporters; the President throughout most of ASER’s life, Abdoulaye Wade (2000-2012), was supportive of the market reforms that led to ASER’s creation (Estache, 2006), the new Minister for Energy Aly Ndiaye is viewed as supportive of PPPs in general, and therefore PASER, and so is the new President Macky Sall (DO1, 2012, NIGA8, 2012).

22

Based on this author’s own experiences through informal conversations. The vast majority of Senegalese people I met during a two-month stay in Senegal felt strongly about the importance of rural electrification, the life-transforming effects it has on communities and the inadequacy of current service provision in many rural areas. Many enquired about the possibility of fast-tracking RE for villages that were home to family members. Individuals were interested irrespective of whether they had any professional link to politics or to the energy sector.

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The combination of these factors renders unsurprising the possibility of politicians exploiting ASER for their own gain. Some interviewees are adamant that this has happened in several instances, to PASER’s detriment. Three frequently cited examples are: the tolerance of SENELEC’s misconduct towards ASER; the implementation of REEP and on-going covenants; and the politically-motivated appointment of some ASER staff. 5.3.2 The tolerance of SENELEC’s misconduct towards ASER Discussions with interviewees suggest that the ME has been unduly tolerant of misconduct by SENELEC towards ASER, even though the two organisations should in theory cooperate to achieve the ME’s aims. Interviewees have suggested that this tolerance is motivated by a desire to maintain political calm, which may in part depend on appeasing SENELEC. To understand the nature and reasons for SENELEC’s misconduct, and the impacts of this on PASER’s development, it is necessary to explore the history of the relationship between the two organisations, the actions of misconduct themselves and the response of the ME. 5.3.2.1 The relationship between SENELEC and ASER: a potted history As explained in chapter 4.2.3, prior to the 1998 reforms Senegal’s main RE efforts were conducted by SENELEC through covenants. SENELEC’s historical business reports highlight the financial strain that this activity caused the company (NIGA5, 2012, Hoang-Gia, 1998), exacerbating its already poor financial health. At the time the losses made were managed through cross-subsidisation with urban clients, but it was recognised that the practice would not be able to support a high level of RE penetration (NIGA5, 2012, NIGA6, 2012, Hoang-Gia, 1998). ASER’s creation should therefore have been regarded as a benefit to the company. Not only did it divest SENELEC of its costly RE responsibilities, but PASER’s rapid expansion aims promise to significantly increase demand for SENELEC’s electricity services, bolstering its revenue streams. Further, trading with a small number of concession IPPs, rather than thousands of householders, will reduce the risks and costs of operating in the rural domain (NIGA8, 2012). In spite of this, several interviewees believe that SENELEC was actually “upset” by ASER’s creation (ICR3, 2012, ICR4, 2012, NIGA5, 2012, NIGA8, 68

2012). The company seems to have viewed ASER not as an organisation relieving it of costly obligations, but rather one that appropriated part of its former work stream and income. This seemingly illogical perspective can be understood in light of the wider impacts of the 1998 reforms, of which SENELEC’s privatisation was intended to be a cornerstone. This was attempted twice, in 1999 and 2001, both instances ultimately resulting in the renationalisation of the company (Enerdata, 2011). Thus individuals that might have initially been open to privatisation experienced up to four changes of senior management, with associated disruptions to policy and personnel. The failed attempts damaged views of the organisation’s stability, both amongst employees and in the wider energy sector (NIGA8, 2012). Although PASER’s PPP model was very much a separate element of the liberalisation reforms, it has been suggested that members of SENELEC opposed to privatisation may have viewed it as a threatening attempt at privatisation by the back door. The Agency took over a subsidised element of the company’s work-stream, and so in turn a source of funding (albeit one that did not cover its own costs), and opened this activity to the private sector (ICR3, 2012, ICR4, 2012, NIGA5, 2012, NIGA8, 2012). SENELEC’s organisational opposition to ASER may have been exacerbated by institutional weaknesses, allowing personal agendas to shape those of the company as a whole. Two interviewees believe that individuals may be at the root of the difficulties between ASER and SENELEC (DO1, 2012, NIGA5, 2012), one of whom thought that political personalities (notably Samuel Sarr, later the Minister for Energy) had been able to dominate the company’s direction. The same interviewee alluded to corruption at SENELEC, suggesting that a person or persons had lobbied to keep RE within SENELEC’s responsibilities, because they “did well”23 out of it. It is important to note that the relationship between ASER and SENELEC is considered to have improved in recent years (NIGA5, 2012, NIGA8, 2012). This may be because

23

“ça [leur] arrangeait beaucoup”

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ASER has gained political weight as its funding resources have grown; it would be very difficult now to challenge its authority to conduct RE. Apparently SENELEC is also coming to accept that its eventual privatisation is inevitable (NIGA8, 2012), reducing the threat that ASER’s represents as a first-stage embodiment of this. However, even today, there are company members who believe that RE should have remained within SENELEC’s remit (NIGA3, 2012, NIGA6, 2012). One argued that as RE is not a commercially viable activity its execution should not be left to commercial enterprises (NIGA3, 2012); another that the RE Plan would have been less problematic under the auspices of a single, national electricity provider (NIGA6, 2012). Both think that PASER would be more cost-effective if delivered by SENELEC, and view RE as an activity that should be publicly-managed; they cited the Moroccan and Tunisian examples as proof that private participation is not necessary for successful RE. Although not representative of SENELEC’s organisational views, this is evidence that some members of the company still privately disagree with the very premise of ASER. 5.3.2.2 SENELEC’s misconduct: events provoking delays The strained relationship between ASER and SENELEC is widely acknowledged by interviewees (ICR4, 2012, NIGA1, 2012, NIGA8, 2012). The combination of a SENELEC that felt threatened by ASER’s creation and fluctuating government support for PASER’s privatisation-based strategy seems to have provided a breeding-ground for protracted disputes, delaying PASER’s development. Several interviewees think that SENELEC has actively created obstacles to ASER’s progression (ICR3, 2012, ICR4, 2012, NIGA8, 2012). Cited examples include: 

Negotiations to agree the boundaries of the two organisations’ respective electricity distribution territories were fraught and protracted, with SENELEC unenthusiastic about ceding part of its territory to the new Agency. Eventually a decision had to be made by the ME as a compromise could not be reached (DO1, 2012).



