Project Number: E.07.

1 Status:
Project Title: S3
Sambangalou Dam programme/project structuring and
promotion to obtain financing

Countries | Region Senegal, Guinea, Gambia | West Africa

Project Location It is located 930 km upstream from the mouth of the Gambia River and
about 25km south of Kédougou. The dam will be located in Senegal, and
part of the 185 km2 reservoir will be in Guinea.
Sector | Sub-Sector Energy | Generation
Project description This project entails the construction of a gravity dam with a 128 megawatt
capacity, as well as a 185 square kilometre reservoir.
Objectives  Supply of sustainable electricity to the three countries
 Control of the water level in the river basin
 Promotion of peace and stability in the region
Economic Sustainability and expected Through the development of this 128 MW hydropower plant on the
benefits Gambia River, the countries involved namely Senegal, Guinea, Guinea-Bissau
and the Gambia will enjoy low-cost, renewable energy. This project originally
formed part of a larger Gambia River Basin Development Organisation
(OMVG) project which entailed an interconnecting power grid with the
Kaleta Dam in Guinea.

The availability of low-cost electricity will lead to increased regional power

trade and enable regional integration. The additional electricity made
available through this project will also increase the region’s energy security.
REC ECOWAS, CEN - SAD
Project Sponsors Governments of Senegal, Guinea, Gambia
Implementing Authority Lead Agency: Gambia River Basin Development Organisation (OMVG)
ECOWAS, ECOWAS Bank for Investment and Development and the West
African Power Pool will play key roles in the implementation.
Project Status  Feasibility study completed in 2011
 2 detailed social and environmental impact assessments were done to
avert any possible environmental impact. It was determined that a
resettlement programme is necessary
 All documents, policies, studies and legal framework have been
completed; will be updated by new transaction advisor once the financing
is in place. The permits are in place
Total estimated Project Value USD 454, 500, 000
Way Forward  Dedicated co-ordination unit to be formed to manage the
implementation process
 Updated inter-governmental agreement to be drafted
 Project sponsors to decide whether PPP structure is to be employed
 Construction to begin in 2014; Construction duration would be 4 years
Political Support This project enjoys strong political support in all countries involved.

There is a single agency, OMVG, to co-ordinate between the three

countries, thus presenting a unified policy to development finance institutions
and private sector financiers.

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Background

This project originally formed part of a larger Gambia River Basin Development Organisation (OMVG)
project which entailed an interconnecting power grid with the Kaleta Dam in Guinea. The OMVG was
established in 1978 with the three principal thrusts of energy, food security and communication.

The original OMVG Energy Project involved the four countries of Gambia, Guinea, Guinea-Bissau and Senegal
and focussed on the rational management of common resources of the Gambia, Kayanga-Géba and Koliba-
Corubal Rivers. The three physical components of the OMVG Energy Project were a) Sambangalou Dam, b)
Kaléta Dam and c) an interconnection transmission line (T-Line) circuit linking the two dams to the electric
grid of the four member countries. This project had been the subject of a detailed environmental and social
impact assessment (ESIA) with resettlement action plans (RAPs) to meet regulations applicable within OMVG
countries and those of AfDB.

These river basins provide an opportunity for power production and studies have been financed by OMVG
countries with international assistance in particularly from the African Development Bank (AfDB). A first study
on power production and transmission investments in OMVG member countries was conducted from 1994
to 1996. It identified a program of hydroelectric sites development and an interconnection line.

AfDB then financed the technical, economic, environmental and institutional feasibility studies for the OMVG
Energy Project. This work was conducted from February 2002 to May 2004 by the same consortium retained
in the first set of studies (COTECO). Detailed technical studies and the preparation of request of proposals
documents, including the update of the environmental and social impact studies were done. The Project
documentation also included an Environmental and Social Management Plan (ESMP) approved at a restitution
meeting in Dakar in December 2006.

