Aid Effectiveness to Infrastructure: A Comparative Study of East Asia and Sub-Saharan … · 2016. 4. 19. · Sub-Saharan Africa Aid Effectiveness to Infrastructure: A Comparative

JBICI Research Paper No. 36-3

July 2008

ISSN 1347-5703

4-1, Ohtemachi 1-chome, Chiyoda-ku, Tokyo 100-8144, Japan

Tel: 03-5218-9720 （JBIC Institute）Internet: http://www.jbic.go.jp/ Recycled paper

JBICI R

esearch Paper No. 36-3

JBIC InstituteJapan Bank for International Cooperation

July 2008

Aid Effectiveness to Infrastructure:A Comparative Study of East Asia and

Sub-Saharan Africa

Case Studies of Sub-Saharan Africa

Aid Effectiveness to Infrastructure: A

Com

parative Study of East Asia and Sub-Saharan A

frica, Case Studies of Sub-Saharan A

frica

Ahmadou Aly MbayeUniversity of Dakar

Aid Effectiveness to Infrastructure:A Comparative Study of East Asia and

Sub-Saharan Africa

Senegal Case Study

i

i

Table of CONTENTS

1. BACKGROUND …………………………………………………………………………… 1

2. THE DEBI-TIGUET PROJECT (DIP) CASE ………………………………………… 32.1 Irrigation in the valley of Senegal river …………………………………………… 52.2 Institutional and Impact Analysis of DIP …………………………………………… 82.3 Benchmarking DIP institutional design ………………………………………… 15

3. REGIONAL HYDROPOWER DEVELOPMENT PROJECT (RHDP) …………… 213.1 The Energy sector in Senegal ……………………………………………………… 213.2 OMVS and the management of Senegal river …………………………………… 253.3 Institutional linkage between OMVS, SOGEM and ESKOM ………………… 303.4 The RHDP: a further description …………………………………………………… 343.5 RHDP: institutional spillovers ……………………………………………………… 363.6 Observed institutional weaknesses ………………………………………………… 453.7 Aid relationship in RHDP …………………………………………………………… 49

4. FINDINGS AND RECOMMENDATIONS …………………………………………… 54

REFERENCE ………………………………………………………………………………… 57ANNEXES …………………………………………………………………………………… 60

ii iii

List of Figures

Figure 1 : Geographic location of DIP …………………………………………………… 4Figure 2 : Institutional setting of Debi-Tiguet Managing Unit ……………………… 10Figure 3 : Interactions in service rendering inside the Union ………………………… 11Figure 4 : Interactions in seeds production and distrobution inside the Union …… 12Figure 5 : Total consumption in energy in Senegal (2003) …………………………… 21Figure 6 : Electricity supply to SENELEC in 2006 …………………………………… 22Figure 7 : Three countries and one river ………………………………………………… 27Figure 8 : Manantali Energy Project ……………………………………………………… 28Figure 9 : Institutional schema of Energy Project ……………………………………… 31Figure 10: Organigramm of SOGEM ……………………………………………………… 33Figure 11: Manantali dam: an aerial view ……………………………………………… 35Figure 12: OMVS member countries quotas in total Manantali energy production … 37

ii iii

List of Tables

Table 1 : Donor funded projects on irrigation in the Valley: 1990-2005 (CFA millions) ……………………………………………………… 7

Table 2 : Uses and resources on rice in Senegal (1995-2002) ………………………… 8Table 3 : Benchmarking DIP against reference projects ……………………………… 17Table 4 : Donor funded projects in energy in Senegal (1998-2005) …………………… 25Table 5 : Project Financing Shares ………………………………………………………… 29Table 6 : The costs of project’s components are broken down as follows …………… 36Table 7 : Losses according to the Fichtner Study ……………………………………… 42Table 8 : Correlation between shares of Manantali project financed

by France and nationality of successful tenderers ………………………… 50Table 9 : The amendements ………………………………………………………………… 51

iv v

Annex

Annex 1: Indicators on DIP (1994 à 2003) ……………………………………………… 60Annex 2: Irrigated agriculture in Senegal ……………………………………………… 62Annex 3: Some Indicators on reference projects ………………………………………… 63Annex 4: Note on the Desk Review of World Bank Regional Energy Projects ……… 64Annex 5: Others World Bank project’s in the valley of Senegal River ……………… 67Annex 6: Debi-Lampsar Irrigation Project ……………………………………………… 70Annex 7: Fourth Irrigation Project ………………………………………………………… 74

iv v

Acronyms and Abbreviations

BCI Budget Consolidé d’Investissement

BEC Bureau d’Etudes et de Contrôle

CAP Project and Programme Implementation Support Unit

CCCE Caisse Centrale de Coopération Economique

CERER Centre d’Etudes et de Recherches sur les Energies Renouvelable

CFAA Country Financial Accountability Assessment

CIDA Canadian International Development Agency

CM Council Minister

CNCAS Caisse Nationale de Crédit Agricole

CPAR Country Procurement Assessment

CSS Compagnie Sucrière Sénégalaise

DCEF Division of Economic and Financial Cooperation

DDI Division of Debt and Investment

DGTCP Direction General of Treasury and Public Accounting

DIP Debi Irrigation Project

DRC Development Cooperation Report

ESP Ecole Supérieure Polytechnique

FDI Foreign Direct Investment

FMTE Framework or Medium Term Expenditure

FNDP Fonds National de Développement Pétrolier

FNE Fonds National de l’Energie

GDP Gross Domestic Product

HC Haut Commissariat de l’OMVS

ICS Industrie Chimique du Sénégal

IDB Islamic Development Bank

ISRA Institut Sénégalais de Recherche Agricole

NGO Non Governemental Organization

OMVS Organisation pour la Mise en Valeur du fleuve Sénégal

PCRBF Projet de Coordination des Réformes Budgétaires Financières

PDEF Programme Décennal de l’Education de la Formation

PO Producer Organizations

PPTE Pays Pauvres Très Endettés

PRPF Programme de Recouvrement de Puissance et de Fiabilisation

PSAOP Programme des Services Agricoles et Organisations des Producteurs

PTIP Programme Triennal d’Investissement Public

RENES Programme de Redéploiement Energétique du Sénégal (RENES)

RHDP Regional Hydropower Development Project

vi 1

SAED Société d’Aménagement et d’Exploitation des Terres du Delta du

Fleuve Sénégal

SAR Société Africaine de Raffinage

SCA Stratégie de Croissance Accélérée

SENELEC Société National d’Electricité

SNP System of Planning

SNTI Société Nationale de Tomate Industrielle

SOGED Société de Gestion et d’Exploitation du barrage de Manantali

SOGEM Société de Gestion et de l’Energie de Manantali

SONACOS Société Nationale de Commercialisation des Oléagineux du Sénégal

TOFE Tableau des Opérations Financières de l’Etat

UEMOA West African Economical Monetary Union

PETROSEN Société des Pétroles du Sénégal

UNDP United Nation for Development of Population

vi 1

1. BACKGROUND

This study is part of a broader assessment of aid effectiveness, using a comparative

case study approach on Africa and Asia. It aims to shed some light on the current

debate on aid effectiveness in Africa by studying project cases in Senegal.

Foreign bilateral and multilateral flows of aid play a significant role in the

Senegalese economy. Such flows make up more than 10% in GDP, and are major

sources of funding for development policies in Senegal. In 2003/2004, Senegal received

$418 millions in aid, which made up about 8.9% of GDP. On average, the amount of

aid per head was $48.1 in 2002/2004. Bilateral aid makes up 55.6% of total flows while

the rest comes from multilateral donors. Up to 60 different bilateral and multilateral

donors (excluding NGOs, private foundations and the like) are operating in Senegal,

and about 750 projects are now underway. There are more than 400 NGOs currently

operating in the country. Although Senegal attracts far more foreign aid donors than

most developing countries (the average number of foreign aid donors for developing

countries is 23), aid is highly concentrated in Senegal, with only four partners

providing more than half of the total flows. Infrastructure is a major beneficiary of aid,

as more than 80% of total bilateral and multilateral interventions are devoted to this

sector.

The main objective of this study is to assess the effectiveness of these interventions,

mainly in terms of capacity building, institutional design, and sustainability. The

irrigation and energy sectors are cases in point, since both figures prominently

in Senegalese government strategies to accelerate growth and to reduce poverty.

Moreover, several institutional settings have been experimented to increase

effectiveness in the design, implementation and management of investment projects

in these sectors.