SENELEC was quick to sign a power-purchase agreement with its subsidiary company, the Senegalese Rural Electrification Company (Société Sénégalaise d’Électrification Rurale, SSER), so that it could function as a 70

DTM under REEP. However for a long time it refused to sign equivalent agreements with other, private operators. This is considered symptomatic of the tensions between ASER and SENELEC, and the reluctance with which the company ceded its RE work (DO1, 2012, NIGA5, 2012). 

SENELEC has been required by decree to collect ‘rural electrification payments’ from its clients and to transfer these to the FER in quarterly instalments since 2006 (Interministerial Decree n° 8442 MEM-MEF 2006). However SENELEC has always refused to apply this; in 2012 the FER had still not received any such payment (ICR4, 2012, NIGA8, 2012). This has the potential to jeopardise the financial viability of future RE works once the initial phase of PPER is complete.

5.3.2.3 The response of the Ministry for Energy (ME) to SENELEC’s misconduct – and the resultant exacerbation of delays Since ASER and SENELEC are both managed by the same Ministry, one would expect there to be ministerial pressure for the two organisations to cooperate. In several cases, the ME has eventually intervened to end disputes between ASER and SENELEC, although only after these had continued for several months. This was criticised by one interviewee, who believes that the Ministry fears the power that SENELEC wields through its strong staff union (NIGA8, 2012). The union has in the past called strikes for days at a time, e.g. in resistance to SENELEC’s proposed privatisations (NIGA8, 2012). Governmental fear of the outcry that might follow resultant electricity disruptions is justified in light of the protests that are already so motivated: politically these would be even harder to manage if the powercuts were a response to a government decision. Alternatively, in the case of RE payments, it may be that the ME has not pressed SENELEC to collect these because it fears popular objection. The payments will in effect be a tax on electricity bills, in a country that already has one of the highest costs of electricity globally, low income per capita and poor reliability of electricity services. Regardless of the ME’s motive for not pushing SENELEC to cooperate with ASER, the incentives for actively supporting ASER in disputes are much weaker: the organisation 71

does not have the strength in numbers to mount a strike on the same scale as SENELEC, nor would this disrupt essential public services and risk angering the population. This author has not been able to verify which, if any, of the abovediscussed motives are correct, but the fact that SENELEC has been able to cause disruption repeatedly and apparently without penalty supports the assertion that there is some incentive for the government to turn a blind eye to its actions. The net effect seems to be that ASER – already often in a weak political position – has often not received due and timely ministerial support in disputes with SENELEC, even when it was clearly in the right. ASER’s programmes have suffered serious delays as a result and the Agency continues to be denied an important source of funding which should be used to extend the scope of RE efforts. 5.3.3 The implementation of REEP and on-going electrification by covenant ASER’s focus on the Rural Electrification Emergency Programme (REEP) (chapter 4.3.3.2) illustrates the influence of changing politics on the Agency’s actions. REEP is considered to have been introduced as a response to existing PASER delays – it has temporarily enabled rapid, but subsidy-inefficient, increases in RE - but the diversion of resources that it has effected is actually believed to have caused additional delays to PASER itself. A recent review of World Bank funded elements of PASER criticises the impact of REEP, claiming it has received “too much attention […] to the detriment of [the] donor funded rural electrification concessions program” (World Bank, 2012, p2). REEP is based on Senegal’s RE covenant model (chapter 4.3.3.1), that was formerly dominant and which is much more open to direct political influence than the privatelymanaged concessions of PPER and ERIL. Several interviewees see REEP as a step backwards and believe that its RE installations would be better managed through PASER (DO1, 2012, ICR3, 2012, IIC1, 2012, NIGA5, 2012, NIGA8, 2012). Channelling political pressure into PASER instead of REEP might have helped to speed-up the development of the Plan’s framework (particularly ERIL, which lags far behind PPER (see 4.5.1.2)), and would have made better use of the subsidies invested. Quite aside from the impacts on PASER’s development, interviewees see REEP and covenants as being undesirable RE models for a variety of reasons: 72



There is widespread belief that the overall motivation for REEP is political, a result of the pressure felt by politicians to achieve short-term RE results in the face of the slow progress of PASER (ICR3, 2012, NIGA1, 2012, NIGA3, 2012, NIGA8, 2012). This is supported by interviewees’ observations that RE efforts under REEP and covenants have increased immediately prior to elections (NIGA3, 2012). The relative simplicity of REEP’s design allows individual projects to be progressed more quickly than PPER, but as REEP does not use subsidies to leverage additional funds it will not maximise new connections in the long-term, nor make efficient use of subsidy. It has been suggested that had delays to PASER been less severe (reducing the potential political benefits of an alternative short-term programme), the inefficient REEP/covenant model might no longer be in use (NIGA5, 2012). Not focussing resources on REEP could in turn have helped to promote PASER’s development.



The selection of villages to be electrified is also believed to be politically driven (ICR3, 2012, NIGA1, 2012, NIGA3, 2012). This may be linked to the increasing political activity of rural populations (NIGA8, 2012). Lack of non-political strategic planning, and no technology-neutral selection mechanism, means that villages chosen may not be the most in need of electrification nor well-suited to the technologies installed, again representing an inefficient allocation of resources (ICR3, 2012, ICR4, 2012, NIGA3, 2012).



The on-going management of REEP and covenant installations led by ASER has been poor in several villages. Interviewees noted instances of: installations falling into disrepair; low numbers of households being connected within villages; electric current not reaching ‘electrified’ villages; and poor management of client billing, with volatile monthly charges making it difficult for customers to manage costs. These problems are blamed in part on the separation of installation and operation works within the model (unlike PPER and ERIL), and in particular the variability of maintenance and operation services provided by Delegated Transitional Managers (DTMs), who may not be sufficiently supervised (ICR3, 2012, ICR4, 2012, IIC3, 2012a, IIC5, 2012).

