Senegal - Sustainable and Participatory Energy Management Project

Document of The World Bank Report No 16357-SE STAFF APPRAISAL REPORT REPUBLIC OF SENEGAL SUSTAINABLE AND PARTICIPATORY ENERGY MANAGEMENT PROJECT May 23, 1997 Urban, Water and Energy 2 Africa Region  CURRENCY EQUIVALENTS Currency Unit I CFA Franc (FCFA)' USS I FCFA 500 (March 1997) ENERGY CONVERSION FACTORS AND MEASURES I ton of air-dried wood 0.41 toe I ton of charcoal 0.69 toe I ton of liquefied petroleum gas 1,095 toe I ton of kerosene 1.04 toe 1,000 kWh of electricity (ther-mal ,@L33% efficiency) 0.2606 toe Wood-to-charcoai conversion efficiency (traditional) 18% Wood-to-charcoal conversion efficiency (improved kiln) 25% Useful energy efficiency from carbonization (traditional) 30% Useful energy efficiency from carbonization (improved kiln) 43%'0 Efficiency of traditional wood stoves 15% Efficiency of improved wood stoves 23% Efficiency of traditional charcoal stoves 20% Efficiency of improved charcoal stoves 27% i cubic meter of firewood (solid) 0.8 tons I stacked cubic meter of firewood 0.4 tons I Hectare 2.47 acres I kilometer 0.625 miles ABBREVIATIONS AND ACRONYMS ATI Appropriate Technology Intemational CERER Center for Study and Research on Renewable Energy CILSS Permanent Inter-State Committee for Drought Control in the Sahel CNE National Energy Committee CSE Center for Ecological Monitoring DE Department of Energy DEFCCS Department of Water, Forests, Hunting and Soil Conservation ENDA Environment and Development in the Third World MEFP Ministry of the Economy, Finance and Planning MEMI Ministry of Energy, Mining and Industry MEPN Ministry of the Environment and Protection of Nature PAFS Senegal Forestry Action Plan PETROSEN Senegal Petroleum Company PRG Regional Gas Program RENES Senegal Energy Redeployment Program RPTES Review of Policies in the Traditional Energy Sector SAR African Refining Company SENELEC National Electricity Company FISCAL YEAR Govemment of Senegal January 1- December 31 The CFA Franc is pegged to the French Franc at the exchange rate of FF I = FCFA o00 Vice President: Jean-Louis Sarbib, AFRVP Country Director: Mahmood Ayub, AFC 14 Technical Manager: Max Pulgar-Vidal, AFTU2 Task Team Leader: Boris Utria, AFTU2  REPUBLIC OF SENEGAL SUSTAINABLE AND PARTICIPATORY ENERGY MANAGEMENT PROJECT TABLE OF CONTENTS TABLE OF CONTENTS ...................................................................................................................... i CREDIT AND PROJECT SUMMARY ............................................................................................ iii I. BACKGROUND ..................................................................1 A. Geography and Climate ................................................................. 1 B. Demographics ..................................................................1 C. The Economy ................................................................. 1 IL. THE SECTORAL CONTEXT ..................................................................3 A. Energy Sources and Consumption ........................ .......................................... 3 B. Energy Sector Institutions and Policies ................................... ............................... 6 III. THE HOUSEHOLD ENERGY SECTOR ..................................................................9 A. Energy Consumption in the Household Sector ................................................................. 9 B. Structure and Functioning of the Traditional Energy Markets ................ ...................... 12 C. Expected Future Trends: The Charcoal Problem ............................................................ 16 D. Sectoral Issues ................................................................. 17 E. Government Strategy ................................................................. 19 IV. BANK GROUP/GEF ROLE IN THE TRADITIONAL ENERGY SECTOR ........... ................ 25 A. History and Lessons Learned from Previous Bank/IDA/GEF involvement .......... ......... 25 B. Rationale for Bank/GEF financing and Consistency with the CAS ............ ................ 25 V. THE PROJECT ................................................................. 29 A. Project Objectives ................................................................. 29 B. Project Description ................................................................. 30 C. Project Costs and Financing Plan ...................... ........................................... 32 D. Beneficiary Consultation and Participation ................................................................. 33 E. Project Implementation ................................................................. 33 F. Procurement and Disbursement .................... ............................................. 