The methodology used in this document is inductive and seeks to generalize findings

from two case studies. In this study, we spell out the institutional accomplishments

and failures of two Senegalese development projects, the Regional Hydropower

Development Project (RHDP) and the Debi Irrigation Project (DIP), using results from

field missions and secondary documents, primarily donor evaluations. A benchmarking

exercise is also undertaken to better assess case project outcome in terms of capacity

building, institutional upgrading and economic and financial viability. We chose to

study these two projects because they met some basic criteria for case study selection,

mainly:

- Significance of project with regard to size ;

- Being in the sector of infrastructure, including irrigation ;

2 3

- Being completed 5 years ago from now ;

- Being funded by Japan, at least for one project cases ;

- Not being a white elephant, in order for the analysis to elicit some relevant

lessons.

The RHDP is funded by the World Bank and helps develop power generation from

the Senegal River. The DIP is funded by the Japanese Government and manages

irrigation in the northern part of Senegal.

2 3

2. THE DEBI-TIGUET PROJECT (DIP) CASE

The DIP is located in the left hand side of Senegal River, at 45 km upstream. The

rack is in the middle of the delta, covering an area of 500 square km. It benefits

favorable geographic conditions, soil quality and water availability, as compared to

other racks in the delta. Two villages are involved, the Debi village and the Tiguet

village, with a total population of 1622 inhabitants. DIP is funded entirely by Japan

with a total budget of 1,596 yen. The project’s goal is to rehabilitate the Debi rack. Its

main objectives are:

An increase in food self-sufficiency ;

Encouragement of autonomous management of agricultural exploitations by

peasants;

An improvement of hydro-agricultural infrastructure in the two villages, and;

An increase in productivity and producer income in the region by introducing

double harvesting in the year.

Investments consist of building a warehouse, availing tractors and trucks, and

rehabilitation of the road linking the two villages. The project also has a technical

assistance component, which consists of training SAED’s agents in the mastery of

accounting systems adapted to these kinds of projects. Peasants are also trained to

be capable of implementing techniques of double culture and to prepare necessary

documents for bank loan applications. The Société Nationale d’Aménagement et

d’Exploitation des Terres du Delta du Fleuve Sénégal (SAED) was set up in 1965 to

manage the irrigation perimeter of the region. The organization consists of 5 divisions

and 4 delegations. DIP is under the jurisdiction BEC (Bureau d’Etudes et de Contrôle)

and the Dagana delegation.

4 5

Fig

ure

1: G

eogr

aphi

c lo

catio

n of

DIP

4 5

2.1 Irrigation in the valley of Senegal river

Agriculture has an overwhelming role in the Senegalese economy. More that 70%

of total labor force works directly in this sector. The country has direct access to two

major rivers, the Senegal River and the Gambian River, and is heavily dependent on

rainfall for its agricultural sector. Irrigated agriculture is particularly encouraged to

increase domestic food supply and to foster exports. The principal zones of irrigation

are the main coast (from Dakar to Saint-Louis), the southern part of the country, and

the Senegal River valley, using notably water resources from the dams of Diama and

Manantali.

2.1.1 Characteristics of irrigation in Senegal River valley

The Senegal River valley is populated by about 3.5 million people (roughly 35%

of the Senegalese population) out of which 85% live close to a basin. The economic

potentialities of the valley have been recognized since the colonial era. They

encompass fishing, livestock, and, overwhelmingly, irrigation for agricultural purpose.

The first irrigation trials date back to 1940, and occurred in Richard Toll. But it

was not until 1965, post-independence, that the government owned SAED (Société

d’Aménagement et d’Exploitation des Terres du Delta du Fleuve Sénégal) was set up

to take charge of irrigation in the valley and to encourage food production (mainly

rice cultivation) in this area. SAED began by managing a cultivatable area of 650

hectars of land. Throughout the seventies, several irrigated areas were developed to

insure against drought. With the construction of the dams in Manantali and Diama,

improved irrigation fuelled further agricultural growth. Nowadays, this kind of

activity is the main activity in the region and has won the support of several donors.

The use of technology is quickly growing in this area, as is the use of high quality

seeds. The array of production has also increased to include rice, onions, potatoes,

sweet potatoes, and tomato. Approximately 100,000 hectares of land are now being

cultivated, out of which 60,000 in the rainy season and 20,000 in the dry season.

There is a great potential for irrigation in the valley due to the diversity of water

resources as well as the large quantity of stored and usable water resources. 500,000

hectars of land are potentially irrigable, but only 60,000 are now actually irrigated,

which makes up 1.6% of cultivatable land, or 2.8% of cultivated land. Agriculture in

the valley consists primarily of rice and vegetables. Irrigation in the area uses mainly

surface water, and underground water contributes only for 10%. The techniques used

are very diverse and include:

The traditional system using watering cans ;•

The improved traditional system: portions of land are watered through flexible •

6 7

drains plugged into the watering terminal;

The gravity system using submersion;•

The gravity system using land parting ;•

The sprinkling system of irrigation, which is more prevalent now in the valley and •

has the advantage of consuming less water.

2.1.2 Development policies and programs in the valley

It is now widely acknowledged by Senegalese authorities as well as by the

community of donors that irrigation can dramatically mitigate the very severe

agricultural crisis in Senegal. The agricultural sector is hampered by several

constraints, which include1:

Very low levels of investment, resulting in very low levels of mechanization and •

diminutive yields;

Rainfall levels following a downward trend due to the process of desertification in •

the Sahel region;

Increased soil degradation, water salinity, and parasite attacks;•

Furthermore, government withdrawal from this sector since the early nineties has

dramatically reduced fertilizer and phytosanitary product use, as well as further

diminishing the mechanization of agriculture.

These constraints have contributed to the lower levels of productivity and income

in rural areas. In order to mitigate their effects, several donors have encouraged the

development of irrigated productive processes in the valley. Among the donors, the

most visible are France, The World Bank, and Japan. Table 1 gives us some major

donor projects and programs in the valley. It shows that this kind of activity is one of

the most assisted in the country.

1 For a deeper analysis of the constrains on agriculture in Senegal, see Mbaye (2005).

6 7

Tab

le 1

: Don

or fu

nded

pro

ject

s on

irrig

atio

n in

the

Val

ley:

199

0-20

05 (

CFA

mill

ions

)

8 9

2.1.3 Rice cultivation in the valley of the Senegal river

Agricultural opportunities in the valley are abundant due to soil fertility and

water availability. Several commodities are developed in this region, notably: maize,

sorghum, industrial tomato, onions, sweet potatoes, groundnut, cotton, and rice. Rice

cultivation is by far the most prevalent activity in the valley and is also undertaken

in the southern part of the country, in Casamance, which the rainiest region in the

country, and in Kolda, with the help of irrigation. However, nowhere in the country

are the levels of rice yields and output comparable to what is observed the valley. Rice

is the basis of nutrition in Senegal and domestic production only covers less than 20%

of total needs. The remainder is imported, mainly from Asia (see table 2).

Table 2: Uses and resources on rice in Senegal (1995-2002)

Years 1995 1996 1997 1998 1999 2000 2001 2002

Populations (adult equivalent) 6483645 6658703 838488 7023128 7212752 7407496 7607499 7812901

Average consumption/year/capita (kg) 60 62 63 65 67 69 70 72

Total demand in rice (metric tons) 389019 410309 432765 456450 481431 507779 535569 564881

Total rice production (metric tons) 100750 96850 113100 141700 138450 124103 137124 158013

Imports (metric tons) 435500 627200 452000 535300 658070 501657 632253 709575

Food assistance in rice (metric tons) 6765 4904 8238 1997 8993 6000 6000 6000

Total supply of rice (metric tons) 543015 728954 573338 678997 805513 631760 775377 873588

Inventory (metric tons) 153996 318645 140573 222547 324082 123981 239808 308703

Source: SAED, 2003

The major constraint for rice cultivation in Senegal is the level of certified seed

utilization. Most of seeds used come from the preceding year’s crops. Thus, they are

cheaper but also less effective than the certified ones. However, the use of certified

seeds is increasing very rapidly recently, rising from 634 metric tons in 1994 to

2250 metric tons in 2000, and yields have followed a similar trend, thanks to donors

intervention in the valley. But the major challenge now is how to make domestic rice

production competitive as compared to asian rice which is much cheaper even in local

markets.