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

Although REEP has achieved material results, the actual number of households connected is not considered “significant” in comparison to PASER’s ambitions (DO1, 2012).

As a regression to Senegal’s historical RE model, REEP demonstrates a lack of clear, consistent political support for the PPP RE strategy developed through PASER. Reliance on this flawed RE model is evidence that the celebrated design elements of PASER are not uniformly prioritised by those setting ASER’s agenda. This concerns interviewees, who would prefer to see ASER’s efforts refocused away from REEP and towards PPER and ERIL. It is believed that the technical and financial structures of these programmes are far better equipped to enable a critical mass of clients to be connected, and to encourage sustainable, longer-term investment in RE by private entities (DO1, 2012, ICR3, 2012, IIC1, 2012). REEP is thought to have caused a general diversion of resources that could otherwise have been focussed on the PASER. This impact is much harder to quantify than the tolerance of SENLEC’s misconduct as it was not associated with particular delaycausing events by interviewees. Nonetheless it is widely-held cause of concern that REEP is considered to have impeded PASER’s development. 5.3.4 The politically-motivated appointment of staff Logically it is easier for the senior ranks of any management structure to change their organisation’s policies if the lower ranks are more loyal to the management team than they are to the stated aims of the organisation. Politicians wishing to deploy government agencies to their own ends therefore have an interest in ensuring that the senior employees of those agencies are in fact their own supporters. There is real concern amongst interviewees that this is a problem at ASER, to the detriment of progressing RE. Interviewees believe that some of ASER’s staff, particularly those at a senior level, have been recruited to support the (then) current political regime, rather than based on their technical and professional merits (ICR4, 2012, ICR5, 2012, IIC3, 2012a). ASER’s MD is appointed directly by the ME, increasing the ease with which candidates may be selected on a political basis. Such appointments may have made it

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easier for ASER to focus its efforts on REEP, or for the ME to delay support to ASER in disputes with SENELEC. Regardless of selection criteria, there is reason to believe that the senior management of ASER thus far has not been the most efficient, from either PASER’s or the Government’s perspective. The Agency has had a turbulent history of Managing Directors (MDs). Of the four MDs to date, the first (Ibrahima Thiam (1999-2001)) was transferred to CRSE by the Prime Minister, when ASER was still in its infancy (ICR4, 2012); Modibo Diop (2007-2010) is in prison on charges of embezzlement (ICR4, 2012); and Aliou Niang (2002-2007 and 2010-2012) is alleged to be guilty of embezzlement (the case has yet to be brought to court) (Diatta, 2012). Antou Samba, the fourth MD, has only been in office since August 2012. The second and third changes of leadership brought with them considerable realignments of ASER’s policies (NIGA8, 2012), which undoubtedly caused organisational delays. The charges of fraud have damaged ASER’s reputation with would-be partners (DO1, 2012), and if unrecovered the embezzled sums would create a significant dent in ASER’s budget. It estimated that over $1524 million may have been stolen, while the total cost of the PPER concessions (provisionally) awarded to date is approximately $97 million. Although it is hard to identify specific delays that have resulted from the political appointment of staff, it is clear that the actions of individuals have caused significant disruption to the Agency’s senior management. It is reasonable to suggest that this may have influenced major amendments to ASER’s polices such as the new RE targets and the RE Emergency Programme, with trickle-down effects contributing to delays such as those already discussed.

5.4 Innovation PASER is recognised as having been an innovative model for RE at the time of its conception (De Gouvello & Kumar, 2007). Several of the delay causes proposed by interviewees are judged to be fundamentally rooted in the difficulties of developing an

24

Calculated using estimates from (Diatta, 2012) and (SeneNews, 2010).

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innovative strategy: slow responses from CRSE; the frequency and breadth of consultations; a lack of technical capacity across the Senegalese electricity sector; and the large number of concessions. This section will explain the delays caused by these issues and why they are a result of innovation through study of three themes: the inherent slowness of innovation; stakeholder participation; and limitations to technical capacity. 5.4.1 The inherent slowness of innovation Careful development of a new strategy is obviously more time-consuming than simply replicating an existing model. Many of PASER’s organisational, procedural, legal, regulatory and financial aspects had no precedent amongst either Senegalese or World Bank projects, and so had to be developed from scratch. Several interviewees have commented that this was a lengthy process, noting that the first PPER concession in particular was slow to develop (DO1, 2012, ICR3, 2012, NIGA7, 2012) and a steep learning curve (DO1, 2012, NIGA1, 2012). E.g., it took four years to develop and secure stakeholder approval for legal framework for the tender of PPER’s concessions (NIGA1, 2012, NIGA7, 2012). The need to develop new elements continues to hold back overall progress; at August 2012 extensive negotiations were underway to resolve the conflict between flat-rate monthly electricity fees, and the need for IPPs to have some protection against uncompensated wasteful consumption (IIC4, 2012). It is expected the implementation of later concessions will be quicker (DO1, 2012, NIGA5, 2012). It is clear from interviews that considerable efforts have been undertaken to design an effective RE strategy, but inevitably some mistakes have been made. E.g., the first PPER concession contract required PREM project details to be finalised before wider installation works commenced; this contributed to a year-long delay when the original PREM project developer resigned, and an alternative project had to be developed (NIGA4, 2012). Contracts for subsequent concessions have amended this clause. Unfortunately not all lessons learned from mistakes can be applied within the current programmes. One interviewee commented that significant efficiencies could have been achieved if Senegal had been divided into a smaller number of larger concessions 76