39 G. Accounting, Auditing and Reporting ............................. .................................... 42 H. Performance Indicators, Monitoring and Supervision Plan .................... ......................... 45  ii SUSTAINABLE AND PARTICIPATORY ENERGY MANAGEMENT PROJECT TABLE OF CONTENTS (Continued) VI. PROJECT IMPACT ................................................ 47 A. Economic Analysis ............................................... 47 B. Social and Environmental Impacts ................................................ 49 C. Project Sustainability ............................................... 50 D. Project Risks ................................................ 51 VII. AGREEMENTS REACHED AND RECOMMENDATION ................................................ 53 Annexes: i. Summary on the Niokolo-Koba National Park 2. Monitoring and Evaluation of GEF Activities 3. Incremental Costs and Global Environmental Benefits 4. Project Participation Action Plan (PAP) 5. Expenditure Accounts by Category and Components 6. Disbursement by Category and Components 7. Perfornance Indicators, Monitoring and Supervision Plan 8. Economic Analysis 9. Energy Sector Policy Letter (Original French text) 10. Selected Documents and Data Available in the Project Files Map: IBRD 28722 This report is based on the ESW undertaken in Senegal through the Africa Regional Program "Review of Policies in the Traditional Energy Sector - RPTES" between 1993 and 1996. A draft Project Implementation Document prepared by the Government of Senegal was pre-appraised in November 1996, and appraised in March 1997. The ESW and project teams comprised Messrs./Mmes. Boris Utria (Economist and Task Team Leader), Max Wilton (Senior Energy Economist), Ignatius Menezes (Senior Economist), Demba Balde (Participation Specialist/NGO Liaison Officer), Mathieu Koumoin (Energy Economist), Azedine Ouerghi (Energy Economist), Kishor Uprety (Lawyer), Amadou Toure (Procurement Specialist), Ellery Stokes (Participation Specialist), Suzanne Roddis (Program Assistant), Susana Hristodoulakis (Operations Analyst), and Salimna Haddour (Project Assistant). Catherine Cassagne and Simon Rietbergen were the peer reviewers of the project.  iii REPUBLIC OF SENEGAL SUSTAINABLE AND PARTICIPATORY ENERGY MANAGEMENT PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Senegal Beneficiaries: Ministry of Environment and Protection of Nature Ministry of Energy, Mines and Industry Poverty Category: Program of Targeted Intervention Credit Amount: SDR 3.8 million (US $5.2 million equivalent) Terms: Standard IDA, with 40 years maturity Commitment fee: Standard Grant Amount: SDR 3.4 million (US $4.7 million equivalent) Terms: Grant Financing Plan: See Estimated Financing Plan (p. v) Project Objectives and Description: The objective of the project is to meet an important part of the rapidly growing urban demand for household fuels, without the loss of forest cover and the ecosystem's carbon sequestration potential and biodiversity. This objective would be met through: (a) the implementation and monitoring of 300,000 hectares of environmentally sustainable community-managed forest resource systems in the Tambacounda and Kolda regions of Senegal, creating a protection zone around the Niokolo-Koba National Park (Biosphere Reserve); (b) the promotion of inter-fuel substitution and improved stoves initiatives; and (c) the strengthening of the institutions involved in the management of the sector, and the promotion of the participation of the civil society (private sector, academic institutions, and NGOs community) in the operation of the sector. The project would finance: (a) an assessment of vegetation cover, an assessment of availability of dead wood and other preparatory activities; (b) community-based forest management activities in 300,000 ha; (c) promotion of rural-based micro- enterprises and private sector and NGO-based inter-fuel substitution activities; (d) consultant services for supervision work, delivery of services and various technical studies; (e) technical assistance; and (d) materials, equipment and goods. Project Benefits: The project would: (a) sustainably produce some 860,000 tons of fuelwood (equivalent to 155,000 tons of charcoal) during the implementation period and  iv would thereafter establish a permanent system capable of producing more than 300,000 tons of fuelwood (equivalent to 55,000 tons of charcoal or half of the annual consumption of the city of Dakar) per year on a sustainable basis; (b) reduce woodfuels-related deforestation in the Tambacounda and Kolda regions by some 10,000 ha/year, reduce net C02 emissions by 510,000 tons/year and reduce the loss of biodiversity by the establishment of sustainable forest systems and the establishment of