Senegal receives $85 mil loan to improve power sector

DAKAR, July 27 Fri Jul 27, 2012 10:32am EDT

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DAKAR, July 27 (Reuters) - The World Bank has agreed to lend Senegal $85 million to modernise its power grid and help the West African nation cope with a growing energy crisis.

The funds are to be invested over the next five years to help state power utility SENELEC "reduce technical and commercial losses and improve the reliability of electricity services", a World Bank statement said.

Part of the Bank loan is due to be invested in improvements to the utility's billing services in an effort to reduce energy costs by clamping down on rampant fraud.

Senegal, and particularly its capital Dakar, has increasingly transformed into a regional trade hub over the past decade and construction has boomed.

The country's power sector has struggled to keep up, however, and rolling electricity cuts, which sometimes last more than 30 hours, sparked street protests last year.

President Macky Sall said on Thursday that government subsidies aimed at keeping electricity prices down for consumers are expected to cost Senegal 120 billion CFA francs ($225.01 million) in 2012, the equivalent of 2 percent of GDP.

"This high level of subsidies is not sustainable as we put in place the social programme I've promised and have the firm intention of delivering on," he said.

Earlier this year Senegal signed a deal with Korea Electric Power Corp to build a 250-MW coal-fired power station at a cost of 300 billion CFA francs, to be operational from 2015. ($1 = 533.2980 CFA francs) (Reporting by Diadie Ba; Editing by Joe Bavier and Mark Heinrich)

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