for PPER (NIGA4, 2012). Not only would reduce this duplication of time and resourceintensive processes under the concession attribution process, but larger concessions would be more attractive to international bidders, possibly resulting in more competitive proposals. The number of concessions has already been reduced several times, but with the programme’s implementation underway it is too late now to merge concessions already being developed. This opinion resounds with the aforementioned findings by Mostert (2008) that larger concessions are more efficient. 5.4.2 Stakeholder participation Stakeholder participation is an important tool for the development of new policies and processes, to ensure that they are well-reasoned, practical, equitable and wellsupported. This is recognised in PASER, whose development and implementation incorporate extensive stakeholder consultation, with approval for key decisions required from multiple signatories. However, such practices are by their very nature time-consuming. The large number of documents requiring approval, combined with the slow response times of some consultees, has led to severe project delays (DO1, 2012, NIGA10, 2012b, NIGA1, 2012). Some interviewees are frustrated by both the frequency of consultations and the number of stakeholders that are required to participate (NIGA10, 2012b, ICR3, 2012). E.g. the PPER concessions attribution process involves eight different groups of consultees and seven separate consultation processes, which were originally expected to account for approximately 130 days of a year-long process (World Bank, 2004). In reality the attribution process for the first concession took five years, with extensive negotiations between stakeholders accountable for long delays. It may be possible to streamline some of PASER’s stakeholder participation by sending documents to multiple stakeholders simultaneously (although care would be needed to avoid overcomplicating the processes concerned). This is already practised in for some processes (World Bank, 2004), but in others documents are passed between multiple stakeholders in succession, increasing potential for backlogs to accumulate. Some of the draft documents for PPER are passed in turn between CRSE, DCMP, the

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funder and other signatories, returning to ASER in between each consultee for comments to be incorporated (NIGA8, 2012). 5.4.3 Limitations to technical capacity Several interviewees questioned the technical capacity of ASER and the wider Senegalese energy sector, noting that this may have posed particular obstacles to innovative development (ICR4, 2012, IIC3, 2012a, NIGA6, 2012). E.g.: 

It was suggested that ASER was overly-dependent on CRSE for technical support in its early days, including for issues that it should have been able to solve in-house25 ((ICR4, 2012).



SENELEC is thought to be too reliant on European industry standards, some of which are considered superfluous to the needs of Senegal’s rural installations (IIC3, 2012a, IIC4, 2012).



One technically-qualified interviewee had been frustrated by others not understanding the arguments in favour of changes proposed by an IPP (IIC3, 2012a).

Individuals with limited technical knowledge may not be equipped to comparatively assess different options, making them either dependent on trusted external advisors or resistant to abandoning existing (but potentially inefficient) options that are known to work. This seems to have acted as a brake on PASER’s development. Interviewees stated that certain technical negotiations had been unnecessarily lengthy for this reason, even when the proposed alterations were technically appropriate and eventually adopted (see Table 6-4 for examples).

25

The interviewee suggested that as CRSE was created shortly before ASER and initially offered a more attractive package to potential employees, it may have recruited the lion’s share of the best minds, leaving ASER with a pool of technically weaker candidates (ICR4, 2012).

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5.4.4 The importance of thorough consultation for innovation: the interaction between PPER and ERIL PPER and ERIL are both rational, considered programmes that aim to tackle RE at different ends of the techno-financial viability spectrum. However the implications of the interactions between PPER and ERIL have yet to be analysed and addressed in policy. Two independently logical aspects of the programmes are in fact in conflict: 

Differences in tariff levels ERIL targets communities that are amongst the least commercially attractive for electrification. Combined with the fact that ERILs cannot profit from economies of scale, this means that ERILs are expected to have higher per unit costs than PPER installations. CRSE is expected to reflect this by setting ERIL tariffs higher than for PPER (IIC1, 2012).



The control exerted by PPER IPPs over the existence and ownership of ERILs within their territory Under PPER IPPs are awarded exclusive rights to conduct RE within a geographical concession. Independent ERIL projects may be permitted within the concession at the PPER IPP’s discretion, and the PPER IPP has the option to purchase any ERIL project from its ERIL IPP, taking over responsibilities for electricity service provision. This respects the exclusivity of electricity provision rights awarded to the PPER provider whilst also allowing small RE projects to be developed in communities where RE is less financially attractive (NIGA5, 2012).

In combination these features actually act as a disincentive for PPER IPPs to permit ERIL projects, and for potential ERIL IPPs to develop projects in PPER areas. Whilst not the cause of delays to ERIL so far, this threatens to stall the progression of ERIL projects in PPER concessions until resolved. The disincentives and their potential impacts are discussed below regarding the value of exclusivity in PPER and the impacts of uncertainty on the development of ERILs.

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5.4.4.1 The value of exclusivity The IPPs involved in PPER appreciate the benefits of holding an electrification monopoly. Representatives expressed very strong reservations about permitting ERILs by third-parties if these are able to charge higher tariffs (IIC3, 2012a, IIC4, 2012). They dismissed the justifications for differential tariffs, insisting that this would give ERIL providers an unfair advantage. The perspective is comprehensible. Only villages that will not be electrified within the first three years of a PPER concession are eligible for ERIL. In selecting villages to be electrified in those first years, PPER providers are constrained by the financial viability of potential installations. Altering the tariffs chargeable could dramatically change the financial viability of electrifying some communities, making them an attractive proposition for development by the PPER provider. This could impact the mix and/or number of villages proposed for electrification by the PPER provider. If all IPPs could charge increased tariffs for communities whose financial viability is borderline, the list of villages eligible for ERIL might be significantly different. Increasing the rate of return for competitors electrifying borderline villages draws into question the very purpose of PPER’s exclusive electrification rights. 5.4.4.2 Uncertainty is discouraging ERIL investments Potential ERIL providers are unsure whether PPER providers will want to buy-out their schemes, or whether they will tolerate the presence of a second energy provider in an otherwise-exclusive concession. One ERIL initiator regarded PPER IPP’s ‘option to purchase’ ERILs as a threat to business, and admitted avoiding projects in regions with operational PPER (IIC1, 2012). The viewpoint is understandable: there is a risk that PPER providers could use the ‘option to purchase’ as a risk-free means of testing the commercial viability of electrification in remote or otherwise difficult-to-electrify villages. Successful ERILs would be worth purchasing from their initiators, whilst those offering limited or negative returns would not. 5.4.4.3 Future outlook The legal framework of ERIL has yet to be finalised. There is an urgent need to rectify this if ERIL is to be progressed, taking due note of the potential conflicts. It is not clear 80