a protective buffer zone around the Niokolo-Koba National Park (international "Biosphere reserve"); (c) generate employment and economic development opportunities in 250 rural villages in the Tambacounda and Kolda regions, paying special attention to gender equity; (d) generate a total of more than US $10.0 million in direct revenues to 250 villages from the trade of woodfuels, and generate additional revenues to the communities from related natural resource management and exploitation activities (agriculture, pastoralism, herding, agro-forestry, etc.); (e) on a sustainable annual basis after the end of the project, generate direct revenues in excess of US $3.0 million to the participating villages from the trade of woodfuels, and generate additional revenues from related natural resource management and exploitation activities; (f) reduce C02 emissions by 42,000 tons/year by the distribution of 225,000 improved charcoal stoves; (g) increase the availability and access of low income households to more reliable and efficient charcoal stoves and to modern fuels; and (h) strengthen the planning, policy making and implementation supervision capacity of the traditional energy sector institutions, while increasing the participation of the civil society (private sector, academic institutions, and NGOs community) in the management and operation of the sector. Project Risks: There is a moderate risk that existing charcoal traders and laborers would resist transferring part of the industry's activity to the rural communities. To mitigate that risk, the project includes two sub-components to support the adjustment of existing traders and several monitoring and evaluation mechanisms to track possible implementation interference. There is also the possibility that traditional traders could switch charcoal production to other areas of the country but this risk is considered negligible. The risk that the rural populations might not be able to achieve full sustainable management of the forest resources cannot be ruled out. Nevertheless, even a partial achievement of the objectives would still result in an important transfer of welfare to the rural communities with unquestionable economic development opportunities and social benefits and significant national and global environmental benefits. There would be no involuntary resettlement as a result of the project. Economic Rate of Return: 37.3% Program Objectives Category: Environmentally Sustainable Development Environmental Category: C Project ID: 46768 and 42056 Map: No. IBRD 28722  v Estimated Project Costs Summary (by category) (US$ '000 equivalent) Categories Foreign Local Total I. Investment Costs A. Goods and Services 1,179.05 474.95 1,654.00 B. Civil Works 554.40 369.60 924.00 C. Vehicles/Equipement 2,146.10 16.80 2,162.90 D. Materials 710.60 480.40 1,191.00 E. Studies 390.79 281.57 672.36 F. Fonds d'appui (Matching Funds) 542.60 1,239.40 1,782.00 G. Training 605.30 657.30 1,262.60 H. Campaigns 297.20 470.80 768.00 I. Consultants 378.38 252.26 630.64 Total Investment Costs 6,804.43 4,243.07 11,047.50 II. Recurrent Costs A. Gasoil/Gasoline 264.00 396.00 660.00 B. Office rental / local contracts 394.40 394.40 C. Transportation 785.00 785.00 D. Vehicle maintenance 570.76 856.14 1,426.90 E. Salaries X 3,261.76 3,261.76 Total Recurrent Costs 834.76 5,693.30 6,528.06 Total BASELINE COSTS 7,639.19 9,936.37 17,575.56 Physical Contingencies 722.94 927.87 1,650.81 Price Contingencies 704.88 - 704.88 TOTAL PROJECT COSTS 9,067.01 10,864.24 19,931.25 Financing Plan' (US $ million equivalent) Source of Funds Foreign Local Taxes 2 Total Government 1.1 0.02 1.2 IDA 2.1 3.1 5.2 GEF 2.4 2.3 4.7 Dutch Cooperation 4.4 4.4 8.8 Total Project Costs 9.0 10.9 0.02 19.9 Estimated Disbursements of the IDA Credit (US Million Equivalent) IDA FY FY97 FY98 FY99 FYO FY01 FY02 FY03 Annual 1.1 0.9 0.8 0.8 0.6 0.5 0.4 Cummulative 1.1 2.0 2.8 3.6 4.3 4.8 5.2 1 Costs are net of taxes and duties. Slight differences in amounts might occur due to rounding of figures. 2 US $ 190,000 equivalent included in the contribution of the Govemment.   