2.2 Institutional and Impact Analysis of DIP

RHDP and DIP have had important impacts on beneficiaries’ incomes. The

connection of neighboring villages to the national electricity network has dramatically

improved living standards in the villages. Irrigation has allowed for double harvesting

8 9

and increasing levels of yield and income in these regions, as well as on production

diversification.

2.2.1 Institutional and capacity building impact of the project

The villages Debi and Tiguet used to be fishing villages. Economic activities used

to be rudimentary and, apart from fishing, consisted of gathering and food oriented

agriculture. The first irrigation trial in the area took place in the Djoudj basin, in

1964. It covered an area of 80ha and doubled to 160ha in 1966. Kuwait funded land

management in these villages in 1980. An area of 737ha was covered under this

program. The Japanese began funding the project in 1996, but the rehabilitation of

the rack commenced in 1992. The area of managed land is 982 ha. Other surrounding

areas are also favourable for irrigation. It is estimated that 1700 ha of irrigable land

is available there for private operations. The major impression we got throughout

our interviews with the beneficiaries is that the program has dramatically improved

living standards in the two villages. More importantly, it has improved domestic

capabilities in managing human organizations. Before the project’s implementation,

the organizational patterns in the two villages as well as in surrounding ones was

cenetered around cooperatives, and villages were sections of such cooperatives. The

management unit of the project consists of a Union2 of the producer organizations

(PO) of 28 people (14 from each village) chosen on a parity basis. The organizational

hierarchy of the management structure is:.

- The PO, whose presidents are automatically members of the board;

- The General Assembly, which is composed of all the people living in the two

villages, organized in PO. It has meetings twice a year: at the beginning and at

the end of the production cycle. The general assembly appoints the members of

the board;

- The board consists of 28 people (14 from each village) chosen on a parity basis.

The board meets once a month to evaluate past activities and follow up on

current projects. The board is directly accountable to the general assembly. The

board is responsible for land distribution inside the community and is structured

by commissions ;

- The board appoints the members of the managing unit of the project. The

unit consists of 6 members chosen on a parity basis, 3 from each village. This

managing unit meets once every 15 days and is managing the project locally. It

is appointed for a 3-year term

2 The official name is: « Union des exploitants de Débi ».

10 11

Figure 2: Institutional setting of Debi-Tiguet Managing Unit

28 people

23 people

6 members

The various departments (commissions) of the board are each managed by a

commissioner and a deputy commissioner. The existing commissions are:- The commission in charge of collecting income and engaging expenses,

- The commission in charge of land management,

- The commission in charge of operation (seed and fertilizer distribution),

- The commission in charge of equipment (tractor and truck) management;

- The commission in charge of the management of rice broking machines,

- The commission in charge of equipment parts management

Each commission presents a report of its activities every meeting. Each PO is

allotted a given parcel of land, assesses its needs and prepares an application for

a loan to CNCAS3. SAED evaluate the technical and financial feasibility of the

application before giving its clearance to CNCAS for the loan to be approved. The

3 Caisse Nationale de Crédit Agricole du Sénégal. CNCAS is the bank that was set up by Senegalese authorities to fund agricultural activities. It grants loans on a subsidized basis at a rate of 7.5%. Commercial banks offer loans at up to double that rate.. The national average level of loan recovery for CNCAS is very low; however, the bank recovers at least 95% of its loans granted to the Debi-Tiguet project.

10 11

SAED monitors loan disbursements with the POs. The loan application is personal,

putting each producer in touch with CNCAS, even though the process is collective. It

is worth noting that POs are not receiving cash, but are instead receiving vouchers

that can be traded in for seeds, fertilizes or whatever input they may need in the

production process. Before granting loans, the bank asks for a deposit amounting to

the fourth of the financial needs, ensuring that each PO has a deposit at the bank.

The harvests are centralized to the board and each deposit is certified by a title. The

board (through its commission in charge) shell the rice, sells the output, repay the

bank according to the share of each producer and return the balance to the POs.

Figure 3: Interactions in service rendering inside the Union

The Union charges producers for various services at the following rates:

- Irrigated water: CFA 62500 per ha,

- Agricultural techniques management: CFA 19000 per ha;

- Certified seeds: CFA 250 per kg ;

- The trucks, 4 of 5 metric tons useful load, and 1 of 10 metric tons useful loads,

are rented to the POs. The costs charged are CFA 25000 per day; but exceptional

discounts are granted for some particular activities. For example the price

charged for the shelling machine is CFA 10000, and CFA 5000 for operational

activities. Regarding the truck of 10 ton metric load, it is affected to fertilizer,

seeds, and crops delivery, and the costs charged for these services are only CFA

12 13

5000 per day. The trucks can be rented by people outside the Union for private

use. In such case, the commission in charge of its management determine on a

discretionary basis, the amount to be charged;

- Rice shelling: CFA 13 per kg.

All these services are also available to private operators who grow rice in the

surroundings of Debi-Tiguet, but at a higher price than what the POs pay. Each

commission determines its margin by comparing proceeds to costs. In recent years,

costs have tended to outpace proceeds; service fees have not increased for the past

10 years except for tractor location fees, which increased by CFA 1500, while the fee

charged for water dropped by CFA 5000 over the same time period, and the costs of

shelling have decreased by 1 per kg, also. The proceeds are used by the Union in the

following ways:

- 44% for the management of the pumping station: gasoline for draining and for

irrigation stations, equipments parts, maintenance (this service is performed by

SAED and is charged to the Union), etc.,

- 41% for in charge of operation (seed and fertilized distribution )

- 15% of total proceeds are deposited at the bank in a savings account, in order

to insure against unexpected risks; however, no such risks have presented

themselves for the past ten years. The current value of the deposit is CFA 147

millions.

Figure 4: Interaction in seeds production and distribution inside the Union

12 13

Cooperation with the research institute is also deemed satisfactory. ISRA4 is

producing pre basic quality seeds and sells them to the Union at the price of CFA

720 per kg. Then, the Union chooses the peasants who have best demonstrated

their abilities to follow the technical itinerary drawn by research, to duplicate the

seeds. This seeds produced by peasants are of basic quality and cost CFA 175 per kg.

In return, The Union sells those at the price of CFA 350 after bearing the costs of

wrapping, sorting out, transportation, and so forth to POs. The Union is realizing an

estimated profit margin of CFA 20. The final stage is that POs further duplicate these

seeds to levels R1 and R2, and distribute them to peasants for production.

2.2.2 Why is the Debi Tiguet Union more effective than similar Unions in the Valley?

According to SAED engineers as well as community members, the main reason

for the effectiveness of the union lies in the type of organization that was put in

place. It ensures total ownership of the organization, and it effectively handles land

management, seed and fertilizers distribution, technology extension, loan application

and reimbursement, and most of all, harvest commercialization. The efforts of the

Union in harvest commercialization are of utmost importance. In many neighboring

villages, the producers deal with crops by trading amongst themselves, even though

they have neither the financial capabilities nor the skills to properly do it. They are at

the mercy of intermediaries who take the spread between sale price and purchasing

price, which is put at its highest. Here, all POs centralize their harvest to the board

which divides it into three components: one for producer self consumption, one for loan

repayment and one for sale.

Another factor for success is the level of available technology, understood both by

methods of production and availability of equipment. SAED makes sure the best

productive itinerary is used by peasants. With regard to equipment, peasants are

provided tractors, shelling machines, and trucks by JICA. According to many expert

opinions, the level of rice yields is among the highest in the world. Average yield is

5.8 metric tons per ha, with peaks reaching 9 metric tons. The availability of tractors

throughout the year is critical. CNCAS’s credit committee meets at around June,

so loans are only available in July. Peasants from other unions are obliged to wait

until these loans are in place to start the production process, while those from Debi-

Tiguet start the field work as early as May, and at that time, they do not need to pay

for tractor service fees. Such payment is deferred until the loans are available to the

peasant. Thus, the production cycle and the technical itinerary are fully respected,

and this ensures the higher yields.

4 Institut Sénégalais de Recherche Agricole

14 15

POs, accompanied by SAED engineers, organize rack towers throughout the

production cycle: one 15 days after sowing, another one 30 days after sowing and a last

one 60 days after sowing. These are intended to evaluate the potential of each field,

to identify the major problems it faces, and to accompany the owner with solution.

Whenever POs realize the existence of very severe deficiencies that could hamper the

quality of harvest and hence the solvency of the owner, they stop all loan processes to

the peasant.

The idea of the project emerged from SAED, which developed it in partnership

with JICA. It is a principle of JICA to work with governments, and SAED was the

governmental body which served as the interlocutor with JICA for this project.