Both the Sambangalou Dam and the Kaléta Dam are now PIDA projects. The OMVG will still take the lead
on this project, while the Economic Community of West African States (ECOWAS), the ECOWAS Bank for
Investment and Development and the West African Power Pool will play key roles in the implementation.

Economic Sustainability and Strategic Importance

The main objective of the Sambangalou Hydroelectric development project is to generate 128 MW capacity
of hydro capacity to meet the projected growth of electricity demand in the West Africa region, to be shared
between Senegal, Guinea, Guinea Bissau and the Gambia in proportions to be determined.

A subsidiary objective is to increase the share of non-GHG emitting power generation to improve the
technology mix of the sub-region

The site of Sambangalou Dam is located in Senegal 930 km upstream from the mouth of the Gambia River
and about 25 km south of Kédougou. It consists of a well-established dam site with a capacity of 128 MW
and a potential for 400 GWh, with irrigation and flood control prospects. This site was chosen given the

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power deficit in the region and the high dependence on imported oil and use of environmentally damaging
hydrocarbon power generation.

The proposed dam and reservoir at Sambangalou is in Senegal and the reservoir overlaps Senegal and
Guinea. The project zone covers Guinea (reservoir and relocation zone), Senegal (main dam works, including
part of the reservoir), a downstream Senegalese reach and then a Gambian downstream reach to the sea.
Guinea-Bissau is not directly affected.

The project will impact 186 households (1,320 persons) and 1,250 ha of land (of which 850 ha of cultivated
land). The beneficiary countries will be Gambia, Guinea, Guinea-Bissau and Senegal.

ECONOMIC IMPACT:

 It is expected that the project will create 3000 permanent jobs per annum in the construction phase,
and 1400 in the operation phase.
 Improvement in the quality of life in host sites
 Allow land tenure security and
 Creation of income opportunities.
 The availability of low-cost electricity will lead to increased regional power trade.
 The additional electricity made available through this project will also increase the region’s energy
security. The project will supply additional low GHG electricity to neighbouring countries, in particular
the Gambia, Guinea, Guinea-Bissau and Senegal.
 This dam, combined with the Kaleta Dam and the transmission lines in the Gambia River basin are
expected to meet 22% of the region’s energy needs.
 It will contribute to a multi-sector (water and power) approach to regional integration.

ENVIRONMENTAL IMPACT: Environmental and social risks will necessitate diligent management, notably
regarding relocation of populations and downstream environmental impact on the Gambia River.

This zone is dominated by upstream forest in the catchment area and a mix of forest and open savannah.
The River also passes notably through the Niokolo-Koba National Park in Senegal before continuing into
Gambia. The park has suffered considerable degradation in its conservation value as a result of changing
climatic conditions and water availability in its cuvettes, or wetland depressions. It has also suffered from
poaching. Tourism is very limited and makes a minimal contribution to the management of the park. The river
subsequently traverses a very extensive level and low lying agricultural basin subject to seasonal and
occasionally severe and damaging floods (notably in 1999 and 2003/04). In the vast tidal reaches of the
Gambia River extensive mangroves dominate.

The study area is clearly immense and covers significant parts of the three countries. The dam site
environment might be described as of “Guinean wooded savannah type” with gallery forest in valley bottoms.
The landscape is degraded from its natural state by the presence of man and through burning and shifting
field development, and opening of “tapades” for cultivation. Natural stands of palm trees are used for oil
extraction and are a particular feature of the Kaleta area.

One obvious impact is in loss of natural resources such as soils and vegetation, as well as to the loss of faunal
habitats because of the creation of a reservoir of 185 km2. These impacts clearly cannot be mitigated because

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of their irreversible character. Reservoir inundation will displace local populations, while there is a potential
for health impacts. Agricultural lands will be lost as well as access to cross the river easily during the dry
season.