how acquisition negotiations would be managed to ensure the fair representation of both PPER and ERIL parties. ERIL is seen as an opportunity for small and/or Senegalese businesses to increase their participation in the RE market (IIC1, 2012). However without clarity on whether such businesses would be assured the right to operate ERIL projects throughout the lifetime of the ERIL concession or a fair selling price for their business activities, ERIL cannot be assumed to offer an attractive point of entry. To date there has been no crossover between PPER and ERIL. ERIL initiators have avoided instigating projects in PPER zones and PPER providers have not yet been asked to consider ERILs in their catchment. As more PPER concessions become operational the issue will become unavoidable26. If it addressed with unfavourable results for the ERIL provider concerned this could prevent the development of ERILs more widely. Two interviewees proposed the concept of PPER “priority perimeters” as a solution to the issue. These would limit the exclusivity rights of the PPER provider to zones that are expected to be electrified within the first three years of the concession. The rest of the concession would be open for ERIL projects, with connections realised counting towards the PPER provider’s electrification targets. PPER providers are said to have been resistant to the idea, so the viability of this option is far from certain - at least in regions with an already operational PPER contract (IIC1, 2012, NIGA8, 2012). It is clear that the expected discrepancies between PPER and ERIL tariffs need to be addressed if the two programmes are to effectively coexist. This might involve allowing both PPER and ERIL providers to access higher tariffs for hard-to-electrify communities, or incentivising PPER providers to accept third-party projects that receive higher tariffs. The most appropriate solution will depend on the prioritisation of ERIL’s goals: is it more important to encourage the participation of national SMEs or to minimise the cost of RE? Different solutions will be needed for PPER concessions

26

The projects that are likely to be the first sites of conflict have been identified. There are plans to implement an ERIL part-funded by Daey-Ouwens near Podor, which is part of the already operational DPSL concession. The fifth and sixth PPER concessions will cover the regions of Kolda and Kaolack, where PERACOD has implemented pilot ERILs. The contracts for these concessions are expected to be signed in 2012.

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that are already operational than for those which have yet to be developed. Failure to resolve these issues may result in on-going delays to ERIL’s implementation.

5.5 Summary All stakeholders consulted consider PASER’s development to have been “slow”. There have been many delays, some lasting several years. Root cause analysis has been used to identify the underlying reasons for these, and has concluded that most are the result of political interference and the difficulties of innovation. Political interference has been an issue because ASER is an attractive political tool and because political support for the programme has been inconsistent. Three particular issues were highlighted: 

Tensions between SENELEC and ASER led to delays and prevented ASER from accessing a source of finance. The ME has repeatedly turned a blind eye to SENELEC’s transgressions, allowing negotiations to drag.



The introduction of REEP represents a concerning regression to Senegal’s historical RE model. The focus on REEP is believed to have exacerbated PASER’s slow rate of progress.



There are concerns that some of ASER’s senior staff have been appointed for political reasons rather than professional competency.

The difficulties of innovation have also caused delays, but should not be judged as harshly as political interference. Extensive consultation processes have developed mutually-acceptable solutions for structures and procedures that are without precedent in the country. However some mistakes have been made, with the conflict between PPER and ERIL illustrating the importance of thorough consultation. Limits to staff technical capacity and design of consultation processes themselves may have caused delays.

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6 Conclusion This chapter brings together the results discussed so far with the aim of answering the objectives outlined in Chapter 1. 

PASER’s experiences to date are reviewed, including discussion of its future outlook.



The question of whether PASER is really a “good model” for RE is addressed.



Lessons to learn from PASER are noted and explained, in reference to the specific experiences of the Plan.



Limitations of the study are discussed.



Topics meriting further investigation are proposed.

6.1 The experiences of PASER to date and the Plan’s future outlook: an overview RE is considered to be a necessary condition for development. It is therefore a priority for many countries in SSA keen to improve the socio-economic situation of their population. However, RE is also resource-intensive, both in terms of capital and the skills needed to implement it effectively. This has led many poor countries with weak electricity sectors to turn to donor organisations for support; donors have in turn requested that countries implement liberalisation reforms to encourage private sector participation in RE. The rationale for this request is based on the insufficiency of current investment flows into RE, which derive largely from public funds. It is widely believed that the contribution of the private sector needs to increase if universal energy access is to be achieved. Senegal is a typical example of a country in the above-described situation, to which PASER is its response. Conceptually PASER offers a highly efficient method of increasing private investment in RE, using technology-neutral output-based subsidies as a leveraging mechanism to make RE commercially viable and to incentivise effective electrification solutions. This innovative design has attracted very significant support from donor organisations, and with the subsidies thus offered it has effectively 83

addressed the need to increase private financial contributions, attracting major international electricity players. On average 45% of the finance secured for PPER is privately-sourced, and of the six concessions awarded to date only one has a private contribution lower than 30%, the level of private sector funding which the IEA believes is necessary to realise universal energy access. This bodes well for the application of similar models elsewhere, and for the possibility of increasing private contributions to RE globally. However it is important to remember that the extent of finance attracted is reflective of Senegal’s situation as well as PASER’s design; investor confidence in Senegal may be relatively high compared to other developing nations, as the country is politically stable and its economic prospects are improving. PASER’s results in terms of installations achieved are not impressive: in ten years PASER has realised 6,121 electricity connections, representing an increase of less than 1% in national RE levels27, which pales in comparison to the achievements of schemes such as Chile’s PER and Morocco’s PERG. The rate of the Plan’s progress has disappointed stakeholders; donors and private investors alike are frustrated, with the WB threatening to cancel funding that is not disbursed on time. PASER’s slow development can be considered the cumulative result of many delays, the underlying causes of the vast majority of which being either political interference or innovation. Innovation is integral to PASER’s design, so should not be considered a ‘problem’. ASER has been aware of the dangers of testing a novel scheme and has tried to avoid pitfalls by consulting extensively with stakeholders. Inevitably some mistakes were not foreseen, but the Agency is keen to learn from these. Delays resulting from political interference are, however, unnecessary. They may be symptomatic of a RE sector liberalised in order to satisfy donor conditionality rather than because reform was the preference of stakeholders, or they could simply be a consequence of ASER’s highprofile potency as a political tool. Certainly ASER has some powerful opponents.

