BUILDING SENEGAL’S FINANCIAL INDEPENDENCE: WHAT ROLE FOR HYDROCARBONS?

S. DIAKHATE –

Oil and gas will not solve Senegal’s debt crisis in the short term. Net income from Sangomar and GTA is structurally low: Petrosen’s existing debt of around 800 billion CFA francs for the two flagship projects will absorb the bulk of the profits.
Senegal’s strategic priority is not exports but import substitution. Gas from Yakaar-Teranga
could replace imported fuel oil and save foreign exchange, while still providing an opportunity to export LNG and contribute to the country’s industrialization. Such an achievement is more fundamental to economic sovereignty and financial independence.
Unless Petrosen’s loans are renegotiated immediately and the project financing model is
overhauled, each new phase of development will primarily benefit creditors before benefiting
the government and Petrosen. An Investment Fund would also be useful for financing the energy transition, agriculture, and human capital.
Finally, better coordination of the timelines for the various projects is essential to maximize
profitability: sequencing of production phases, timely completion of infrastructure such as the gas network, and synchronization of domestic gas supply with conversion of power plants are essential conditions for avoiding bottlenecks and cost overruns.

This Policy brief is part of the editorial series published during the Experts meeting and International Conference organized by IDAN on Senegal’s debt Crisis (11 to 13 May,Dakar,Senegal).