In the operation phase, Sambangalou will have major impacts on the river regime. These impacts are linked to
modification of the hydraulic balance in the wet zones of the Senegalese and Gambian reaches. There will be
a recession of the saline front during the dry season (positive and negative impact) and for a period a
deteriorated quality of water downstream of the dam (and in the reservoir). In particular there will be
modification of the morpho-sedimentary balance of the estuary and progressive impoverishment of the
mangrove swamp in the central estuary area. This will lead to a loss of certain habitats downstream during
the dry season and there will be modification of some animal populations in such reaches.

With regard to the human habitat, the negative impacts of the operation of Sambangalou Dam are linked to
health, especially with regard to risks of waterborne illnesses. There will be an initial reduction of fishing yields
downstream of the dam. However, many positive impacts will compensate these disadvantages, such as the
potential for improvement of supply of rural electricity, the opening up of the reservoir zone to economic
development, agricultural opportunities and flood protection.

Impacts Mitigation and Enhancement: To minimise, mitigate or compensate the impacts of Sambangalou
Dam, the ESMP includes a program of measures for both pre-construction /construction and operation
phases.

 In the pre-construction and construction phase, the recommended mitigation consists of contractor
best practice stipulations to minimise, for example, nuisance caused to local populations and the risks
of degrading natural resources (water, vegetation, wildlife, etc.).
 In the operation phase, the ESMP mostly aims to mitigate the impacts downstream of Sambangalou
Dam. For example, there is a proposal for an eventual artificial flood to mitigate the impacts on
wetlands downstream. Also, it is recommended that there be an artificial low water level in order to
enable wildlife to cross Gambia river in the dry season, especially in Niokolo-Koba National Park, and
to allow replenishment of brackish water to the mangrove located in the saline front withdrawal area.
The ESMP identifies stakeholders for implementation and monitoring environmental change. MOUs
have been signed with Wetlands International and IUCN to participate in studies to monitor
environmental change and develop cost-effective mitigation response measures.

The conclusion of COTECO at the time of the feasibility study of 2002-2004 was that this component of the
OMVG Energy Project despite its inevitable and varied likely impacts did not represent risks to challenge the
project context. Among the solutions for mitigation and compensation particular attention was focused on: a)
populations in the zone of the reservoir, but also to villages directly downstream the dam (M’bara, Roundé
M’bara, Tépéré Diantou and Kédougou), b) the Niokolo-Koba National Park, c) the fishing zone located in
the area of recession of the saline front in Gambia, and d) the totality of downstream wetlands.

The upstream impact study proved to be an important element in the choice of elevation 200 for the height
of the dam, allowing minimisation of impacts. One of the most critical impacts will be the relocation of more
than 1,300 persons presently living within the area of the future Sambangalou reservoir. The RAP relocation
plan defines the arrangements for managing resettlement and compensation. Significant environmental (and

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social) impacts in the Senegalese and Gambian downstream reaches are also anticipated, and measures are
proposed to mitigate these through control and management of water flows from the dam.

Technical Specifications

The SambangalouDam will be a multi-purpose dam. It will have an installed capacity of 128 MW and the
mean energy production will be 402 GWh per year. The total capacity will be 3,800,000,000 MW. The
design involves the construction of a gravity dam and 4 turbines of 32 MW each. The plant production cost is
estimated at US Cents 16.2/kWh at the bus bar.

Project Structure
Project
Sponsors:
Govt.s of
Senegal,
Guinea,
Gambia

Co-ordinating agency
Other on behalf of the 3
implementing countries: Gambia
partners: West River Basin
African Power Development
Pool, ECOWAS Organisation
(OMVG)
Sambangalou
Dam

Development
Finance Institutions: Off - takers:
ECOWAS Bank for Senegal, Guinea,
Investment and Guinea-Bissau
Development, and the Gambia
AfDB

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The project is being developed by OMVG as a regional organization, with the oversight of the West African
Power Pool. It is developed as a public sector project.

Proposed financing structure: PPP was envisaged, but this option seems to be no longer the preferred
approach and more concessional funding is being sought. Private sector financing is being sought to fill the
financing gap, but little progress has been achieved under the proposed project structure which rests on
public sector control.