27

Senegal’s overall RE growth rate has not suffered from PASER’s slow development as programmes external to PASER have made up the shortfall, but inefficiencies of design prevent these from offering a sustainable long-term solution to RE. These programmes are considered regressive by interviewees and there are concerns that the focus on them may have further slowed PASER’s development.

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Some members of SENELEC were (and still are) opposed to the wider acts of privatisation that ASER is perceived to represent and appear to have actively created obstacles to its development. Similarly, PASER has not received the consistent political support from Government that it should be due as a long-term, and well-funded, strategy. E.g., the ME has allowed disputes with the national electricity company to drag unnecessarily, even when the company’s misconduct was indisputable. An emergency RE programme designed to soothe public frustration with PASER’s slow progress is believed to have had a negative feedback effect on PASER itself. Interviewees inferred that the emergency programme was enacted as a political popularity measure. There are concerns that ASER’s senior staff have been recruited on political grounds, and it is clear that some senior appointments may have been mistakes. The direct impact of charges of fraud against former senior staff on PASER’s development is unclear, but the resultant changes in leadership are likely to have disturbed progress. Regarding PASER’s slow development, one interviewee described the Plan as “the perfect example of a thing that works very well on paper but doesn’t work on the ground” (DO3, 2012). Acknowledging that the number of connections achieved to date is poor, this author considers such an assertion to be premature. In relation to the roadmap discussed in chapter 4.5.3, PASER is still in its ‘launch’ stage: it is therefore too early to judge whether the Plan will be effective once its programmes become fully operational. However, PASER has almost reached the point of being able to realise electricity connections in significant numbers and at a significant pace. If there are no further major delays – and threatened funding can be secured – PASER is projected to increase RE from the current level of 24% to 31% by the end of 2013. Developments during this period should provide a good indicator of whether the concept works once equipment is installed and customers are connected. There are many outstanding questions, e.g.: 

Will PASER provide the services that customers need and want?



Are tariffs set at a level that customers can afford – but which does not unnecessarily lower the revenues of IPPs? 85



Will IPPs be satisfied with profits realised?



Will PPER’s output-based subsidies be effective at ensuring IPPs deliver – or will IPPs increase their subsidy demands later, once sunk investment costs make it unviable not to meet these demands?



Will the anticipated benefits of PREM – on both socio-economic development and the financial viability of electrification – be realised?



How will SENELEC manage and be affected by bulk sales of electricity in rural areas at a rate lower than that charged for urban areas?

The ongoing sustainability of increased electrification rates under PASER will not be known for considerably longer, and will depend on the actions of IPPs once the initial three-year period of PPER concessions is complete. A strategy to incentivise continued new electrifications by IPPs needs to be devised. The conflict between PPER and ERIL must also be resolved or ERIL could come to a sharp halt once all the PPER concessions are operational, to the detriment of communities whose electrification is not viable under PPER’s framework.

6.2 Is PASER a “good practice” model for rural electrification? As noted in Chapter 1, IRENA’s RRA for Senegal describes PASER as a “good practice” model for RE but does not justify this judgement. To date PASER has proven itself to be conceptually excellent. Allowing for the inevitable difficulties of innovation, the delays experienced are a result of the electricity sector’s political situation and not the Plan’s design itself. This supports Barnes’ assertion that the success of RE initiatives is decided not by their institutional model, but by the social, economic, political and cultural environment in which they are implemented (Barnes, 2007). However, PASER’s operational phase is only just beginning, and it may be that design flaws in service provision or client management come to light as the Plan progresses. It is therefore too early to judge PASER’s concept as a whole. It is fair to describe PASER as a “good model” for attracting donor finance and private sector participation. It is harder to pronounce judgement on the model’s capacity to manage innovation as the delays experienced are so mixed up with the effects of political interference. Even if

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PASER were sufficiently advanced to offer a judgement on its operational effectiveness, it would not be appropriate to claim that the model was or was not a ‘suitable’ one for SSA. RE models need to be tailored to the individual situation of the country in which they are implemented. Countries with a weaker economy or political situation may find it harder to attract the donor funding necessary to leverage private finance. This has been the case in Senegal’s poorer neighbour Mali.

6.3 Lessons to learn from PASER A list of lessons to learn from PASER for the development and implementation of new RE strategies is provided below. This is targeted at countries in a similar situation to Senegal in terms of financial resource, electricity sector expertise and reliance on donor funders, as described at the very start of this chapter. Although the lessons have been identified in the context of a RE model, many of them relate to the difficulties of sectoral restructuring, and so could be applied more widely – e.g. to the reform of other infrastructure or public service sectors in developing nations. 

Maximise the potential scope of subsidies by leveraging private investment PASER’s leveraging strategy has succeeded in raising proportions of private finance in excess of that targeted, and higher than that deemed necessary to achieve universal energy access by the IEA. The companies attracted are major international players in RE, bringing with them expertise that can be transferred to national entities. Although the extent of private investment that can be attracted will vary between countries, depending on local risks to business, it is worth taking time to design a programme that will be attractive to the private sector to maximise the bids proposed by IPPs. Issues such as the size of concessions, the level of subsidy and the rate of return allowed on installations should be considered.



Assure long-term political support It is reasonable to suggest that ASER’s institutional capacity has been compromised by a lack of political commitment to creating a well-governed, technically-focussed organisation with a clear, consistently-applied RE strategy. 87

The values inherent to PASER, aimed at maximising the effectiveness, efficiency and sustainability of long-term RE improvements, have not been applied to concurrent programmes – possibly to PASER’s detriment. Further it seems that some of the delays to PASER could have been shortened if ministerial support had been forthcoming sooner. A source of on-going funds for RE has yet to be delivered to the Agency, some six years after it was enacted in law, limiting its financial capacity. Countries implementing a new RE strategy should try not only to assure the robustness of the strategy in itself (which Senegal has done – PASER is protected by long-term, large-scale commercial and financial interests), but also to avoid the potential for political meddling. The managing agency itself - and not its Action Plan - should be constitutionally committed to pursuing financially-efficient, self-sustaining electrification programmes that maximise the number of people with access to electricity (and not simply the number of villages with an electricity connection). This would make it harder to promote shorter-term programmes that provide political soothers through rapid but financially inefficient electrification approaches. 