REPUBLIC OF SENEGAL SUSTAINABLE AND PARTICIPATORY ENERGY MANAGEMENT PROJECT I. BACKGROUND A. GEOGRAPHY AND CLIMATE 1.1. Senegal's topography is generally flat, and altitude is less than 50 meters above sea level over 75 percent of the territory. Senegal has a semi-arid tropical Sudano-Sahelian climate, with a relatively narrow temperature span. The rainy season is limited to a single summer monsoon and rainfall has declined significantly in the last 40 years. It fluctuates widely from one region to another, ranging from 1,000 mm/year in the south to less than 300 mm/year in the north. Vegetation runs from bushy steppes in the north to forest stands in the south and southeast. The central regions consist of Sudano-Sahelian and Sudano Savannah. Senegal's soils are dry and sandy in the north, ferrous in the central regions and lateritic in the south. In general, fertility is very poor and the soil is extremely vulnerable to wind and erosion from rain. B. DEMOGRAPHICS 1.2 In 1988, Senegal's population was 6.9 million. Of which 39 percent was living in urban, making Senegal the most highly urbanized country in the Sahel region. Women make up 51.4 percent of the total population and children under age 15, 30 percent. National demographic growth is estimated at 2.9 percent per year (3.8% in urban areas and 2.1% in the countryside). If current demographic trends remain unchanged, total population will rise to some 12.6 million by the year 2010, of which 6.1 million will be urban (48%), with 3.4 million people clustered in the Dakar region alone. Urban growth will increase demand for food, fuel, timber and other natural goods and services. If the productivity of natural resources does not increase and they are not managed sustainably, it will be necessary to increase imports of food, energy, construction material, etc. C. THE ECONOMY 1.3 At independence Senegal had one of the most developed economies in West Africa. Its economy deteriorated, however, due to a gradual loss of regional markets, prolonged drought and weak management. In 1994, Senegal's gross national product (GNP) was estimated at US $3,710 million and its per capita GNP was US $611. 1.4. Senegal's adjustment efforts date back to 1980 and were supported by four Bank macroeconomic adjustment operations (SALs) in 1980, 1986, 1987, and 1990, and two sector adjustment operations (SECALs), including one in the financial sector in 1989 and another in the transport sector in 1991. These adjustment operations contributed towards stabilizing macroeconomic conditions and achieved a partial liberalization of the economy. A fourth SAL was introduced in 1990 which focused on the removal of labor market rigidities, the reduction of  2 government subsidies, and the implementation of a more aggressive privatization program. Since the beginning of the 1990s, however, the economy experienced a serious decline with a contraction of output in key sector. Low economic activity resulted in a shrinking tax base which forced the government to reverse import tariff reduction and to increase the taxation of petroleum products. In 1992-93, the economy declined even further as the difficulties of pursuing an adjustment strategy based on internal deflationary policies became more acute. The fiscal deficit and the balance of payment positions worsened; the fiscal balance (excluding grants) declined from a 0.2 percent surplus in 1991 to a 3.9 percent deficit in 1993. During the period 1988-1993, Senegal's economic growth stagnated at an average of 1.7 percent per annum. 1.5 In an attempt to reverse this economic deterioration, in mid 1993 the government adopted a series of internal adjustment measures including cuts in public sector wages. However, these measures were not sufficient to restore the competitiveness of the economy and its growth prospects. The decline in investments and exports, widespread smuggling and custom fraud, and increasing macroeconomic imbalances made inevitable the January 1994 devaluation of the FCFA. With the devaluation, Senegal has now gained a unique opportunity to restore competitiveness and export-led growth, taking advantage of its strategic location and its sizable human resource base. Increasing GDP growth, reducing inflation and stabilizing prices, and reducing the current account and budget deficits are the principal macroeconomic challenges facing Senegal for the foreseeable future. Generating a strong supply-response by the private sector, increasing labor productivity, improving natural resource management patterns to reduce environmental degradation and loss of productive capacity, revitalizing urban enclaves and promoting rural development opportunities will all have to be actively pursued if those challenges are to be met.  3 II. THE SECTORAL CONTEXT A. ENERGY SOURCES AND CONSUMPTION 2.1. Senegal has a modest but relatively diversified energy resource base. Under present conditions, however, its use is associated with either major environmental risks (forest-based fuels - fuelwood and charcoal) or substantial investment outlays for exploration (hydrocarbons, lignite) and mobilization (hydroelectricity, solar and wind power). 