SAED also monitors the production cycle and the loan processes alongside with the

Union, and oversees the overall financial management of the unit. Since 2004, it

has established centers to manage rural organizations called CGER5. These centers

prepare financial statements for each peasant organization and send a copy to SAED;

they review the accounts and make relevant recommendations about management

to the organization. SAED reserves the rights to order additional audits if necessary.

Besides, SAED appoints a permanent representative to the Union with the title of

Conseiller agricole6, who is an agronomic engineer, who attends all board meetings as

an observer. Throughout the production cycle, he avails himself to POs for technical

advices. The Conseiller is permanently based in Debi-Tiguet. His duties include:

planning for the next agricultural campaign, tracking tractor maintenance, assessing

financial and technical needs from POs and helping them prepare loan application to

CNCAS, and, finally, double-checking the conformity of deliveries to their orders. On

the technical side, he verifies that water drainage and spreading are completed on

time, and he follows each peasant individually and provides advice on an individual

and collective basis.

Training is also an important factor of success. When the Union was set up in 1996,

each commissioner and deputy commissioner was granted a training on his field of

interest. The peasants were trained on how to manage a rack. This training was

provided by a body called ATOP7, which depends on SAED. Literacy activities were

also taken in charge. Currently, peasants are trained about the technical itinerary at

the beginning of each agricultural campaign. For more advanced training modules,

SAED invites the management of the union, who replicate the training received to the

remainder of the group. Furthermore, the management of the Union organizes trips

5 Centre de Gestion des Economies Rurales ;6 Agricultural advisor.7 Appui Technique aux Organisations paysannes.

14 15

abroad to expose themselves to other technical experiences in rice cultivation. Also, as

part of the project, SAED engineers are sometimes invited to Japan for training.

JICA is directly dealing with the government via SAED and not with the POs. It

has mainly two funding instruments in Senegal: technical cooperation and grant aid

cooperation. The funding of Debi-Tiguet falls under grant aid cooperation. Under this

scheme, rehabilitation works of irrigation facilities and drainage pumps are conducted

and necessary equipments are provided. In addition, Japanese engineers are sent to

ministries and Senegalese civil servants or engineers are sent to Japan for capacity

building. In the case of grant aid project, the Japanese and the Senegalese government

agree on the sector and the projects to be supported, and JICA intervenes accordingly.

The disbursement rate of JICA is 100% since they do not give money to recipient

government. They can install equipments, build classrooms, or roads, but none of

these is directly managed by recipient government. The major areas of concentration

of Japanese cooperation in Senegal are health, education, hydraulics, and support to

productive initiative mainly in agriculture and fishing.

2.3. Benchmarking DIP institutional design

2.3.1 The methodology and its main limitations

This benchmarking exercise is to compare the accomplishments of the DIP in terms

of institutional design and capacity building with other reference projects. The projects

that are chosen for this purpose are the Ndombo Thiago and the Thiagar projects.

We will compare the accomplishments of DIP to those of the reference projects to

determine how good its relative performances are as compared to average projects of

the same nature. The exercise is likely to yield a robust outcome if it is proven that

the reference projects are not outliers from the average projects. To address this issue,

we selected projects that have more or less the same level of success as DIP. Another

prospective problem is that projects are implemented in different time periods. This

can influence technology based indicators such as yield and quality of seeds. However,

this is tempered by the fact that technology does not experience huge increases in

productivity in a short period of time; thus it is realistic to assume that variations in

technological skills and quality of equipment are not very significant. The following

are the criteria were used in the selection process of reference projects:

- The reference projects are in the same sector as DIP; both are irrigation projects

in the delta of Senegal river,

16 17

- They are financed by different donors8; the Ndombo-Thiago (1981-1986)

perimeter is funded by French cooperation, while the Thiagar irrigation project

(1987 – 1992) is funded by the World Bank

- They are comparable in scale to the DIP; 590 ha of land management for

Ndombo-Thiago, 1270 ha for Thiagar, and 982 ha for DIP

- Information on institutional set-up and mode of implementation for both are

available from secondary sources. Some basic information on institutional and

developmental impacts are also available.

2.3.2 A brief description of reference projects

Ndombo and Thiago are located in the Delta of the river, south of Richard Toll. In

1981, SAED implemented 12 autonomous perimeters, divided into subsets of 6 each,

and fed water by a 45-horsepower pump. The total cultivatable surface was 590 ha.

Each perimeter was designed to cultivate rice and tomato. The Thiagar perimeter

is located close to Rosso Senegal and the Senegal River. It was first managed in

1976 and rehabilitated in 1986/87. The rehabilitation concerned the management

of the irrigation network, the strengthening of pumping stations, and the repair of

production tracks. This project was part of a bigger program which was intended to

rehabilitate 7000 ha of land in the delta and to transfer them to POs.

The implementation of Ndombo-Thiago project dramatically increased the level

of production and yield of beneficiary peasants. Tomato production increased from

17 metric tons in 1982 to 88 metric tons in 1990, even though it decreased in the

following years. If we look at rice, production rose from 174.35 metric tons in 1982 to

462 in 1989. Yields increased from 3.96 in 1982 tons per ha to 5.82 in 1989 for rice in

Ndombo, and 18.5 to 51 for tomato. In Thiago, the corresponding figures are 5.16 to

6.58 for rice and 17.10 to 159 for tomato. Yields in Thaigar increased from 2.5 metric

tons per ha in 1981/82 to 4.7 in 1990/91. None of these projects has a transformation

component (i.e. rice breaking machines) or transportation equipments, like in DIP.

2.3.3 The results of the analysis

In order to rank the DIP project against the two reference projects, we judged the

three projects on a few quantitative indicators (the first five indicators in the chart

below) and many other qualitative indicators (the remainder). The indicators all have

8 JICA is now funding a project in Thiago, but for the period under consideration, this was not the case.

9 These figures which are published by SAED are a lot above the ones obtained by Le Gal 1991, from his surveys in the Delta.

16 17

the same weights, thus reflecting that they are each equally important. For each of

these indicators the three projects are ranked by order of performance. That is the

project that performs better for a given indicator is assigned a score of 2, the following,

a score of 1, and the last a score of 0. We then sum up all the scores to give an overall

ranking of the three projects according to these criteria. Below, we give some insight

on the rationale of each criterion (see table 3).

Table 3: Benchmarking DIP against reference projects

18 19

In order to implement this benchmarking methodology, we used the evaluation

missions prepared by CCCE10 on the Ndombo- Thiago and Thiagar projects, as well

as documents from DIP which we collected from various sources: JICA, Debi Tiguet

Union of producers, SAED, Ministry of agriculture, and other sources. Data for

DIP are much more diversified and reliable than data form reference projects. The

multiplicity of these data allows for double-checking our results for the DIP, which

is not the case for reference projects. This can dramatically entail the benchmarking

outcome for some indicators (indicators related to yields and production)11, for the

other indicators, they seem quite reliable. We have skipped indicators referring to

poverty incidence and severity since the available statistics cannot be disaggregated

for these villages.

With the expressed reservations about data reliability in mind, we see that DIP is

not performing as well as the reference projects in the fields of growth of output level

and growth of yield level. If we turn to output diversification, we can see that the

reference projects target at least two types of products (rice and tomato) while DIP

only targets rice cultivation, so the reference projects scored higher for this indicator,

too. Apart from that, DIP has much higher scores for all other indicators, except for

producer involvement in the project design, for which all the projects scored a 0. It

is also shown in the evaluation for reference projects (CCCE, 1992) that populations

were not at all involved in identification of Ndombo Thiago and Thiagar perimeter

rehabilitation projects. While for DIP the main interlocutor with JICA was the

Senegalese government through SAED, the POs we met with during the field mission

said that the peasants were not involved enough in these phases of the projects. This

is despite the fact that it was assumed that peasants were strongly involved in project

identification and design stages. Furthermore, it seemed that training for both SAED

and producers was sufficient in the reference projects and the DIP, so all three projects

scored equally for the related indicators.

Indicators related to loan are a case in point, to illustrate DIP highest performances

for the majority of indicators. The level of bank loan recovery is higher for DIP

(more than 95%) than in reference projects. Evaluation documents indicate that loan

recovery rate tended to turn lower and lower as we move forward on time for the

reference projects. For the DIP, however, a very strong organization involving SAED,

the Union, and the CNCAS ensures a very high and stable rate of loan recovery. Also

in DIP, we have a very deed involvement of the whole community in loan application

10 Caisse Centrale de Cooperation Economique, which became Agence Française de Développement.11 For example, Le Gal (1991) indicated reported levels of yields much lower in the order of 3.53

metric tons per ha than what is found in some evaluation documents. So indicators related to yields and production should be used with caution.