PPP viability: PPP can be envisaged with IFI risk management support to cover the performance risk of
utilities. PPP seems to be the most practical approach to fill the project financing gap, but a consensus needs
to be found on the opportunity of PPP. PPP feasibility depends above all on the creditworthiness of the off-
taker utilities, which will require performance guarantee from the respective governments. A sensitive aspect
is that PPP would involve the loss of control of OMVG and the countries on the project, which would be
commercially run. This vision is not fully endorsed by all partners.

Project Status

 Feasibility study completed in 2011

 2 detailed social and environmental impact assessments were done to avert any possible
environmental impact. It was determined that a resettlement programme is necessary
 Dedicated co-ordination unit to be formed to manage the implementation process
 Updated inter-governmental agreement to be drafted
 Project sponsors to decide whether PPP structure is to be employed
 EoIs released by OMVG in July 2013 for:
o technical, legal, and transactions consultant to update technical studies of the project,
structure transactions and legal agreements, define terms of electricity sales from the
Kaleta project, study OMVG restructuring, and study regulatory mechanisms
o environmental and social consultant to review studies of environmental and social
assessment and formulate a project of mitigation and conservation of watershed
ecosystems
 Discussions on-going on financing; the next step is the finalization of the financing plan. It is under
the responsibility of OMVG.
 Commissioning scheduled in 2018

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Risk Analysis

Certain assumptions were made in the course of project development, which if not borne out, present
risks for the project. Mitigation arrangements would have to be made for safeguarding against these risks.

Assumption Risk Mitigation

Arrangement
OMVG is capable of filling the If the project cannot be fully funded by grants, the ECOWAS, WAPP and
financing gap without calling capacity of OMVG to service the debt will have to OMVG to reconsider
on the private sector. be strengthened. the decision to
develop the project as
The project is financially public sector and
sustainable. Financing plan is incomplete by a large amount and consider PPP structure.
donors’ regional allocation of funds is unlikely to be
sufficient to fill the gap. OMVG to develop the
Project financial sustainability is not established. project to private
OMVG is developing this as a investor selection
public sector project. The structuring of the project as a public sector point.
project raises two issues: it may not allow the
mobilization of the missing resources to fill the Financing gap to be
financial gap of the project. In addition, it is unlikely filled by private
the envisaged institutional arrangements will investors/lenders
guarantee the financial sustainability of the project.
Similar structures have net with recurrent financial
and management issues. The envisaged operation by
a private company under an O&M contract is
unlikely to be sustainable, as evidenced by the
Manantali case. Even as a public sector project, there
is no credible mechanism to ensure the sustainability
of the project.

Cost of the project can be Cost of electricity is close to $ Cents 15/kWh, which Off-take agreements
fully covered by electricity provides little incentives for other countries to to be negotiated
sales. purchase electricity from Sambagalou.
Terms of power off-take from sub-regional utilities
are not finalized yet.
OMVG has the institutional Implementation capacity of OMVG may need to be Performance
and financial capacity to strengthened. guarantees for the
implement the project, performance of utilities
including the water to be established
management component.

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Financial Status

Total estimated Project Value USD 454, 500, 000

Potential Financiers (2013):

Proportion
AfDB 14% Debt
Chinese government 86% Debt

Projected financial position (2013):

Break – even year 25

Financial Internal Rate of return 15.5%
per year
Cumulative benefit to cost ratio 0.6

Existing financing:

 The project will be financed by the OMVG members with assistance from the African
Development Bank, EIB, the World Bank, AFD, BIDC, BOAD, KFW, Abu Dhabi.
 The AfDB has actively sought to promote private sector participation in the project, through
equity or debt participation, pending further discussions on the project.
 The financing plan is not yet finalized.
 Donors have pledged about USD 190 million for the project, leaving a financing gap of about
USD 265 million.

Funding Gap USD 265 million