IMF: Energy crisis saps one percent of GDP

According to a just-released "county report" by the International Monetary Fund (IMF), Senegal's energy crisis is seriously shorting its economy. According to the report:

"Capacity constraints, frequent electricity outages, high production costs and electricity tariffs, and poor governance of the energy sector have increasingly constrained economic development. The authorities’ analysis suggests that energy supply problems have reduced real GDP growth by more than 1 percent per year during the past two years."

Senegal's government has an active plan to reform the energy sector, according to the report:

"The authorities’ reform plan (TAKKAL), includes (i) short-term emergency measures that complement medium-term investments (including recapitalization of the national electricity company SENELEC and renting of additional generating capacity (partly used to allow for the upgrading of existing power plants)); (ii) increasing the electricity supply by changing the production mix, acquiring mobile power units, and accelerating the construction of a coal power plant; (iii) demand management policies; (iv)structuring of SENELEC to achieve its financial viability; and (v) creating a communication strategy to ensure transparency and good governance of the reform process.

Financing needs: The total cost of energy sector reform for 2011–15 is estimated at some US$ 1.5 billion (more than 10 percent of 2011 GDP). Financing needs in 2011 alone amount to more than 3 percent of GDP. The analysis of a reputable private sector consultancy shows that the investment package is highly profitable."

An American company, APR Energy Ltd., is one of the key players in this program. After significant investment by former Secretary of State Madeleine Albright and capitalist George Soros, the company was purchased this week by U.K. financier Hugh Osmond's listed cash shell Horizon Acquisition Co. PLC. The company supplies "rental power."