1. Fossil Fuels 2.2 Senegal is largely dependent on expensive imported petroleum products. Fossil fuels in the form of heavy petroleum was discovered in the 1950s at the Dome Flore in Casamance (100 million tons) and natural gas and light petroleum in the 1960s at Diam Nadio Kabor near Dakar. Between 1987 and 1992 these reserved produced 61,000 barrels of crude and 31 million m3 of natural gas. In 1991 a deposit of 400 million m3 of gas was discovered at Diam Nadio and is being used for power generation. An additional gas deposit estimated at 10 million m3 was discovered at at the same location in 1996, but it will take some time before it can be economically mobilized. Since there is no residential piped gas infrastructure in Senegal the new natural gas discovery will not be a factor in foreseeable household interfuel substitution schemes. There is a reserve of peat of some 39 million m3 along the Dakar coast at St. Louis. 2. Hydro 2.3 The country's hydroelectric potential, based on the Senegal and Gambia rivers, is estimated at about 1,000 MW capable of producing 280 Gwh in an average year. The development of the Senegal River under the OMVS should make it possible to have a supply of hydroelectric power generated by facilities at the Manantali site in Mali. It is expected that this could provide Senegal with 280 GWh/year (out of total domestic consumption of some 900 GWh) and would save SENELEC (National Electricity Company) some 150,000 tons of fuel per year of the current consumption of 300,000 tons. 3. Traditional Fuels (Fuelwood and Charcoal) 2.4 The potential supply of energy wood is not well known. In 1980, forest land was estimated at 12 million ha (60% of the country's area), with very variable types of stands: closed and open forest represent 20 percent of the woodlands and Savannah and steppe 80 percent. Depending on the source and assumptions used, annual total productivity was estimated for that same year to be between 13.4 million m3 (1991 PASF/terroir management studies) and 8.6 million m3 (1981 PDDF). Availability was estimated in 1980 at 7.3 million m3/year (PDDF) and accessible reserves at 3.1 million m3/year (PAFS, World Bank). Table 2.1 presents 1980 estimates of Senegal's forestry potential. It is estimated that some 80,000 ha of forest stands disappear each year due to land clearing for agriculture, bush fires, the production of charcoal, overgrazing and scarce rainfall. Annual deforestation for charcoal production alone is estimated at more than 30,000 ha per year. In the last ten years, an average of 190,000 ha/year was lost to forest fires throughout the national territory.  4 2.5 A recent study conducted by the government of Senegal with World Bank support concluded that the availability of woody biomass in Senegal may have been previously underestimated both in terms of volume of stocks and yield potential.2 Available forest stock information (estimated on the basis of primary data collected prior to 1980) indicates that there are some 44,000 km2 of woodlands and forests, 29,000 km2 of savanna woodlands, 43,000 km2 of savannas and 32,000 km2 of Sahelian steppe grasslands. Yields are now estimated to be between 1 ton/ha/yr and 2 ton/ha/yr, depending on the geographic location and specific stock composition. Under improved rainfall condition, natural stocks growth could be even higher. Pending confirmation by a comprehensive assessment of vegetation cover in the Tambacounda and Kolda regions (included in the proposed project), it is now estimated that Senegal should still have sufficient forest resources to meet most -- if not all -- of the demand for woodfuels for at least the next two decades under sustainable forest management schemes. Implementing sustainable management would imply exploiting the existing forest stocks at or below the annual growth (yield) level and would therefore result in maintaining the original stocks over time. Table 2.1: Forestry potential in 1980 Area d(1 Stocks (2) Production' potential from:i ('000 m3/year) Region :t00 0'OOOha ff00# wm Nat. stndsu Degradation: PltIanations Total Aessble$ West 142 500 28 42 6 76 57 Louga 1,180 1,400 131 130 2 263 62 Fleuve 2.098 3,000 253 300 1 554 X 119 Sine 527 5,200 282 175 7 464 311 Saloum East. Senegal 5,206 68,200 3,470 735 4 4,209 1,176 Casamance 1,732 60,600 2,673 400 5 3,078 1,395 Total - ii::10884 138, 00 6,837 1,782 25 86 44E 3i:: (1) Productive woodland area, i.e., not including fallow woodlands, mangroves and national parks. (2) Standing volume for trees > 10 cm overbark, diamater at breat height. Source: PDDF and World Bank. 4. Other Potential Resources 2.6. There is a relatively large availability of agricultural residues, but their energy use has not yet prove to be more attractive than their use as fertilizers and/or cattle supplements. On the other hand, byproducts from agro-industrial processing such as groundnut shells and bagasse offer more attractive prospects and have been used by the industries that produce them (SONACOS and CSS) to generate electricity for some time. With an average daily radiation of some 5.4 kWh/mi2 Senegal has a considerable solar energy potential for applications such as small scale electricity production (PV), water pumping and heating and drying of fish and agricultural products. 