Letter of Development Policy for the Energy SectorIn October 2012, the GoS adopted a Letter of Development Policy for the Energy Sector. The Letter of Development Policy outlines the sector policy objectives of the newly elected government to improve the sector’s performance in the medium term. The main axes of the Letter of Development Policy for the Energy Sector are: (a) ensuring energy security and increasing the energy access for all; (b) developing a policy mix combining thermal generation, bio-energy, coal, gas, and renewables and seizing the opportunities of regional interconnections; (c) continuing and accelerating the liberalization of the energy sector by encouraging independent production and institutional reform of the sector; (d) improving the competitiveness of the sector in order to lower the cost of energy and reduce sector subsidies; and (e) strengthening regulation of the sector.The 2013-2017 plan for developing production facilities is based on an energy policy mix combining coal, natural gas, hydroelectricity, and renewable energies. In addition to the rehabilitation of SENELEC’s production facilities, which are in progress, this plan makes provision for the following additional capacities: the Félou hydroelectric power station of 15 MW in 2013, an IPP in the amount of 150 MW (liquefied natural gas) in April 2014, the IPP Tobéne (Taiba Ndiaye) of 70 MW in 2014, a coal-fired IPP (Sendou) of 125 MW in April 2015; an import of 80 MW from the natural gas powered plant in Mauritania in October 2015; a coal-fired IPP with Kepco of 250 MW between 2016 and 2017, and renewable energy projects. A standing inter-ministerial committee for monitoring energy projects has been instituted. The coming on stream of these new units will be accompanied, at current oil prices, by the phase-out of the electricity subsidy and will lead over time to lower costs for the user.To react to the power crisis, in 2010, the GoS carried out a diagnostic exercise of the sector, which highlighted an increasing gap between fast growing demand and insufficient, costly, and unreliable supply of electricity, as well as SENELEC’s persistent financial difficulties, characterized by a significant operating deficit and high indebtedness. To tackle both technical and financial imbalances, the GoS developed a 2011 – 2015 electricity emergency plan, outlining the overall policy framework and strategy to steer the sector towards a sustainable path and ensure SENELEC’s financial and operational sustainability over the long run.The GoS also set up a special fund to support fuel provision for electricity generation (the Special Fund for Energy – FSE). The FSE became operational in July 2011 and it finances fuel supplies to SENELEC and co-finances investments in new infrastructure, particularly generation expansion. The Fund’s revenues are financed through GoS budgetary transfers (including tariff compensation), charges on oil products, energy and telecommunications, and a contribution from SENELEC.