18 19

process, even if each producer is the only responsible of his (her) own loan. This type of

organization is not observed in reference projects. That is why they both are scored a

0 for this indicator, while the DIP scored the maximum for the indicator. The DIP has

achieved a savings level of CFA 147 millions, while for most PO groups in references

projects, working capital has totally faded away.

DIP also performed better in indicators related to equipment availability.

For reference projects12, investments consist mainly of irrigation and drainage

equipments, threshing machines, plough, while investments for DIP include all of

those plus tractors and trucks. DIP is thus scored higher for these indicators, while

the reference projects are both scored a 0 for them. These investments are crucial

for explaining the impressive accomplishments of DIP. Equipment management

and maintenance are better dealt with in DIP than in reference projects. Evaluation

reports for the reference projects show a very weak peasant organization for assuming

such an important task. In DIP, producers have set up a very strong mechanism

for equipment maintenance; furthermore, fees are levied for services rendered by

such equipments which are intended to be used to purchase parts when needed.

Maintenance of irrigation and drainage equipments is done directly by SAED, which

is contracted by peasants to perform said jobs when needed. There is no similar

mechanism observed for the reference projects.

We see the biggest accomplishment of DIP is in establishing a sustainable overall

organizational setting. As shown in preceding sections, the organizational setting of

DIP is much stronger than in reference projects. The pattern of irrigation in Ndombo-

Thiago is very much scattered: we have two main cooperatives, one for each village,

and 6 POs per village. If we look at Thiagar, most POs that were constituted within

the project eventually broke up. Financial statements from Thiagar were deemed

unreliable. The head of the POs was deemed very authoritarian and tended to decide

without input from others. With these institutional weaknesses, Ndombo- Thiago

started having problems towards the end of the project, as is evident in rice harvest

yields, which dropped from 462 metric tons at the end of the project (1989) to only 70

metric tons the following year. Contrastingly, POs have taken over the management

of the whole process for DIP and the managing unit is functioning autonomously with

the support of SAED; donors have never been involved in the management of the

project. Hence, the DIP scored higher than the reference projects for this indicator.

The overall assessment of project performance shows that DIP received a total score

12 It is worth noting that the situation dramatically changed in Thiago when the JICA availed new tractors to Thiago’s POs.

20 21

of 26 while Thiagar received a 19 and Ndombo Thiago received a 13. DIP received

higher scores for 10 out of the 18 indicators, the same score for 3 of them, and lesser

scores for 5 of them.

2.3.4 The role of donors in project outcome

It is difficult to single out the contribution of the Japanese donor on the outcome

of the DIP project because Japanese funding came to consolidate previous initiatives

in this area. The Senegal River vally has long benefited from the support of various

donors, for land management, technical assistance and capacity building, for SAED

and for producers. It is worth mentioning the PSAOP (programme des services

agricoles et organisations des producteurs), implemented by the World Bank. This

program emphasizes producer organisations in the way that is observed in Debi, in

line with government withdrawal from agricultural activities in Senegal. Therefore,

the accomplishments observed in Debi are the results of consolidated efforts from a

number of donors, the government and the POs, with the support of several financing

schemes.

20 21

3. REGIONAL HYDROPOWER DEVELOPMENT PROJECT (RHDP)

3.1 The Energy sector in Senegal

In Senegal, energy consumption is still very low, as only 56% of energy needs are

met in urban areas and 12.5% in rural areas, in 2004. Figure 12 shows the breakdown

of energy consumption in Senegal per broad category of energy.

Figure 5: Total consumption in energy in Senegal (2003)

Source: Sarr, 2003.

3.1.1 Constraints on energy supply in Senegal

The energy sector in Senegal is characterized by the following:

- A very high energy dependence on foreign countries, since Senegal is not oil

producer;

- A high level of ligneous combustible consumption relative to the level of forest

resources and, more importantly, their rates of regeneration;

- Electric energy production is mainly from thermal sources, highly dependant on

imported oil, and its distribution is monopolized by one firm: SENELEC

Energy production in Senegal is dominated by wood generated energy, which meets

56% of total output; charcoal represents 40% of output and firewood represents 16%.

The consumption of ligneous combustibles are more prevalent in cities, notably in

Dakar which consumes 79,100 metric tons, representing half of the nation’s charcoal

consumption for electricity and 22,100 metric tons of firewood. The consequence of this

is deforestation that destroys about 30,000 hectars of forest per year. In recent years,

the government has started to implement a voluntaristic policy to reduce domestic

consumption of ligneous combustibles.

Electricity production is a central focus of national energy policy. Electricity is

22 23

almost all from thermal source and is almost totally produced by SENELEC, which

also has in charge electricity distribution. Some major firms such as CSS, SAR,

SONACOS, SNTI, ICS, and the GMD13 produce their own electricity for consumption

because of the incapacity of SENELEC to provide reliable power on a continuous

and competitive basis. Electricity supply is considered one of the most serious

constraints to Senegal’s economic growth and competitiveness. Surveys of firms show

how deeply Senegalese private sector development is hampered by power outages

and uncompetitive costs of electricity. The amount of non distributed energy due to

insufficient level of production has increased by 302% between 2005 and 2006 and a

total number of days in which power outages took place was recorded in 2006.

SENELEC, the national electricity supply company, has various suppliers

of electricity, including its own generators, foreign suppliers (namely GTI and

AGGREKO, both of which are US nationals), and SOGEM. Figure 6 provides a

breakdown of electricity supply to SENELEC.

Figure 6: Electricity supply to SENELEC in 2006

Source : rapport de la SENELEC, 2006

The sources of energy supply in Senegal are the following:

Fossil sources of energy: Fossil fuels in Senegal include gas, peat, and lignite. A ten billion cubic meter deposit of natural gas was discovered in 1997 in the administrative

region of Thies and is extracted by PETROSEN. An estimated 52 million cubic

meter deposit of peat was discovered in 1980 and has been extracted by Compagnie

Sénégalaise des Tourbières since 1982.

New and Renewable sources of energy: Renewable sources of energy in Senegal

13 Respectively, Compagnie Sucrière du Sénégal, Société Africaine de Raffinage, Société Nationale de Commercialisation des Oléagineux au Sénégal, Société Nationale de Tomate Industrielle, Industries Chimiques du Sénégal, Grands Moulins de Dakar.

22 23

include solar energy, wind energy and hydro electric energy. With 3,000 hours of

sun per year, and a global radiation estimated at 2,000 KWH per square meter per

annum, solar energy is an important potential source of energy in Senegal. Some

donors, notably Germany and Japan, have strongly encouraged the Senegalese

government to turn to this alternative source of energy. The various applications

of this type of energy involve: public and domestic lighting, water pumping,

refrigeration, dehydration of agriculture and sea products for storage, and so forth. A

few of the major Senegalese programs to harness solar power include the settlement of

photovoltaic solar centrals in the localities of Niaga Wolof, Notto, Diaoulé and Ndiébel,

and the settlement of more than 1500 photovoltaic systems throughout the country,

especially for rural households.

The potential of eolian energy does not seem to have been properly exploited in

Senegal. There are some eolian energy installations located in a strip between Dakar

and Thies supported mainly by NGOs. The major impediment to developing this

source of energy is that the location of sites should be considered with caution, since

this used to be the most important factor of failure in Senegalese experience in this

field.

The Senegal, Gambia, and Casamance Rivers are strong potential sources of

hydroelectric energy for the country. Of these rivers, only the Senegal has been used so

far for hydroelectric purpose. Two dams have been constructed along it: the Manantali

dam and the Diama dam, both jointly operated with neighbouring countries Mali and

Mauritania. It is estimated that the consolidated potential of the Senegal and Gambia

Rivers is 1000 KWH. The Manantali hydroelectric central was finalized in 2002 and

has a total capacity of 200 MWH; it is intended to deliver power to the capital cities

of the three countries (Bamako, Dakar, and Nouackchott), as well as neighbouring

villages.