2 Jensen, Axel M., Elements d'economie spatiale des energies traditionnelles, RPTES Discussion Paper Series, World Bank, October 1994.  5 2.7. Figure 2.1 present Senegal's energy flows matrix. Figure 2.1: Energy Flows Matrix of Senegal ORIGINE TRANSFORMATION DESTINATION Importation Impoltation Exportation Trsport 44% PRODUIITS PTRiOERS Industrie 36% Tertiaire 20% Diam Nadio - Industrie 45% GAZ NATUREL entrales ~~~~~~~ELECTRICITE Mdnages 23% Diam Nadio : Autre 35% Arachide, DECHETS VECETAUX canne i sucre ;ndustrie \ BOIS ,> M6nages Forets et BOIS savanes M6nages Restaurafion CharbonniCres snow\ Pes s de asformatw,on 5. Energy Consumption 2.8. Total final energy consumption in Senegal for 1992 was estimated at some 1.5 million tons of oil equivalent (TOE), and a per capita energy consumption of 195 kilograms of oil equivalent (KOE), which is relatively high compared to most West African countries. Out of the estimated total energy consumption, forest-based traditional fuels (firewood and charcoal) -- mostly used for household cooking purposes -- represented 53 percent, petroleum fuels 34 percent, electricity 12 percent and agricultural residues I percent. The household sector is the principal energy consumer (58%) followed by transport (20%), industry (17%) and the tertiary sector (5%). Total charcoal consumption in 1992 was estimated at 330,000 tons (equivalent to 1.8 million tons of fuelwood), of which 76 percent is consumed in the principal urban areas. The city of Dakar alone has an estimated consumption of almost 150,000 tons of charcoal per year. Total consumption of fuelwood was estimated at some 1.5 million tons in 1992, 86 percent of which is consumed in the rural areas. Tables 2.2 and 2.3 present final energy consumption by energy resource and by economic sectors, respectively.  6 Table 2.2: Final Energy Consumption ('000 toe) ~198. 1989 1990 199 192 AvA"ge Fuelwood 569 580 591 602 613 .19%. Charcoal 181 194 207 221 234 14% Agricultural Residues 17 18 18 19 22 : % Electricity 180 176 190 192 213 12% Petroleum Products 511 526 552 541 566 34% .. - I- . 3 1430 1 446 1. 5..5 -.1.00 Sourc Revised from Directorate of Energy Table 2.3: Final Energy Consumption by Sectors ('000 toe) Industry and Fisheries 191 231 243 236 264 17%/1 Transport 304 313 323 315 310 21% Households 802 832 864 895 931 62 Total 1337 1 3161 1 430 . 146 .10 .0% Source: Directorate of Energy B. ENERGY SECTOR INSTITUTIONS AND POLICIES 1. Sectoral Institutions 2.9. Institutional structure and actors. Energy policy choices, directions and coordination are overseen by the National Energy Commission, an inter-ministerial entity chaired by the Prime Minister. The National Energy Committee headed by the Minister of Energy implements the directives formulated by the Commission. Administrative and technical oversight of the sector falls under the Ministry of Energy, Mining and Industry (MEMI) with the exception of the supply of woodfuels, which is the responsibility of the Ministry of the Environment and Protection of Nature (MEPN). MEMI oversees certain parastatal companies and mixed-capital enterprises: SENELEC, in charge of electric power production, transmission and distribution; SAR (African Refining Company), responsible for imports and production of petroleum products; GPP (Petroleum Trade Group), responsible for the distribution of petroleum products; PETROSEN (Senegal Petroleum Company), responsible for oil exploration; and CTS (Senegal Peat Company), responsible for the development of peat reserves. Other ministries are key players, including the Ministry of the Economy, Finance and Planning; the Ministry of Infrastructure and Land Transportation, responsible for oversight of hydrocarbon transportation; the Ministry of Modernization and Technology and the Ministry of Water Resources, both of which are involved in solar energy programs; the Ministry of National Education, which has oversight of the CERER (Center for Study and Research on Renewable Energy); ENSUT (National School for Advanced Studies in Technology); and the "Cellule de Combustibles Domestiques", which is an inter-ministerial body  7 created in 1993 to serve as a formal link between the different governmental institutions and operators in the sector. 