Anticipate personal conflicts of interest and incentivise stakeholder cooperation at the individual level The difficult relationship between ASER and SENELEC illustrates both the sensitivity of individuals to organisational restructuring and the power that individuals may hold over an organisation. Where instigation of a new RE strategy will reduce the revenue streams and/or responsibilities of existing structures, care needs to be taken to incentivise the incumbent holders to cooperate with their successors. This is especially important where the incumbent holders may feel threatened by extraneous developments, even more so if the new strategy is linked, however tenuously, to these developments. If corruption linked to RE is suspected in existing structures, additional measures should be considered to either remove persons that may be illegally benefitting from the management of RE, or to action powerful motives for these individuals to assist the change. 88

In situations where weak governance may be a problem, cleverly-designed, early consultation could help to anticipate problems by investigating how different parties will react to reforms, and in turn how such reactions might alter the behaviour of other parties or interact with policies. This consultation probably needs to be anonymous – and may benefit from being conducted by an independent party – if it is to be effective. Stakeholder interviews conducted by this author in reference to such principles were illuminating in terms of the sharply contrasting views that different parties held of the plan, and of each other. 

Prioritise clear, coherent and comprehensive communication at all levels of why and how new processes are to be developed and implemented The relationship between ASER and SENELEC might have been easier had the attempted privatisation of SENELEC been successful. Given that it wasn’t, greater efforts should have been made to educate SENELEC staff at all levels of the benefits of ASER to SENELEC (including SENELEC’s necessary on-going involvement in RE) and to RE in Senegal. The fact that some SENELEC staff still disagree with the premise of ASER indicates that any such education efforts have not been wholly successful. It is important to promote the benefits of organisational change effectively, targeting those most likely to be affected by the change. This is different from indiscriminately publicising the benefits.



Recruit and distribute technically-adept, open-minded personnel across all public implementation bodies, to work with external participants and to advise decision-makers on innovative developments There are concerns that limitations to the technical expertise of some public sector personnel have caused delays because they were overly cautious of proposed innovations. This is not to suggest that Senegal itself lacks the requisite expertise, but it may not always be deployed in the most appropriate positions. Interviewees recognise that there are highly-skilled employees at all 89

the major public players involved within PASER: ASER, SENELEC and CRSE. They have also suggested that the best brains may not fairly distributed across the organisations, so there is an imbalance in their relative technical capacities. Personnel responsible for developing technical aspects with external parties and advising decision-makers need to have the competence and confidence to evaluate novel propositions without bias, and to defend their logically-derived conclusions – whether this embraces or rejects the innovations proposed. 

Be realistic about the timeframes to implement the first round of innovative programmes, anticipating/accepting that some delays are likely In retrospect PASER’s early action plan looks unrealistic. It was hoped that the Plan’s operational components would be developed during its first two years, with the implementation launching in its third year, to complete 53,000 new installations by 2005. In fact PASER did not become operational until 2001 and the first PPER tender programme was only launched in 2005. Although ambitiousness is desirable in any development framework, managing stakeholder expectations is also crucial, and it is likely that the development of innovative programmes and associated consultations will be time-consuming. The vast majority of interviewees were either disappointed or frustrated with PASER’s progress. More concerning, several funders have also expressed their dissatisfaction and it is uncertain whether organisations such as the WB and AFD will be willing to extend disbursement deadlines a second time. The fact that only 40% of the donor finance for the first PPER concession is now expected to be disbursed by the new WB deadline is a threat to the financial viability of the project (ASER, 2012b). Had a more achievable timeframe been targeted from the outset, stakeholder morale might now be higher, and the finance secured from funders would be less likely to be under threat.



Interactions between proposed policies, and not just the policies themselves, should be critiqued by a comprehensive range of stakeholders The fact that IPPs have been able to identify potential conflicts between PPER 90

and ERIL before these arise highlights the foreseeability of these conflicts, and thus also the oversight of the organisations that developed the programmes. The importance of critiquing policies from multiple perspectives is understood within PASER; stakeholder consultations have played an important role in developing the Plan. However it may be worth broadening the scope of these to increase their effectiveness. Certainly the interactions between PPER and ERIL should be considered before ERIL’s legal framework is finalised.

6.4 Limitations of the study Methodological limitations to the study were identified in chapter 2. Fieldwork has identified the following additional limitations: 

Data unavailability and reliability issues have proven to be significant obstacles to research in Senegal. Much information is not publically available and where it is, different sources may contradict each other. This has inevitably required assumptions to be made and has limited the quality and accuracy of the analysis.



Information unavailability sometimes made it difficult to identify appropriate interview candidates by purposive sampling. This was at times very timeconsuming and dependent on the knowledge and willingness-to-cooperate of individuals. Although all the interviewees contributed to the richness of this author’s understanding of PASER, it is believed that those consulted for at least one major organisation were not the most appropriate. Time constraints made it impossible to remedy this.



Some of the issues raised by candidates are politically highly sensitive. Some candidates were prepared only to allude to such issues and others may have avoided them altogether, even if they perceived them to be important. It is possible that different conclusions would have been reached if all candidates felt able to speak openly and honestly.

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An additional very significant limitation of the project is the lack of comparison of PASER with RE models in use elsewhere. This would have allowed objective insight as to the relative benefits and shortcomings of PASER’s private-concession design.

6.5 Suggestions for further research The research undertaken for this study has identified several areas which may be worth further exploration, both to provide a more complete assessment of PASER’s model and to strengthen understanding of crucial issues for RE more widely. 

A later-stage review of PASER As previously noted, many questions remain unanswered as to whether PASER will succeed in effectively increasing RE levels once infrastructure is installed and clients are connected. A later stage review of the programme would allow its effectiveness to be better evaluated, taking account of issues such as the suitability of tariff structures for rural populations, the sufficiency of service provision and the extent to which PPER and ERIL are complementary or conflicting programmes.