Alternative sources of energy. In this heading, we discuss all alternative sources

not listed above. Biomass is one important alternative source of energy. The biomass

components that are used the most in Senegal are agricultural and animal waste and

biogas. This source of energy is not widely utilized though. Only some few enterprises

resort to them to meet their energetic needs, mainly CSS and SONACOS. Biogas,

which is obtained from the fermentation of organic waste, has been of real interest

to the Senegalese government since 1992 in its effort to diversify energy supply

sources Apart from providing an alternative source of energy, it can also be used for

soil fertilization. This source of energy is mainly used by SAED, which has set up 10

production units of biogas.

24 25

3.1.2 Energetic policies and programs

The ministry energy, mining and industry are in charge of designing Senegal’s

energy policies. The backbone of policy design is the Commission Nationale de

l’Energie, an interministry body headed by the Minister of Energy. The Centre d’Etudes

et de Recherches sur les Energies Renouvelables (CERER) et de l’Ecole Supérieure

Polytechnique (ESP) are playing central roles in the research and promotion of

renewable sources of energy, as well.

The following funds are designed to implement the government energy policy:

- The Fonds National de l’Energie (FNE), which is manage by the Ministry of

Finance and is supported by fiscal revenues collected on oil and oil byproducts.

It is designed to finance rural and urban electrification programs and relies on

public/private partnerships. The fund also subsidizes the transportation costs of

energy into the hinterland to ensure the same price for energy between Dakar

and the other regions of the country.

- The Fonds de Préférence, which is supported by a special tax levied on each

KWH of electricity sold. Its purpose is to help private firms that are most

vulnerable to fluctuations in the price of electricity.

- The Fonds National de Développement Pétrolier (FNDP), which was set up to

help PETROSEN in its mission.

It is worth noting the following energy programs:

The Programme de Redéploiement Energétique du Sénégal (RENES), which •

was put in place after the oil crises of the 70s and 80s. It has two components,

the rehabilitation of the electric sector, and the economizing of energy in large

firms. The purpose of the program is to reduce the country’s dependence on

foreign sources of energy, to reduce the dependence on ligneous sources of energy

(primarily in rural areas), and to reduce the costs of energy. The following actions

needed to be taken :

- Energy redeployment in favor of fossil resources and new and renewable sources

of energy, as well as hydro electricity;

- Rehabilitation of energetic infrastructure and rationalization of distribution and

consumption;

- A progressive adjustment of power prices in order to reduce the deficits of power

24 25

producing firms;

- A better connection between research and applications at the level of firms;

- An improvement in the pace of rural electrification.

A specific program for SENELEC was implemented to address the monopoly’s •

deficits of electricity production distribution. This program is supported by donors

like Japan, The Islamic Development Bank and the World Bank. The following

projects are parts of the program :

o Building new power centrals on the interconnected network of SENELEC,

such as the Kounoune (Rufisque) central, funded by the French government

(AFD) and the World Bank with a budget of euro 15 millions; the Bel-Air

central which is funded by IDB and the Programme de Recouvrement de

Puissance et de Fiabilisation (PRPF).

o Building solar energy equipment in the Saloum Islands under project

ISOFOTON, which is funded by ADF and Spain to the tune of 15 million

Euros.

Table 4: Donor funded projects in energy in Senegal (1998-2005)

DonorDate of

convention signature

Project title Budget (CFA 000)

IDA 29-oct-98 PASE (Energy) 50 000 000BOAD 09-avr-98 Energy (Manantali) 5 000 000FAD 2 mai 2000 Energy (Manantali) 8 687 250IDA 27-juil- 01 PPF (Electricity) 525 000

Espagne 24-juil- 02 Rural electrification using solar energy (662 villages) 7 022 945, 24

Espagne 26-nov- 02 Photovoltaic electrification (Saloum Islands) 9 084 313, 550BAD 29-nov.-04 Rural electrification project 7 558 620BID 18-mai-05 SENELEC 2 826 000BID 18-mai-05 SENELEC (Leasing) 13 696 382,160BID 03-déc.-05 SENELEC (Phase 2) 7 779 650,020ICO 21-févr.-05 Rural electrification using solar energy (phase II) 3 012 066,500IDA 31-mars-05 Access to electric services in rural areas ruraux 16 171 000IDA 28-juin-05 Electricity project 8 242 500

Source: Ministry of Finance/DDI, 2007.

3.2 OMVS and the management of Senegal river

The Senegal River is 1800 km long and is fed by three main tributaries, Bafing,

Bakoye and Falémé, all of which have their sources in Fouta Djalon (Guinea). The

26 27

river crosses out Mali and stands as the border between Senegal and Mauritania.

The first studies for Senegal River management were completed in 1861 by colonial

authorities. In 1934, they created the ‘Mission d’aménagement du fleuve’ which

coordinated all the studies and experiments on the river, for the purpose of better

understanding navigation, energy production, and irrigation. The mission was mostly

interested in cotton production in the valley. Immediately after independence, the

4 newly independent countries (Senegal, Guinea, Mali, and Mauritania), took over

the project and sought ways to manage the river. In 1964, the four countries created

OERS (Organisation des Etats Riverains du Sénégal), which had broader integration

objectives. However, the organization proved ineffective due to political tensions

between Senegal and Guinea14, and in 1972, it was officially dissolved and replaced

by OMVS, which has a less ambitious integration agenda. OMVS’s mandate is only

limited to cooperation to manage the river resources (irrigation, hydroelectricity, and

navigability) and rules out other aspects of integration.

The work to build the Manantali and Diama Dams started in 1981. Manantali

is designed for electricity production and irrigation, while Diama is intended to

prevent salt water from the Atlantic to flow back15 through Senegal River and

deteriorate the land intended for agriculture. The Diama Dam allows for continued

agricultural activities on 375 000 ha, out of which, 240 000 are located in Senegal.

The Mananatali Dam has the installed capacity to produce 200 MW of hydroelectric

power and distributes 52% of the power to Mali, 33% to Senegal, and the remainder

to Mauritania. Hydrological data from 1950 to 1994 suggests that the Dam can

potentially produce 807 GWH; if we just consider data from 1972 – 1994, there is still

the potential to produce 560 GWH.

14 Guinea said no to De Gaulle who launched the idea of setting up a community of France and his former colonies. This opened up the doors for independence in francophone Africa. Senghor, the Former Senegalese president was considered by progressive African leaders as the man of France.

15 This flow back can affect up to 240 km of land.

26 27

Figure 7: Three countries and One River

Source: SOGEM (2007), présentation du réseau interconnecté de Manantali, Séminaire

d’Information sur le projet d’Achat de Crédits de Réduction d’Emission de Gaz à effet de Serre,

03-05 Octobre 2007

28 29

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28 29

The total cost of the two dams is E 737 million, out of which E 145 million is for

Diama, and the remainder E592 for Manantali. The French funded one third of the

Diama project but only 0.7% of the costs of the Manantali Dam. The Manantali Dam

was built during between 1982 and 1987 on Bafing tributary, 1000 km away from

the river mouth. It supports a storage basin of 11 billion cubic meters of impounded

water, allowing for a river flow stabilization at 300 cubic meters per second in Bakel.

The central is different from the dam; it is comprised of 5 generators with a capacity

40MWH each. The investments also include 1300 km of high voltage power lines for

energy distribution to the three capitals. The funding for the central is broken down

as follows:

Table 5: Project Financing Shares

Doner/Lender % Share AFD 22%KFW 14%

FADES 10%UE 9%BEI 9%IDA 9%FAD 8%BID 6%

ACDI 6%BOAD 5%

SOTELMA 1%MAURITEL 1%

Interest 2%Total 100%

OMVS is led by a conference of members’ heads of state which meets once yearly.

Strategic decisions about the organization are taken at this level. Accountable to the

heads of states is the council of ministers, which meets twice a year and oversees

execution of the decisions of the heads of states. The following level is the High

Commissioner of OMVS, headquartered in Dakar, followed by operational bodies

like SOGEM and SOGED. The main difference between SOGEM and SOGED is

that the former has hired an operational agent for the need of running Manantali

energy, while the latter has done nothing of the sort. OMVS has declared that the

Senegal River is international and belongs to all 4 member states; so do all dams

and equipment built on the river. Several conventions were signed by participating

governments and ratified by parliaments to organize the legal settings of OMVS. The

High Commissioner has to oversee all activities that are performed in OMVS and to

30 31

make sure they are consistent with the overall general objectives laid out by member

governments. These objectives include providing electricity and developing irrigation,

but also address issues related to health, environment, and community development.

An important program that is being developed by OMVS is the GEEP (Gestion de l’eau

et de l’environnement sur la basin du fleuve Sénégal). The High Commissioner is also

developing micro projects at the community level and is now working on building a

road connecting Diama and Rosso.

