afrol News, 20 February - The Senegalese government is speeding up the privatisation process, in particular in the strategic power and groundnut sectors. While tenders are being presented to run several state companies, Senegal's first independent power producer soon will be established.

The Dakar government traditionally has adhered to a centralised economic policy of regulations and is one of Africa's latest starters in introducing privatisation reforms. Enhanced pressure from the International Monetary Fund (IMF) however has led to an acceleration of economic reform.

Following IMF critiques on the slow speed of privatisation of Senegal's strategic power and groundnut sectors, Dakar is now hurrying to compel to IMF demands. In a 'Letter of Intent' to the IMF, Senegalese Minister of Economy and Finance, Abdoulaye Diop, outlines his government's efforts to privatise.

In the letter, Minister Diop goes far in excusing the delays in the privatisation process and promising enhanced efforts to reach the "structural benchmarks" agreed upon with the IMF. "Delays were experienced in the process launched to solicit private investment in the power and groundnut sectors," Mr Diop regrets.

Progress had however been made, the letter said. In the power sector, the process of awarding an Independent Power Producer (IPP) concession for the production of 60-megawatt electricity began with a call for expressions of interest. In June 2003, six companies were pre-qualified and received the technical specifications. The complete tender documents were subsequently prepared and the invitations for bids were ultimately issued to the pre-qualified companies on 5 November 2003.

Also, the process of privatisation of SONACOS, the groundnut processing company, had been held up "because of delays incurred in the related technical preparations," Mr Diop writes. As a result, the first phase of the process - the call for expressions of interest - could take place only on 31 July 2003.

The second phase of the privatisation of SONACOS - the pre-qualification of potential investors - was completed on 10 December. Finally, the invitations to bid were actually issued on 13 January, the Senegalese Ministry of Economy and Finance informed the IMF.

The Senegalese government said it agreed on "the necessity to sell" SONACOS' real estate assets and the production plants and equipment in separate lots. In order to maintain the attractiveness of SONACOS, the patents acquired by the firm were to be passed on to the purchaser, opened in public session, like all other assets, and the legal duration of each patent will be strictly enforced.

- Despite the delays experienced in the implementation of these reforms, considerable progress was made in involving private operators in the power and groundnut sectors, Finance Minister Diop writes. The progress had been so comprehensive that "the programme objectives should be attained."

Also the public electricity enterprise SENELEC will be up for privatisation in the near future. SENELEC, which achieved an operating surplus in 2003, however still is causing the Dakar government problems. The state-owned electric utility recently had contracted a non-concessional external loan from the West African Development Bank "to carry out extremely urgent investment projects," thus unknowingly breaking with IMF's demands to Senegal.

Although SENELEC achieved an operating surplus in 2003, the company's basic balance did not reach the target level because of a shortfall in the recovery of claims, the Senegalese Ministry of Finance informed. SENELEC is undergoing a commercialisation process, making it fit for later privatisation.

A government memorandum attached to Mr Diop's letter also revealed long term plans to privatise the national postal services, run by the state company SN La Poste. In its 2004 budget, the government foresees to spend franc CFA 15.5 billion for the "re-capitalisation prior to measures to make the Post office autonomous from the treasury correspondent account."

In a recent review of Senegal's compliance to the IMF's policy recipes, Agustín Carstens, Deputy Managing Director for the IMF, had urged Dakar to enhance privatisation.

Reform aims, Mr Carstens held, "should be strictly adhered to the privatisation of the groundnut company, SONACOS," which, he said, "should be completed." He added that that "reforms in the electricity sector should be vigorously pursued, with a view to further harnessing private investment for the needed expansion of energy generation and forestalling the potential imposition of a burden on the government budget."

By staff writer

© afrol News

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