2.10. From the different ministries that play an operational role in the household and traditional energy sectors, MEPN is by far the best organized and endowed in human and material resources and is technically capable of fulfilling its assigned responsibilities. Currently MEPN is managing some 300 projects through out the country, most of which are donor- supported and which include capacity building and institutional development components. The Water and Forest Directorate (DEF/MEPN) has implemented a gradual reorganization process over the last two years, giving special priority to the strengthening of its regional structures. That process was implemented as part of the ongoing process of administrative decentralization to increase the Forestry Service's supervision and field extension services. While the forestry service, including the several technical support units (forestry operations, planning, cartography, monitoring and evaluation, etc.) has sufficient and technically qualified staff to undertake complex projects, the multi-sectoral nature of participatory forest management systems will require the mobilization of additional expertise from other governmental agencies (agriculture extension, rural development, women affairs, rural infrastructure, etc.) and the NGO community. 2.11 MEMI, on the other hand, has serious limitations in its ability to effectively discharge its assigned responsibilities as it lacks the necessary staff and resources to do so and has little control over the operation of the enterprises it is supposed to oversee. With institutional development support from the World Bank and the Dutch and German Cooperations the Energy Directorate has recently managed to improve its situation, but the strengthening of its planning and policy making and supervision functions are still badly needed. This will imply moving away from actual field implementation of projects -- which has been the traditional means of securing resources -- and focusing on more on analytical and planning functions and sector monitoring and supervision. 2.12 Coordination and institutional problems in the power sector are similar to those encountered in the petroleum sectors. In addition to that, poor management of SENELEC has led to a growing deficit of power generation capacity, deterioration of facilities, low level of access to electricity, and high costs. SAR's refinery is uneconomic and has led to high prices of petroleum products. 2. Sectoral Policies 2.13 The national energy policy is set forth in the RENES program formulated in 1980 and revised in 1991 and in the document issued by the Inter-ministerial Energy Council (1993). The global objectives of the GoS energy policy are: (a) to limit consumption of imported energy; (b) to rehabilitate the electric power production and transmission infrastructure; (c) to shift production and consumption toward local energy sources; and (d) to reduce consumption of environmentally destructive energy sources (wood and charcoal). 2.14 Official forestry policy, establishing new post-colonial guidelines for exploitation of woodfuels, was initially addressed by the Master Forestry Development Plan (1981). The Master Plan was then revised during the formulation of the Forestry Action Plan (1993) and is now framed within the new forestry code of April 1995 (Decret 95-357). This new code introduced major changes to the previous regulatory framework, including the recognition of the rights of the local communities to exploit state-owned forest land and to capture revenues directly from their regulated exploitation. In addition to those significant changes, the legislative  8 decrees sanctioning the administrative decentralization have already been signed, with which local communities are, inter alia, further insulated from centralized decisions on forest and natural resource issue. 2.15 The GoS has now articulated its energy policy around the following points: * the stabilization of the potential supply of woodfuels through the transfer of responsibility for the management of natural forests from the Forestry Service to the local community and the implementation of sustainable community-based forest management systems; * the sustainable exploitation of existing natural forests and the rationalization of forestry operations through the implementation of a national participatory natural resource management program; * the diversification of fuels available to consumers, by developing the use of butane, introducing peat-based charcoal briquettes to the market and studying the possibilities for using kerosene for cooking; * savings in consumption (improved stoves) and in the transformation of wood into charcoal (better carbonization methods); and - a shift towards full cost pricing of energy products so that the market prices reflect the real economic costs.  