3.3 Institutional linkages between OMVS, SOGEM and ESKOM

Before 1997, all OMVS activities were managed from Dakar, including water

management at Diama and hydroelectricity production at Manantali. This was highly

inefficient and entailed huge transaction costs, since clearance was needed from

Dakar for every routinely administrative decision. This is why donors, notably the

World Bank, pushed for the creation of autonomous bodies in charge of managing

the two dams. The OMVS Council of Ministers still plays a central role in the day to

day operation of SOGEM. For example SOGEM may not set the price of electricity

on its own without submitting it to the Council Minister (CM) for approval. The

chairmanships of the Conference of the Heads of States (CHS) and of the CM are

shared by the member countries on a rotating basis.

Resources generated by the Manantali project can meet costs incurred; however,

this is not the case for the Diama project. SOGED can only collect revenue from water

use by farmers irrigating their crops. Water use costs are subsidized below their real

value, but still, few of the beneficiaries are settling their bills. The biggest clients, such

as national water distribution companies and big farmers, do pay, but most users,

mainly small producers, do not. This has forced member states to subsidize SOGED.

To cover this subsidy, OMVS governments recently asked SOGEM to refund them the

advance payments made to this entity when it was getting started. In this manner,

roughly CFA 2 billion have been transferred from SOGEM to SOGED, although some

of this reimbursement is in the form of advances. Furthermore, member states have

asked SOGEM to assist SOGED as much as possible primarily by providing resources

to meet maintenance needs in SOGED areas.

30 31

Figure 9: Institutional schema of Energy Project

SOGEM (Société de Gestion de l’Energie de Manantali) was created in 1997,

and implemented in 1998. SOGEM’s mandate is limited to deal with managing

hydroelectricity production in Manantali following the construction of the dam.

From 1988 to the implementation of SOGED in 1997, Manantali was managed by a

provisional entity (Société Provisoire de Gestion du Barrage – SPGB). SOGEM was

created in pair with SOGED, which is in charge of the management of the Diama

dam. Manantali has an installed capacity of 200 MWh, which is distributed to member

countries using a system of quotas. Before the implementation of the central, the

objective of Manantali was only limited to irrigation

SOGEM is piloted by a general director based in Bamako, the capital of Mali. in

the position was originally meant to be based in Manantali (a village located 325

km from Bamako), but OMVS eventually decided that these companies needed to be

headquartered in the capital cities to be closer to national administrations as well as

to donors’ headquarters. Hence, the general director and the three sectoral directors

(the director of finance, the director of administrative affairs, and the technical

director) of SOGEM are based in Bamako while the field engineers are based in

Manantali. The role of these field engineers is to monitor the functioning of the dam

and the central, as well as to supervise the work done by the operating agent that was

32 33

appointed by SOGEM (ESKOM).

ESKOM stands for Electricity Supply Commission. It is a public company that is

100% by the Government of South Africa even though it is autonomously managed.

It has owned other privatized companies in neighboring countries, such as in Zambia,

Mozambique, Uganda, Zimbabwe, and so forth. ESKOM Enterprises is the parent

company and was established in 1923. It was heavily restructured in 1999 and is now

a multinational that entirely covers the demand for electricity in South African as

well as in some neighboring countries. ESKOM SA is a company created according to

Malian law in which ESKOM international has 100% of total shares.

Donors accepted the arrangement of headquartering SOGEM in Bamako, instead

of Manantali as previously planned, in exchange of OMVS willingness to entrust the

operation of the dam to a private company. ESKOM was chosen after winning an

international bidding process. ESKOM submits on a yearly basis a comprehensive

program detailing the logistics of hydraulics, electricity, irrigation and food production

to SOGEM. It first discusses the plan with SOGEM representatives in the field, who

in turn, defend it before SOGEM headquarters. Once approved, adherence to the plan

becomes mandatory for both sides.

ESKOM’s primary task is to distributing electricity produced at Manantali

between Senegal, Mali, and Mauritania. A proposed distribution plan is presented

annually by ESKOM to SOGEM for approval as part of the comprehensive program

discussed above. The plan is drawn up with the cooperation of ESKOM’s three clients:

SENELEC (Senegal), EDM (Mali), and SOMELEC (Mauritania). In October, these

three companies predict their electricity and water demand for the coming year.

Weighing these predictions against predicted electricity output, SOGEM decides the

distribution of water and electricity among the three member countries. In practice,

things are not that simple, since national companies can ask for more or less than

what was initially predicted due to fluctuations in daily demand. This creates

serious management problem for SOGEM. To mitigate the effects of such demand

reversals, SOGEM meets with national companies every Friday to decide about output

distribution for the following week, on a take-it-or-pay-it basis. Normally, energy

distribution between national companies should not pose many problems since peaks

in demand vary from one country to another. Demand peaks between October and

November for Senegal, March and April for Mali and July and August for Mauritania.

32 33

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It is also ESKOM’s responsibility to ensure the maintenance of all equipments

including parts replacement. There is currently a dispute between ESKOM

and SOGEM, about the implementation of the terms of the contracts. ESKOM

representatives think that the company is underpaid for this maintenance considering

the current hydrological and operational conditions of the central, leaving them in

a poor position to undertake the maintenance activities as initially planned. This is

confirmed by SOGEM. The two entities are now under deep discussions to settle the

issue. It should be noted that the lump sum payment SOGEM is giving to ESKOM was

determined through a series of negotiations between the two institutions, and, as was

earlier mentioned, ESKOM was selected through an international bidding process.

This process was conducted under the supervision of the consultant AFD (which was

appointed by the other donors as leader for Manantali energy) hired by SOGEM. This

consultant actively participated in the tendering process which eventually resulted in

the selection of ESKOM as the contract winner.

3.4 The RHDP: a further description

The Regional Hydropower Development Project is located at the bottom of the

Manantali dam, 78 meters away from the dam axis. The dam is located in the south-

western part of Mali, on Bafing tributary. The civil work for RHDP has started in

1997, 9 years after the dam was built. The components of the core work are described

as follows:

- The central part of the work, including Lot 3 (civil work), plus Lot 4 (turbines

and mechanical equipments) and Lot 5 (alternators and electric equipments).

- The Eastern system for power transmission

- The Western system of power transmission.

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Figure 11: Manantali dam: an aerial view

Source: SOGEM (2007), présentation du réseau interconnecté de Manantali, Séminaire

d’Information sur le projet d’Achat de Crédits de Réduction d’Emission de Gaz à effet de Serre,

03-05 Octobre 2007

The most complicated part was Lot 3, whose donors included IDA, BOAD, and IDB.

Engineering surveillance and control were performed by COFITEC (a consortium

including Coyne & Bélier, Fichtner, and Tecsult) and were financed by CIDA, KFW,

and AFD. Lot 3 encompassed the following:

- Realizing building in concrete, and assembling necessary equipment for central

operation,

- Restoring the hydraulic damper ,

- Re-injecting part of the dam and the central,

- Providing general services to other working partners on the field, notably those

intervening in Lot 4, Lot 5, SOGEM, COFITEC, and other on site operators.

The RHDP was designed to build a power system from the dam to distribute

power to urban cities; notably, the capital cities in Senegal, Mali and Mauritania.

The reservoir of the dam is 11,300 m3. The total capacity of the equipment for power

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generation is 200MW, produced by 5 generators of 40 MW each. This makes up an

average production of 807 GWh, under the assumption of 300m3 per second of water

flow in the river. The project has 3 major components:

1. An investment component that includes the construction of the central, the

civil work that is intended to host the equipment, and a system for dispatching

high voltage power to the three capital cities. Power produced in Manantali is

dispatched to the west towards Dakar and Nouakchott and to the East towards

Bamako.

2. A capacity building component for SOGEM and OMVS to assist them in hiring

a private operator, setting appropriate rates for energy sales, ensuring financial

sustainability of operation, taking account of environmental aspects, and

transfering technology.

3. An environmental component, through PASIE (see below for further details).

The main objectives of the project, as laid out in the World Bank Implementation

completion report involve:

a) a reduction in long term costs of electricity supply in the three countries,

b) a contribution to service the debts that were contracted to fund the building of

the dam, at the beginning of the 80s,

c) an increase in the efficiency and the reliability of the power system in the three

countries,

d) the promotion of competitive private sector participation in project operation,

and in future generation project in the river basin,

e) providing support to agriculture downstream the river, and

f) rational management of the Manantali reservoir.

