Creating Alliances to Build an Energy Hub

Senegal is becoming a strategic hub for training the next generation of West African energy leaders. Alliance Energy Managing Director, Dr. Ndjuga Dieng, spoke to Africa Energy Series – Senegal, about how Alliance Energy launched the National Institute for Petroleum and Gas (INPG), which trains young Senegalese in becoming the future leaders of the oil and gas industry, increasingly positioning the institute as an educational and training facility for the region. 

What is Senegal’s potential to become a regional energy hub? How do you foresee sector growth in hydrocarbons, power, and renewable energy?

Senegal’s potential to become a regional energy hub lies in its resources. The country has oil, gas, solar and wind in abundance and is increasingly exploiting them for the benefit of its people, its economy and the region. In 2017, we set up West Africa’s largest solar farm. In 2018, we took an investment decision on a 2.5 million tons per annum floating liquefied natural gas facility. We erected the first wind turbine in West Africa’s largest wind farm in 2019. These projects are positioning Senegal as a pioneer in energy developments within the subregion. By 2030, our entire energy mix will be profoundly transformed and over 70 percent of our electricity will come from domestic and clean energy sources like gas, solar and wind. That is a deep transformation from the current situation, as we still heavily rely on imports of diesel and coal.

What factors make Senegal a safe and attractive investment destination for international operators?

Senegal is widely-recognized for its political and economic stability and often described as an “exception” in West Africa. Politically, we are a stable, democratic country with a demonstrated history of stability since our first President Léopold Sédar Senghor came to power in 1960. Our elections are peaceful and our transitions are smooth. In a region plagued by military coups, civil wars and ethnic conflicts, we stand out as a safe haven. Economically speaking, we have had tremendous and steady economic growth for years now, backed up by government reforms and bold leadership. Our economy is expected to grow by another 6.9 percent this year according to the International Monetary Fund, which places us in the top ten fastest-growing economies in the world. More importantly, we are not reliant on a single commodity as a source of revenue.

How has the country’s leadership under H.E President Macky Sall supported economic growth across sectors, and in particular, the energy sector?

Our country’s leadership has carried out reforms to support economic growth and incentivize foreign investment. The Emerging Senegal Plan, for instance, constitutes a new economic development model and a reference for our medium to long-term development goals. Under this plan, our target is to become an emerging nation by 2035 by transforming our economy, creating jobs, improving living conditions and strengthening our governance framework. This has given clarity to investors and stakeholders, and resulted in increased investment into infrastructure. In oil and gas specifically, we have also changed and modernized our regulatory framework with a new code that makes it even more attractive to invest in the sector, as well as a new law promoting local content development. This new Petroleum Code was adopted on January 24, 2019 by the National Assembly and effectively replaces Law No. 98-05. It adapts our regulations to Senegal’s new energy scenario, especially when it comes to developing our gas value chain. Overall, the code brings more transparency to the sector and clarifies several procedures when it comes to the exploration and production of our country’s resources.

What key aspects of the business must be considered when planning to start operations in Senegal? 

Investors coming to Senegal must carefully select their local partner, and keep in mind regional opportunities. Local partners are key in any operations or investments made in Senegal. For many industries, especially in oil and gas, contracting or procuring from local companies is becoming an obligation by law. Beyond that, a proper local partner will facilitate entry into the market, be it by facilitating communication with local authorities, fast-tracking the granting of necessary permits and approval and helping to navigate the local business culture. The other aspect to consider is the regional opportunities, as Senegal is a gateway to the whole MSGBC Basin countries, which include Mauritania, The Gambia, Guinea Bissau and Guinea Conakry, along with countries within the subregion, such as Sierra Leone and Liberia. By considering the establishment of a base from Senegal, an investor is potentially looking at operating and serving in an entire subregion where economic growth forecasts are the highest in the world.