9 III. THE HOUSEHOLD ENERGY SECTOR A. ENERGY CONSUMPTION IN THE HOUSEHOLD SECTOR 3.1. There were an estimated 1.3 million households in Senegal in 1992 with an average size of 6 persons. In Dakar alone there were an estimated 156 thousand households, with an average household size of 12 persons. The consumption of energy by the household sector was estimated in 1992 at about 0.9 million toe. That total was made of 1.5 million tons of wood, 330,000 tons of charcoal (equivalent to more than 3.3 million tons or 4.2 million m3 of wood), 40,000 tons of gas butane and some 10,000 tons of kerosene.3 Figure 3.1 presents a breakdown of energy consumption by the household sector for 1992. Table 3.1 presents a breakdown of household energy consumption by fuel and by region for 1987 and 1992. Table 3.2 presents a breakdown of traditional fuels consumption in the household sector in terms of toe and wood equivalence (m3). Table 3.1 Household Energy Consumption by fuel and Region (1987-92) ('000 toe) --- 1 1987 1992 REGION Fielwood Charcoal Gas Total Fnelwood Charcoal Gas Total Dakar 2 92 10 104 3 103 27 133 Thies 5 11 1 17 5 10 3 18 Kaolack 6 7 0 13 7 11 1 Ziguinchor 2 8 1 II 6 11 1 18 SaintLouis 4 9 1 14 3 13 1 17 Other Cities 27 15 1 43 70 41 5 116 Total urban 46 142 14 202 94 188 38 320 Rural 501 14 2 517 520 46 7 373 Total 547 156 16 719 614 234 45 893 Source: DNEF 3.2. Household energy demand patterns are determined by a combination of factors including but not limited to geographical location (urban/rural and distance/accessibility to supply sources), family size, relation between level of household incomes and fuel prices (purchasing capacity), market availability of fuels, and cultural habits (fuel choices and method of fuel use). An analysis of the tables 3.1 and 3.2 and of various studies in the sector reveals the following key trends: 3 Kerosene is used for lighting (sometimes for starting fires) and hence does not compete with the others.  10 Figure 3.1: Senegal: Household Energy Consumption Patterns (1992) Senegal Household Energy Consumption Patterns (1992) Rural Ch.0 ___ 1ll i 0 *Woodfuel 0) Urban LPG Charcoal 0 Charcoal o : Ii | t :t j t : : - s t OLPG : Kerosene National Charcoal a E__ectricity , I 91 _ _ _ _ _ | ] "~~~~~~~ Electricity 0% 20% 40% 60% 80% 100% Percentage of Total Energy Consumption Source: Energy Directorate Table 3.2: Household Consumption of Traditional Fuels (1987-92) ('000 tons) 1987 1992: REGION To1 Wood T odtal: Wood __________0 ;S0:i:t Fuelwood;; :0Charcoal: Equivalent Fuelwood Charcoal tEquivalent Dakar 6 132 737 8 147 825; Thies 1 1 16 1.02 12 14 209 Kaolack 15 1 1 74: 18 15 122 Ziguinchor 9 12 76 14 15 119 Saint Louis 4 1 3 75 6 1 8 1 50 Autres villes 66 22 1186 172 59 5022 Total urbain 11 1 206 I 2%; 230 268 1927. Rural 1,111 20 1,225 1,267 65 1,600 Total 1,222 22~~6 2,475: 1,497 333 ~ 3,527 Source: World Bank and Energy Directorate * The consumption of fuelwood dominates in the rural areas, gas tends to replace charcoal as the primary household fuel in Dakar and Thies (given end-use efficiency differences charcoal consumption is still higher than LPG on nominal terms), and charcoal is still the main household fuel in the other secondary cities;  11 * Gas is making substantial inroads in the principal cities, but charcoal is still consumed in large quantities because urban consumers tend to use several fuels, often concomitantly; * The consumption of charcoal is concentrated in the Cap Vert peninsula and in the Thies region, which is home to most of the country's urban dwellers; and * Charcoal represents about 27 percent of final consumption of traditional fuels but accounts for 55 percent of the out-take of forest resources for energy use. Most of the wood collected by rural dwellers comes from dead wood, whereas charcoal is produced most of the time from the cutting of live trees. This highlights the high proportion of forestry resources extracted for charcoal. 3.3. Consumption of LPG has gone from 3,500 tons in 1974 to 16,000 tons in 1987 and then to approximately 65,000 tons in 1996. The penetration of LPG in Senegal has been promoted by an aggressive program of cross-fuel subsidies, which is currently estimated at 5 billion FCFA per year. The promotion of LPG in Senegal has been primarily supported by the subsidy policy of the government since 1974 and by the CILSS/FED Regional Gas Program (1990-93). Consumption of LPG has increased by some 12 percent per year for the last five years (well over population growth) and by now more than 70 percent of urban households and 25 percent of rural families utilize LPG on a regular basis. Nation wide it is estimated that close to 45 percent of households have purchased LPG stoves. Furthermore, in 58 percent of households in Dakar and 43 percent of households in Thies LPG have replaced charcoal as the primary cooking fuel. Figure 3.2 present the evolution of LPG sales by bottle Size between 1974 and 1996. Figure 3.2: Senegal: Evolution of LPG Sales by Bottle Size (1974-96) 70,000 1 I I I 1I 11111111 gm~~~~~~~Ul 6f- . kg