Table 6: The costs of the project’s components are broken down as follows

Component Cost ($)- Power house and dam reinforcement- Western transmission line- Supervision- Institutional strengthening- Eastern transmission line- Dispatching centre

55,400,000137,700,00015,600,00037,800,00041,800,00017,200,000

3.5 RHDP: institutional spillovers

3.5.1 Technology transfer and capacity building

The construction of the dam and the central buildings made use of advanced

technologies. Optical fiber technology is used to coordinate the monitoring of power

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distribution between the three countries.

Capacity building was a very critical criterion in the process of selecting the

international operator (ESKOM). SOGEM insisted that ESKOM works with local

expertise as much as possible. Among ESKOM’s experts, only the General Manager

is an expatriate (South African); the rest are from local countries. Ninety percent of

the personnel come from the national companies (SENELEC, EDM, and SOMELEC).

Most of them had worked with private foreign firms during the project construction

phase. They benefited from huge technological transfer from expatriates and have

become highly efficient within the scope of the project. As a result, the personel are

able to manage the maintenance operations autonomously, without any assistance

from abroad.

ESKOM relies on local manpower from the Manatali locality for unskilled labor.

Most of these personnel benefited from training programs and some of them have

specialized and become topographers or electricians. During the implementation

phase of the project, local workers were initiated to central building and operation.

Some were sent abroad for additional training lasting up to 3 years. While the project

is benefiting from technical assistance from expatriates (mostly from South Africa),

more than 95% of the core business employees are from local countries.

Figure 12: OMVS member countries quotas in total Manantali energy production

The project also encompassed population relocation. Villagers displaced by the

creation of the dam were compensated and received new houses in a neighboring

settlement for free. The new houses are built of the same material as the originals,

banco, but are designed to last longer. While villagers used to have needed to rebuild

their houses every year, they have not done so since 1983. Other components of

the projects involve treating the river to avoid exposing the local population to

blindness and other diseases. SOGEM has also built a well-equipped hospital and two

elementary schools, for his own personnel and also for local population. ESKOM is also

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organizing vaccination campaigns for the inhabitants of Manantali to fight endemic

diseases. Populations are also encouraged to establish community businesses in order

to perform certain tasks for ESKOM under contract, such as weeding and cleaning the

site. Four such businesses have been established so far, and their combined income

from ESKOM is reaching CFA 60 million per annum. Furthermore, local taxes are

paid to local administration, for an amount of about CFA 6 million per year.

3.5.2 Financial and economic sustainability

Various evaluations have been performed on the economic and institutional

sustainability of the Manantali energy project. All of them concluded on a very strong

economic although some weaknesses observed on the institutional sides could be fatal

to the project’s continuation if not properly addressed on time.

Electricity production of the dam varies between 450 and 900 GWH, depending on

level of rainfall. The project was designed under the assumption of 807 MWH, and the

average level of river flow has allowed for this level of production. Clearly, variations

of river flow are a major determinant of returns on investment. To address the risk of

decreased river flow, donors insisted on establishing the hydrological risk fund, which

should be used to compensate during du drier years. During the 80s, a feasibility

study was performed by Tractable comparing two situations: a) implementing the

Manantali energy component to satisfy energy needs for the three countries, and b)

implementing instead a thermal central for the same purpose. The study concluded

that the Manantali energy project would yield a rate of return of 22% for the regional

interconnected network, against a rate of 17% for a network limited to Mali, given a

level of river flow amounting to 804 GWH of electricity generation. In case such flow

decreases generation to 540 GWH, these rates of return would decrease to 17% and

14.5%, respectively. It is worth mentioning that these estimates were done under the

assumption that the price of oil would cost $20 per barrel, while the cost is now close

to $100. In case of an observed deficit in rainfall, we will note a competition between

energy production and agriculture.

The total cost of the energy components of the Manantali projects is E 345 million,

while the construction of the dam costs E 590 million. The costs of the energy

component can be further broken down into the costs of equipment for electricity

production and civil work (40%), and the costs of building a huge network designed

to convey electricity to the capital cities (Dakar, Bamako, and Nouakchott), which

make up 60% of the costs of energy component. Technologies used in thermal centrals

are different from the ones used in hydroelectric centrals. The former entails cheaper

investments but higher operational costs that the latter.

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Manantali is also servicing the outstanding balance of the loans that served to fund

the dam construction; the interest rate on the loans is 43.8%. The rates SOGEM is

charging to national electricity companies are calculated in such way that all charges

must be covered under the assumption of a production of 804 GWH, including debt

services; if average production drops to 546 GWH, at the very least, first order charges

must be covered by average sales. The rate we came up with at 1996 prices was CFA

24 per KWh for an average production of 804 GWh and CFA 29 for a production level

of 546 GWH. The most pessimistic assumption sets the level of production at 430

GWh, which corresponds to the average level of rainfall observed during the period

1978-1994, and the corresponding rate is CFA 32. Under this assumption, breakdown

point would be achieved in 25 years.

In practice, energy sold by SOGEM was delivered to national electricity companies

at a rate of CFA 30 in 2002 and 2003, and CFA 32 in the following years. The recent

increase in oil price has made Manantali energy profitability even greater. SENELEC

estimated the costs of a KWh of electricity at CFA 68. In 2002, the company saved

an estimated CFA 6.5 billion by purchasing 161 GWh of electricity from Manantali.

Manantali was at least 38% percent cheaper for Senegal in 2003. Again, with the

recent rise in oil prices, this percentage should have grown. The benefit for Mali is

greater given the inefficiency of the country’s thermal central. EDM of Mali produces

energy from thermal sources at a cost of CFA 105 per KWh. Therefore, Manantali

energy was 70% cheaper than energy produced from other sources for Mali in 2003;

and savings made by EDM only on oil importing by substituting Manantali energy to

thermal energy are CFA 12 billions, while consumption increased at the same time by

20%.

3.5.3 The World Bank assessment of design and implementation of the RHDP

The World Bank prepared two evaluation reports on the RHDP: an implementation

completion report in January 2005 and a project performance assessment report in

December 2006. The latter was prepared by the Independent Evaluation Group of the

World Bank (IEGWB), which annually assesses 25% of the Bank’s lending operations.

The group gives preference to projects that are innovative, large, complex, and likely to

generate important lessons. The choice of RHDP by IEGWB highlights the importance

of the policy lessons to drawn from the project. The scale and rating system of IEG are

quite identical to those we use in this exercise as can be seen in the following box.

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Box: the rating system of IEGWB

The time-tested evaluation methods used by IEBWB are suited to the broad range of the World Bank’s work. The methods offer both rigor and a necessary level of flexibility to adapt to lending instrument, project design, or sectoral approach. IEGWB evaluators all apply the same basic method to arrive at their project ratings. Following is the definition and rating scale used for each evaluation criterion.

Relevance of Objectives: the extent to which the project’s objectives are consistent with the country’s current development priorities and with current Bank country and sectoral assistance strategies and corporate goals (expressed in Poverty Reduction Strategy Papers, country Assistance Strategies, Sector Strategy Papers, and Operational Policies). Possible ratings: High, Substantial, Modest, Negligible.

Efficacy: the extent to which the project’s objectives were achieved, or is expected to be achieved, taking into account their relative importance. High, Substantial, Modest, Negligible. Efficiency: The extent to which project achieved, or is expected to achieve, a return

higher than the opportunity cost of capital and benefits at least cost compared to alternatives. Possible ratings: High, Substantial, Modest, Negligible. This rating is not generally applied to adjustement operations.

Sustainability: the resilience to risk of net benefits flows aver time. Possible ratings: Highly Likely, Likely, Unlikely, Highly Unlikely, not Evaluable.

Institutional Development Impact: the extent to which a project improves the ability of a country or region to make efficient, equitable and sustainable use of its human, financial, and natural resources through: (a) better definition, stability, transparency, enforceability, and predictability of institutional arrangement and/or (b) better alignment of the mission and capacity of an organization with its mandate, which derives from these institutional arrangement, institutional development impact includes both intended and unintended effects of a project. Possible rating: High, substantial, Modest, Negligible.

Outcome: The extent to which the project’s major relevant objectives were achieved, or are expected to be achieved, efficiently. Possible ratings: Highly Satisfactory, Satisfactory, Moderately Satisfactory, Unsatisfactory, Highly Unsatisfactory.

Bank performance: The extent to which services provided by the World Bank ensured quality at entry and supported implementation through appropriate supervision (including ensuring adequate transiti