Comparison of PASER with RE models in other countries This could focus on other countries implementing private sector concessions (such as Morocco and Mali) or other countries in a similar situation to Senegal (middle-income or non-fragile low income nations in SSA), or PASER could be compared with highly contrasting RE models, such as the Grameen Shakti social enterprise in Bangladesh or Costa Rica’s cooperative model.



The sustainability of private sector finance for RE Although PASER has attracted considerable private sector finance, it is not certain that this will be sustainable in the long-term. IPPs involved have admitted they are motivated by CSR and improving international relations; the perceived marginal value of such investments may decrease as they become more commonplace. Can this be avoided? The character of private finance

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attracted may be worth exploration: what is the composition of funds offered and how does this interact with the investor’s own motivations and goals? 

The level of existing technical capacity and its implications for the take-up of innovative solutions It was beyond the scope of this thesis to assess the Senegalese energy sector’s technical capacity and its impacts on resistance to change. Stakeholder interviews and the endemic problems of SENELEC suggest the need to improve expertise is not limited to RE. How can Senegal capitalise on the knowledgetransfer potential of PASER to skill-up representatives from across the electricity sector – not just ASER officials and PASER’s sub-contractors?



Does PASER effectively encourage the use of low carbon technologies and how can deployment of these for RE be increased? PASER is technology-neutral, but it has a cost-levelling mechanism to encourage the use of renewable technologies. This thesis has not sought to assess PASER’s effectiveness for encouraging renewables, but it is an obvious question given the interactions between development issues and climate change. A large number of the electricity connections to be realised through PASER are expected to be extensions of the national grid – which is true in many other countries undergoing RE. Research could consider incentivisation of private participation for both centralised and decentralised renewable technologies powering RE.

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V.

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VI.

Appendices

Appendix A.

Organisational grouping of interviewees

Organisation-type of interviewee

Interviewee identification code

Interview date

RE beneficiaries

REB1 REB2 REB3 DO1 DO2 DO3 ICR1 ICR2 ICR3 ICR4 ICR5 IIC1 IIC2 IIC3 IIC4 IIC5 NIGA1 NIGA2 NIGA3 NIGA4 NIGA5 NIGA6 NIGA7 NIGA8 NIGA9

31/07/2012 31/07/2012 31/07/2012 09/07/2012 09/07/2012 18/07/2012 21/06/2012 21/06/2012 29/06/2012 03/07/2012 04/07/2012 05/07/2012 05/07/2012 11/07/2012 27/07/2012 31/07/2012 26/06/2012 29/06/2012 04/07/2012 17/07/2012 19/07/2012 23/07/2012 01/08/2012 02/08/2012 02/08/2012 & 08/08/2012 23/07/2012 & 08/08/2012

Donor organisations

Independent consultants and researchers

IPPs and installation coordinators

National and international government agencies

NIGA10

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Appendix B.

Design features and processes of PASER programmes

Table 4 Design features [A] Note that the Rural Electrification Emergency Programme (REEP) was not originally part of PASER. Sources: (IRENA, 2012, IIC1, 2012, IIC3, 2012, NIGA1, 2012, NIGA4, 2012, NIGA8, 2012, Gaye, 2010, Diop, 2009, Ngom, 2009, De Gouvello & Kumar, 2007, Niang, 2006, ASER, 2004, World Bank, 2004, Hoang-Gia, 1998)

Programme duration

PPER including PREM 2003 – 2017

Objective

Use output-based subsidies to leverage private sector finance for ‘top-down’ RE.

ERIL Pilots: 2005-2009; 2009-2013. First official ERIL completion expected 2013. Supports the development locally-initiated RE projects.

PREM Maximise the effects of RE on poverty reduction, by promoting revenuegenerating activities using electricity and prioritising electricity access to social structures.

Instigation of projects

Also maximise effect of RE experience/knowledge developed. International invitations to tender for concessions are launched annually by ASER. PREM PREMs requirements are stipulated in the PPER ITT.

Model

ASER invites project proposals twice a year. These may be put forward by local authorities, community organisations, charities, NGOs or local private companies. Successful candidates are awarded financial support to cover 50% of feasibility study costs. Based on the feasibility studies, some projects are selected for implementation by ASER.

Regional-scale power distribution and generation concessions awarded to IPPs.

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For communities in operational PPER concessions, the implementation of ERILs is subject to approval by the PPER concessionaire. The PPER IPP may choose to purchase an ERIL from the ERIL company and operate this himself. Small-scale power concessions awarded to IPPs.

Size and geographical limitation of concessions

Prioritisation of concessions for electrification Target groups

PPER including PREM 10 regional concessions have been identified, covering all non-electrified rural areas of Senegal (illustrated Figure 6). Each concession has a minimum of 10,000 potential customers; this is considered sufficient to attract interest from major power providers. (Diop, 2009)

ERIL The size of concessions is limited to a maximum of 200 new connections. The geographical boundaries of concessions are not pre-determined, but it is expected that concessions will be contained within a single local authority.

There is no limit on the number of concessions that an IPP may hold.

There is no limit on the number of concessions that an IPP may hold. Dependent on motivation of local communities. Pilot scheme focussed on regions where project leader PERACOD was already working.  Communities located in a region where a PPER concession has not yet been awarded.  Communities that will not otherwise be electrified within the first three years of the PPER concession.

Donors select the concessions that they would like to finance. The ITT is developed once finances are in place. 



Communities with the least-cost of electrification (e.g. communities close to the existing grid, communities with a population greater than 1,000). Each concession requires electrification of a minimum number of connections located >20km from the existing grid. This helps to ensure the poorest communities are not excluded; often these are the most remote.

PREM Social services and small businesses within PPER or ERIL concessions.

Division of finance for investment costs

Potential ‘first generation’ PREMs (implemented as part of the PPER IPP’s contract) are identified in the PLE. But further ‘second generation’ PREMs may apply to ASER for financial support, proposed by external organisations. Upfront investment costs paid by operator Internal installations and connection fees paid by the consumer, through a prefinancing mechanism. Limits of capital expenditure division:  IPP: >20%

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Feasibility study funded 50% subsidy, 50% project promoter. Capital expenditure:  Subsidy: