Macroeconomic performance¹

Real GDP growth was an estimated 3.5% in 2018, the same as in 2017 and up from 1.8% in 2016, driven mainly by irrigated agriculture, fisheries, construction, stronger metal prices, and manufacturing. The upswing is projected to continue in 2019. The economy remains largely dependent on iron ore, which is trading at atypically lower prices (source: EIU Maritania Country Report October 2019). Inflation stayed within price stability targets, at an estimated 2.9% in 2018. Nominal and real exchange rates have depreciated in recent years. The foreign exchange ratio has deteriorated from 24.2 in 2016 to –11.2 in 2017 and –12.4 in 2018. The fiscal position remains viable, with an estimated surplus of 0.1% of GDP, up slightly from being balanced in 2017. The external public debt ratio dropped for the first time since 2011—from 72.5 percent of GDP in 2017 to 69.3 percent in 2018— reflecting low project disbursements and steady nominal GDP growth. Only a handful of small external loans were contracted in 2018, all on concessional terms. Total public sector debt increased to 83% of GDP in 2018 as the government recognized about 10% of GDP in liabilities to the Central Bank (debt information is from IMF Third Review under the Extended Credit Facility Arrangement 2019). The current account deficit deepened to 16% of GDP in 2018, from 14% in 2017, due mainly to rising oil prices. Given the deteriorating terms of trade due notably to the sharp fall in the price of iron ore as a result of the sluggish global economic environment, the country’s economic growth slowed down in 2015 (iron ore USD <50/ton) with an estimated growth rate of 3.1%. This downturn reflects the vulnerability of growth to world commodity prices, particularly iron ore (circa. < USD 60/ton) that is the country’s main export product, hence the low diversification and integration of the productive base into the regional and global economies. Figure 2 displays the trends of iron ore prices. Mauritania’s economic growth is sensitive to climatic conditions (especially drought). Mauritania has low population density and difficult access to the desertic areas.

¹Source: African Economic Outlook, 2019, African Development Bank. Accessible here: https://www.afdb.org/en/knowledge/publications/african-economic-outlook/

Business environment and private sector development²

Despite considerable progress, there remains scope to improve the business environment. Mauritania ranks in the last quartile at 148 out of 190 in the Doing Business survey despite gaining 28 ranks in the past four years. With a view to climbing among the first 100 countries, the authorities created a council on the business climate chaired by the prime minister. Furthermore, an action plan focusing on introducing online tax payments, simplifying access to electricity (Figure 3), and modernizing commercial courts was also established in 2019. The Government is convinced that , greater regional integration would offer new opportunities for trade (source: IMF Third Review under the Extended Credit Facility Arrangement 2019). Despite this progress, Mauritania’s private sector remains mostly informal and businesses are constrained by the legal and regulatory framework. These constraints include weak property rights, the lack of an effective commercial justice system, difficult access to credit, and sometimes complex cross-border trade procedures. Key challenges to promote further private investment in the Renewable Energy include: (i) Formulate approve and operationalize an unique, overarching and identifiable strategy and long-term vision for the sector; (ii) Design implement and enforce a stable and expanded regulatory and tariff structure. (ii) Overhaul existing electricity tariffs to make them more cost reflective.  (iii) Expand the role of the regulator to cover the electricity company, SOMELEC, and to have broader authority in setting tariffs and market rules. (iv) There is a need to revamp the current legal environment, whether the regulatory or the institutional framework, to sufficiently reflect RE priorities and thus to provide a sufficient level of support. (v) Address the overlap between current programs and institutional participants, creating inefficiencies in managing priorities and available budgets. This overlap affects both equipment maintenance and the management of production facilities. (vi) Enhance the financial sustainability and bankability of SOMELEC, the tariffs charged by SOMELEC, as approved by the Ministry of Energy, do not enable it to cover all its expenses. (vii) Reduce SOMELEC’s high technical and commercial losses, to allow the reduction of state subsidies.

²AFDB - mauritania_-_csp_2016-2020
³President brief – Desert to Power – September 2019

Key takeaways on the electricity sector⁴

Electricity Access

The access to electricity rate is estimated at 43% in 2018. In urban areas, the access rate is estimated at 99%, against only 1% in rural (and sub-urban) areas. According to the 2013 national census, Mauritania has a total of 8,100 localities of which only 840 have more than 500 inhabitants, that is 72 % de la population. Concerning the 294 localities that have more than 1 000 inhabitants, only 95 are electrified (Energy Access Outlook, 2017: From Poverty to Prosperity,” International Energy Agency, (2017): https://www.iea.org/publications/freepublications/publication/WEO2017SpecialReport_EnergyAccessOutlook.pdf). Mauritania display average electricity access rates compared to countries having similar GDP per capita levels. In absolute terms, about 3 million of people is without power across the country.

Installed and available capacity

The installed generation capacity is at 500 MW (2018), mainly HFO based, of which 85 MW from solar energy sources (Table 1). Mauritania has made substantial progress in increasing generation capacity, with 24% solar and wind capacity in the energy mix and additional potential to export gas‐based generation (Figure 4). Over recent years, SOMELEC has set up new generation capacities: (i) Arafat II HFO thermal power plant of 10.5 MW in 2009, Wharf of 36 MW in 2012, North of 180 MW in 2015, ( ii) 30 MW wind power plant in 2015 (iii) 15 MWp Sheikh Zayed solar power plants in 2013 and 50 MW in 2017, (iv) Félou hydroelectric power plant in 2013. As for mining demand, before 2006 was mainly due to SNIM. However, it experienced strong growth in 2006 with the entry into production of new mines (Tasiast / Kinross gold and MCM copper). In 2018, 73% of the total power installed capacity is from thermal sources and 27% from renewable energy sources. However, this increase in generation capacity has mostly benefitted the urban population. Furthermore, delays in the construction of the transmission network and other bottlenecks limit the evacuation of energy reducing the available capacity. For example, until very recently, the Duale center has not been able evacuate 60 MW due to HT network limitations.

Table 1: Total installed power capacity (2018)

Figure 4: – Installed capacity and percentage power energy mix 2018 (MW)

Source: Ministry of Petroleum Energy and Mines

Production

Total energy generation is at 1500 GWh (2016). Since 2014/2015, Mauritania exports electricity to the sub-region, following the completion of new Nord Nouakchott (Table 2).

Figure 4: – Installed capacity and percentage power energy mix 2018 (MW)

Source: Ministry of Petroleum Energy and Mines

Production costs

The cost of electricity generated by the mini-networks serving rural areas was estimated at an average of USD 0.54/kWh in 2014, against USD 0.16/kWh for the network managed by the Mauritanian Electricity Corporation (SOMELEC) which is planning to cut production costs by up to USD 0.10/kWh when the Banda gas deposit discovered in 2001 will be used to generate power. However, the rates charged by SOMELEC as approved by the Ministry of Energy, do not enable it to cover all its expenses. SOMELEC faces high technical and commercial losses, forcing it to resort to state subsidies. Furthermore, the review of the sector’s institutional framework underscores the need for better coordination due to the multiplicity of actors, and for capacity building. To address sector difficulties and constraints, there are plans to extend the network from major consumption centres under the “2012 Master Plan for Power Generation and Transmission in Mauritania” and public authorities are encouraging the diversification of sources of power generation, particularly clean energy sources (solar, wind, etc.), and attracting private capital to the sector.

Demand trends and prospects⁴

SOMELEC recorded average demand growth of 9% over the period 2000-2009. This growth was maintained at the same pace between 2009 and 2014, with the exception of 2011, which saw demand stagnate from an unfavorable national situation. To support this demand, SOMELEC has set up new generation capacities (described above). Domestic demand, excluding mining demand, is expected to grow at about 9% per annum until 2020, then at 6% per annum after 2020, driven by progressive connection of load centers to the OMVS grid and economic growth (Table 3). Installed capacity in 2017 will remain predominantly thermal, with a noticeable shift from diesel/heavy fuel oil (HFO) to gas generation, amounting to 530 MW in total: 380 MW of thermal power (of which 300 MW provided by SPEG), 75 MW hydropower provided by OMVS grid, 40 MW solar power and 35 MW wind power. Demand is expected to increase up to 1,050 MW by 2025. However these projections are based on ambitious new mining projects that are likely to be delayed with the recent drop in commodity prices. All mining projects, with the noteworthy exception of Tasiast/Kinross gold mine, are likely to be provided electricity by power plants built close to the mines and not connected to the OMVS grid. The assumptions used to develop forecasts presented in Table 4 are based on the investments envisaged in the mining sector and the development potential of the fishing and agricultural sectors. A Low Scenario builds on real GDP growth of 4.5 percent per annum over the 2015-2029 period, in line with the IMF forecast in its 2010 report. The average real GDP growth rate is 5.7 percent in the Average Scenario and 7% in the High Scenario. Given the above, demand in 2014 reached 1,308 GWh, slightly above the Scenario Low forecast, but well below the Medium and High Scenarios. In fact, planned investments in the mining sector have been postponed given the unfavorable global economic situation (extension Tasiast, Askaf, SNIM, Bofal).

Table 3: 2015-2025 Demand Forecasting

Source: Ministry of Petroleum Energy and Mines

In order to take advantage of the country's gas potential, the Authorities have decided to develop Banda's off-shore natural gas field for electricity generation in order to meet domestic and industrial electricity needs, and to generate revenue through the use of electricity. The Banda natural gas field will supply several power generation units connected to the demand centers (Nouakchott, Nouadhibou, Export). As such, SOMELEC has started the construction of a 180 MW Dual (HFO / Gas) power plant, which entered service at the end of 2015, and plans to build a 120 MW Combined Cycle Power Plant (CCGT) to secure export commitments. The diversification of the energy mix will be mainly thanks to the massive introduction of renewable energies. The power available to Mauritania for the hydroelectric power plants programmed for 2025 is 169 MW (see table OMVS hydroelectric power stations Source OMVS, Table 3 above).

Transmission

Mauritania’s electricity sector is characterized by a fragmented power system, low rates of electricity access and demand/supply imbalances. Because of the low population density and the scattered nature of settlements over a vast territory, the Mauritanian power system is fragmented into several isolated grids supplied mostly by oil-fired generating units. Mauritania transmission network comprises the Interconnected Network and the Autonomous Networks (Figure 7 and Figure 8). The Interconnected Network consists mainly of 225 kV and 90 kV high voltage lines (HVB) and associated stations forming part of the OMVS network (RIO: OMVS Interconnected Network). A 225-kV line connects the Dagana substation (Senegal) to the 225/33 kV source substation at the Centrale SUD in Nouakchott (Arafat), via Rosso, where a 225/33 kV substation is located. A 90 kV line connects the 225/90 kV substation at Bakel (Senegal) to the Sélibaby 90/15 kV source station. And, from the 225/90 kV substation located in Matam (Senegal), a 90 kV line supplies the localities of Kaédi and Boghé with 90/15 kV source stations and the 225/90 kV substation located in Bakel (Senegal). ), a 90 kV line connects the city of Gouraye and Selibaby. Finally, as part of the Nouakchott water supply project from the river (Aftout Essaheli), the National Water Company (SNDE) built a 90-kV line connecting the Béni-Naji pumping station to the OMVS station in Rosso and operated by SOMELEC.

Source: Petroleum, Energy and Mines Ministry, "La Mauritanie face au défi de la transition énergétique"(2019)

MT distribution network

The network will be expanded to extend the national interconnected network through seven Interconnected Networks to HTA stations. For remote areas, it is envisaged to create Autonomous Networks (RA), independent of OMVS Interconnected network. The Interconnected Networks (IR) will be connected to the Interconnected Network of OMVS (RIO) and possibly hybridized through a photovoltaic park. The IRs (see Map 2) will be built around the HTA stations located in the following localities: Rosso and Tiguent (Trarza), Aleg and Boghé (Brakna), Kaédi and Mbout (Gorgol), and Sélibaby (Guidimakha). From these localities, it is envisaged to serve the localities of more than 500 inhabitants located within a radius of 120 km, by privileging at first, the localities on paved roads. Thus, at first, the IRs will serve the following axes:  RI of Tiguent:  33 kV Tiguent-Rosso line (financing to be mobilized);  33kV / 90kV lines (study will define voltage level): Tiguent-Mederdra, Mederdra-R'kiz, R'kiz Belgherbane and R'kiz-Rosso-Boghé Connection Point (funding to be mobilized);  RI Rosso: line 33 kV Rosso-Boghé (received 2015);  Boghé RI: Boghé-Aleg Line (under construction facilitated by EU / APAUS) and Boghé Kaedi (in the process of being finalized, state funding);  RI d'Aleg: line 33 kV Aleg-Boutilimit (Financing FADES), Aleg-Sangrava (FADES funding);  Kaédi IR: 33 kV Kaédi-Boghé lines (under construction, State financing), Kaédi-Mbout (FKD financing), Kaédi-Maghama (FKD financing);  Mbout RI: 33 kV Mbout-Lexeiba lines (FKD financing) and Mbout-Foum Gleita- Aftout (IDB / OFID financing);  Sélibaby RI: 90 kV Sélibaby-Mbout line (BID / OFID financing), Sélibaby-Ould Yenje -Kankossa (OMVS funding) and Sélibaby-Maghama (FKD financing).  RI de Gouraye: line 33 kV Gouraye- Diaguili (received 2015), Diaguili-Ghabou (OMVS funding).

The Autonomous Networks

will promote access to electricity in areas beyond RI's reach. The objective is to conduct a rational electrification that can reduce production costs through the energy mix. These networks will be developed over a radius of 120 km around hybrid thermal / PV plants built or to be built in the following eight localities: Atar (Adrar), Tidjikdja and Echram (Tagant), Kiffa (Assaba), Aioun (Hodh El Gharbi) ), Djiguenni, Adel Bagrou and Nema (Hodh Echargui) 2.  AR of Adel Bagrou & Néma: 2 Hybrid power plants and 500 km of 33 kV line (in progress, FADES financing);  RA de Djiguenni: (Financing to mobilize);  RA of Aioun: Hybridization 2 MW PV of the Central (realized by Masdar (Emirates)), line 2 33 kV (Financing to be mobilized, request transmitted to ADB); Kiffa RA: Hybrid power plant and Kiffa Guerrou 33 kV line (underway, Mobilized financing, AFD), Kiffa-Kankossa line 33 kV (OMVS financing);  RA Echram: Hybrid power plant and 200 km of 33 kV line (financing to be mobilized);  Tidjikdja RA: Hybrid power plant and 200 km of 33 kV line (financing to be mobilized);  RA of R'kiz: Hybrid power plant and 100 km of line 33 kV R'Kiz- axis Rosso / Boghé (financing to be mobilized) and R'Kiz-Bir El Veth-Ajouer Tenhoumad (Financing to be mobilized);

Mini solar power plants

By capitalizing on the experience of the Multifunctional Platforms, it is envisaged to improve this concept by migrating to a more suitable solution of mini solar power plant with a power of 20 to 50 kW with storage (model installed in Nimjatt. renewable with a mini-grid, could then support the natural growth of small isolated localities by meeting the electricity needs of households and allowing the emergence of economic activities. A hundred or so localities eligible for this type of infrastructure have already been identified, and a PPP-type financing mode could be proposed. These are small localities of about one hundred households, off-center compared to a power plant or electricity grid built or planned.

Target transportation network

Mauritania has started construction of a HT 225 kV North-South backbone between Nouakchott and Nouadhibou (financed by Exim Bank of India and FADES) and between Nouakchott and the Senegalese border (financed by FADES). This last section is part of the Nouakchott-Tobène HT project (Senegal), and is an associated infrastructure for the Banda Offshore Gas Power Project. These infrastructures will enable the Boulanouar wind farm to inject its production into the network, and will aim to ensure the service of the Nouadhibou Free Zone and the Tasiast mining site (TMLSA), as well as to export surplus energy to the OMVS space, and eventually to Morocco. It is therefore planned to export 230 MW to Senegal, including 80 MW as soon as the 21 km line connecting the 180 MW power plant to the OMVS substation in Nouakchott will be built. A second 225 kV HT backbone linking the Nouakchott production center to the Zoueratt and Akjoujt mining basins will, in particular, supply the national mining operator, SNIM, which plans to produce 40 million tonnes annually. of iron. Funding is estimated at $ 280 million (AFESD, Saudi Fund and Abu Dhabi Fund) and the project is in its procurement phase. A third HT-225 kV East-West backbone from Nouakchott to Kiffa in the east of the country (financing of the study mobilized from AFESD) with a connection to the OMVS network at Kayes (Mali), is planned. to serve the eastern part of the country and the mining zone of Mali, and facilitate, eventually, energy exchanges with the production centers of OMVS (Mali). The 90 kV lines linking Boghé to Aleg (Interconnection project with Vallée / FADES financing) and Sélibaby in Mbout ((Aftout Echergui Project / BID-OFID) are in the process of completion or procurement.

Tariffs

According to the most recent tariff study, the financial improvement of SOMELEC will require a 33% increase in the tariff from a current average tariff of 64 UMA/kWh (US$ 0.22/kWh) up to 85.6 UMA/kWh (US$ 0.29/kWh). The commissioning of the gas to power project in 2016 will consolidate this improvement by tapping into cheaper sources of energy compared to the expensive fuel oil and diesel plants that represent a large share of the current generation mix. The study urges SOMELEC in parallel to engage in a vigorous campaign for enhanced collection of receivables and reduction of losses. Estimations of tariff coverage and liquidity ratios are presented in Table 4.

Table 4 :– Coverage and liquidity ratios forSOMELEC from 2012-2017

⁴Ministere Du Petrole, De L’energie Et Des Mines, Situation Du Secteur De L’éléctricité

Country strategy on the environment and climate change³

Policy and regulation

Mauritania has an arid desert climate and it is exposed to drought, climate change, and various plagues (locust plagues, etc.). Drought has caused a serious deficit in agricultural production. Climate change has generally resulted in: (i) major disturbances marked by floods; and (ii) the degradation of natural resources. Given its geographic location, the capital, Nouakchott, faces a serious threat of flood as it lies on an extensive depression located more than 70% below sea level. Mauritania’s natural resources and environment are under mounting pressure exerted by climate change because the country’s environmental governance is limited. To respond to this situation the Government has deployed the legal instruments (the Environment Code adopted in 2000, the National Sustainable Development Strategy, the National Environmental Action Plan, the Renewable Energy Promotion Strategy, the Desertification Control Plan, the new Forestry Code, etc.) that rationalize its action in this domain. However, it still faces great challenges related to global warming and its consequences, and environmental protection. The country will also capitalize on regional initiatives such as the Pan African Agency of the Great Green Wall, which seeks to ensure the sustainable adaptation and resilience of populations in the Sahel region, including Mauritania, to the consequences of climate change and desertification as well as security in the zone. During COP21, Mauritania committed to fully participate in the effort of the international community to reduce greenhouse gas (GHG) emissions by 22.3% by 2030 with respect to projected emissions in that same year. With emissions of about 2 tonnes of CO2-eq per capita, Mauritania’s Nationally Determined Planned Contributions (INDC) is ambitious. Its implementation would help to reduce cumulative emissions of 33.56 million tones of CO2-eq between 2020 and 2030. Out of this contribution, 88% is subject to international support (conditional share of the contribution) and 12% could be achieved through the country’s own means (unconditional share of the contribution). To that end, the country plans to strengthen its climate monitoring mechanism to better organize the expected mitigation effort of each of its development sectors, continue to implement its renewable energy development programme, and develop its liquefied gas reserves through power generation.

Country strategy on the environment and climate change

Regional Framework

Mauritania, Mali and Senegal have a long track record in regional integration. In 1972, the three countries established OMVS (the Senegal River Basin Development Organization) with the mandate of managing water resources in order to promote irrigation and hence make member countries less vulnerable to rainfall deficits. Over time, OMVS also took on an important role in regional power trade, given the region’s dependency on hydropower. The power infrastructure of OMVS consists of the Manantali hydropower plant (200 MW), the Félou hydropower plant (60 MW), the transmission system interconnecting the power grids of Bamako, Dakar and Nouakchott, and a central dispatching center. Going forward, it will also include the Gouina hydropower project (95 MW) that will be commissioned in 2017/2018. All hydropower plants are located in Mali and their generation is split between the three countries on a quota basis2. The infrastructure is managed by Société de Gestion de l’Energie de Manantali (SOGEM) on behalf of OMVS. In the OMVS network, Mali and Guinea have substantial hydropower resources that are expected to be developed in order to meet future demand, but these projects will take several years to come on-stream.  Problems faced in the past by SOGEM related to payments of electricity have been solved. By 2008, SOGEM faced important arrears and a low collection rate from the three countries. To solve these issues, SOGEM and the three national utilities agreed in 2009 to a payment mechanism that included: (i) enforcement of resolution No 470 of OMVS’ Council which requires that electricity supply be reduced and then cut if bills are not paid on time; (ii) payment of new bills by bank draft within fifteen days after reception of the bill; and (iii) penalties for an electricity company which has not paid its bill within 15 days. Since this payment mechanism was applied in 2009, bills have been paid on time: all arrears have been settled and average collection period is below 90 days.

OMVS hydro power

Mauritania is member of the OMVS (Organization for the development of the Senegal river). As such is has the right to draw on the hydro power capacity installed to the Senegal River and sharing it with Guinea, Mali and Senegal (Table 5).

Table 5 - Hydroelectric power stations OMVS⁴

Source: Ministry of Petroleum Energy and Mines

Regional National Institutional OMVS Counterparts

• Ministry of Petroleum, Energy and Mines (MPEM) is responsible for overseeing activities upstream in oil and gas, electricity and mining sectors. This institutional arrangement has been instrumental in the design of energy sector reforms leveraging the demand of anchor industrial activities in the extractive sector. The Regulatory Authority (ARE) is responsible for regulating activities in the areas of electricity, water, telecommunications and postal services. In 2001, SONELEC (Société Nationale d'Electricité) was split into two entities: the power utility, SOMELEC (Société Mauritanienne d'électricité), and the water utility, SNDE (Société Nationale des Eaux). Privatization of SOMELEC was planned but never implemented. In anticipation of the privatization, the state under invested in the power sector.
• The state-owned Société Mauritanienne des Hydrocarbures (SMH) is mandated to represent the interests of the state in the petroleum sector through direct participation in development and production activities, oversight of private investors, and promotion of investment. Oil production in Mauritania has been steadily declining; however there have been recent oil and gas discoveries. Petroleum was first discovered in 2001 in the Chinguetti field off the coast of Nouakchott. Oil production started in 2006 at about 75,000 barrels per day (bpd) but, due to the complex geology of the field, rapidly declined to approximately 6,300 bpd in 2012. Nonetheless Mauritania continues to attract interest from reputable international exploration companies.
• In Senegal, responsibility for the sector lies with the Ministry of Mines and Energy, which is assisted by the Permanent Secretariat for Energy (an entity set up in 2010 to follow-up the implementation of the electricity sector emergency recovery plan). Electricity production, transmission, distribution and client commercialization is dominated by the state-owned, vertically integrated, electricity company, Société Nationale d’Electricité du Sénégal (SENELEC). Senegal has introduced a number of Independent Power Producers (IPP) that sell electricity exclusively to SENELEC. Fifty-one percent of overall production in 2012 was provided by IPPs. The Electricity Regulatory Commission (CRSE) regulates tariffs for a defined period; this period was recently reduced from five to three years, so that revenue requirements can respond faster to a fluctuating cost environment.
• In Mali, the Ministry for Energy and Water is responsible for technical regulation, defining the overall national investment planning and proposing the national energy strategy. Key regulatory functions, in particular electricity tariff setting, are under the responsibility of the Regulatory Commission for Electricity and Water (CREE). Energie du Mali (EDM) is the national utility company which is in charge of providing electricity services nationally in urban areas under a national concession agreement. It is owned by the Government of Mali (66%) and by Industrial Promotions Services (34%), a subsidiary of the Agha Khan Development Network. EDM is operated as a private company by Industrial Promotion Services.

The power sectors in all three countries suffer to various degrees from similar issues, including low access rates to electricity, relatively high technical and commercial losses, and high generation costs due to a dependence on oil-based thermal generation capacity. Tariffs are high but still insufficient to cover costs, resulting in reliance on government subsidies (Table 6).

Table 6: key electricity sector indicators of OMVS countries

Source: AFDB (2019)

⁴ Ministere Du Petrole, De L’energie Et Des Mines, Situation Du Secteur De L’éléctricité

Regulatory assessment

Regulatory assessment

The Electricity Regulatory Index for Africa (ERI) is a flagship publication of the Power, Energy, Climate Change and Green Growth Complex of the African Development Bank, which seeks to empirically evaluate the performance of African utility regulators, benchmark their performance against international best practices as well as a peer-to-peer comparison of their performance. Mauritania’s results are displayed in Table 8 along other G5 Sahel countries that have been included in the ERI 2019 edition.

• Key recommendation for Mauritania: The role of the regulator needs to be expanded to cover the electricity company SOMELEC and to have broader authority in setting tariffs and market rules.

Table 8: ERI ranking of Mauritania and selected G5 Sahel countries (2019)

National utility

General profile

In 2001, SONELEC (Société Nationale d'Electricité) was split into two entities: the power utility, SOMELEC (Société Mauritanienne d'électricité), and the water utility, SNDE (Société Nationale des Eaux). Privatization of SOMELEC was planned but never implemented. In anticipation of the privatization, the state under invested in the power sector. The state-owned Société Mauritanienne des Hydrocarbures (SMH) is mandated to represent the interests of the state in the petroleum sector through direct participation in development and production activities, oversight of private investors, and promotion of investment. Oil production in Mauritania has been steadily declining; however there have been recent oil and gas discoveries. Petroleum was first discovered in 2001 in the Chinguetti field off the coast of Nouakchott. Oil production started in 2006 at about 75,000 barrels per day (bpd) but, due to the complex geology of the field, rapidly declined to approximately 6,300 bpd in 2012. Nonetheless Mauritania continues to attract interest from reputable international exploration companies.

Policy and strategy⁶

Mauritania’s energy policy is defined largely in an ad hoc manner, based around existing opportunities and financed by international institutions and bilateral projects. This approach has served the country by allowing it to become a leader in the sub-region in the installation of renewable energy projects. To capitalise on this success and to ensure ongoing and co-ordinated development of renewables, the country needs to better define its goals and the means of achieving them. Energy has been identified as a priority for Mauritania’s development. The first theme of the country’s Poverty Reduction Strategy Paper (PRSP), for example, emphasises: Developing infrastructure to support growth through the improvement and diversification of electricity production – with particular emphasis on the fact that the country pays “specific interest to the development of energy as a factor of production”. Optimal exploitation of sources of growth through the development of oil drilling and exploitation of the Banda gas field to overcome the energy deficit. Mauritania has clearly identified the lack of access to basic services, including energy, as a stumbling block to national development efforts. The PRSP seeks to expand existing electricity distribution channels as soon as possible and to provide services independently in locations where the grid is not available. Specifically, it mentions the need to develop local or regional energy resources (natural gas and hydropower) and to balance the renewable energy mix. The PRSP includes targets for the electrification of 108 villages in the 9 poorest wilayas and support for collective and private electrification initiatives in 192 local areas (villages of 500 to 1 200 inhabitants). It also includes the objectives of increasing the urban electrification rate from 50% to 80% by 2015, and the rural electrification rate to 40% by 2015 (IRM, 2011).

Mauritania’s electricity sector⁷

Generated power at peak time reached 86 MW in 2012 against an estimated demand of 110 MW. SOMELEC’s installed capacity3 in 2012 was estimated at 171 MW of which 100 MW was deemed available. Meanwhile, mining sector peak demand reached about 100 MW in 2012. Domestic demand, excluding mining demand, is expected to grow at about 9% per annum until 2020, then at 6% per annum after 2020, driven by progressive connection of load centers to the OMVS grid and economic growth. Installed capacity in 2017 will remain predominantly thermal, with a noticeable shift from diesel/heavy fuel oil (HFO) to gas generation, amounting to 530 MW in total: 380 MW of thermal power (of which 300 MW provided by SPEG), 75 MW hydropower provided by OMVS grid, 40 MW solar power and 35 MW wind power. Demand is expected to increase up to 1,050 MW by 2025. However these projections are based on ambitious new mining projects that are likely to be delayed with the recent drop in commodity prices. All mining projects, with the noteworthy exception of Tasiast/Kinross gold mine, are likely to be provided electricity by power plants built close to the mines and not connected to the OMVS grid.

Table 9: SOMELEC’s Existing Electric central main features

Note: # estimations for Manantali and Felou
Source: SE4All Facility (June 2018) “Mauritania Energy Sector Institutional Reform”

Table10: SOMELEC Key Indicators

SOMELEC Key Indicators

Le bilan de l’offre et de la demande d’énergie au niveau du système interconnecté mauritanien est donné dans le tableau 2 ci-dessous. Il reflète la faiblesse du taux de disponibilité des anciennes centrales thermiques de SOMELEC dont la part dans la production devient de plus en plus marginale. La puissance garantie de la centrale Nord (105 MW) correspond à la limite d’évacuation des départs 30 kV qui y sont issus. Elle correspondra à la puissance opérationnelle de cette centrale dès la mise en service de la liaison 225 kV entre elle et le poste 225 kV de l’OMVS dont la mise en œuvre est en souffrance du fait des défaillances de l’entreprise contractante.

The supply and demand balance for the interconnected Mauritanian system (Table x) reflects the limited reliability of the former SOMELEC thermal power plants, whose share in production is becoming increasingly marginal.

Figure 11: Demand/Supply balance of the SEMELC’s interconnected system

Note: # estimations for Manantali and Felou
Source: SE4All Facility (June 2018) “Mauritania Energy Sector Institutional Reform”

Peak power trends Figure 10 shows the trend of Nouakchott's annual peak power from 2008 to 2017. It is growing at an average rate of 6.4% per year.

Table 10: Peak electricity for the capital city Nouakchott

Source: SE4All Facility (June 2018) “Mauritania Energy Sector Institutional Reform”

The Government has put in place a sector recovery plan to improve the financial situation of the utility. The sector recovery plan has five medium term components for SOMELEC: (i) reinforce sector oversight by the line ministry, including through an updated performance agreement between the government and SOMELEC; (ii) recapitalize the company through financial restructuring; (iii) urgently invest and rehabilitate generation and distribution infrastructure; (iv) improve commercial performance, including through introduction of pre- payment meters; and (v) restructure human resources and increase training. The recovery plan is under implementation with support from AFD, and has included a consolidation of cross debts between the government and SOMELEC, and a recapitalization of the latter.

Despite important efforts to improve SOMELEC ́s financial situation, additional measures need to be put in place to restore its financial equilibrium. SOMELEC suffered from financial losses in 2012 and 2013, despite improving its operational efficiency. Efforts made since 2010 to reduce technical and commercial losses are bearing results as there has been a 5% decrease in overall losses since 2010 (from 29% end of 2010 to 23% in late 2013). However, the strong reliance on heavy fuel oil, coupled with the increase of fuel price, and a reduction of subsidy allowance from the government, has resulted in a deficit that almost doubled between 2011 and 2012, reaching US$15.7 million. Moreover, the consecutive years of negative earnings have significantly reduced the equity portion of SOMELEC: total equity is expected to have reached -US$24 million at the end of 2013 compared to +US$10 million at the end of 2011. This testifies to the urgency of its recapitalization and tariff adjustment.

Financial analysis was carried out for SOMELEC

SOMELEC relies on a similar generation mix (essentially expensive HFO and a small share of regional hydropower) with tariffs of the same order of magnitude, at US¢ 22 per kWh. It suffers from tangible financial losses as a result of under-recovery of costs and relying strongly on government support. SOMELEC has begun to pursue a more financially sustainable path through a projected shift in their generation mix (e.g., gas-fired assets in Mauritania, coal generation in Senegal, and hydropower in Mali) within the next five years. All three utilities will continue to rely on government support for the next three to five years, although at a decreasing level. New Projects will help reduce average cost of power generation for each utility and thereby provides an opportunity for SOMELEC to reduce their reliance on government subsidies.

Mapping of ongoing programmes and projects

ABU DHABI FUND FOR DEVELOPMENT (ADFD)

• A wind power mini-grid project and a grid-connected hybrid solar, wind and hydro project were approved for funding by the IRENA-ADFD (Abu Dhabi Fund for Development) project facility in 2014 and 2015 respectively. Valued at USD 22 million, the projects will be 50% funded by ADFD the rest coming from the Mauritanian government. The multi-sectoral projects seek to provide access to clean energy to 169 villages with an average population of about 1 000. The National Agency for Development of Renewable Energy (ANADER) and the Agency for the Promotion of Universal Access and Services (APAUS) are the project coordinators.

ISDB AND AFD

• SOMELEC has already obtained sufficient funds from donors for its share in the SPEG power plants and in the North HV line (though it may need some additional funds for the latter). The other SPEG shareholders, Kinross and SNIM who are mining companies, have confirmed in writing their intention to fund their share of SPEG equity. Regarding the South HV line, funds have been committed from IsDB and AFD is expected to submit its funding share in the line for Board approval in May 2014.

UNDP, GEF, THE INTERNATIONAL RENEWABLE ENERGY AGENCY (IRENA), THE ABU DHABI FUND FOR DEVELOPMENT (ADFD) AND AFD

• The TFPs financing off-grid electrification initiatives in Mauritania include UNDP, GEF, the International Renewable Energy Agency (IRENA), the Abu Dhabi Fund for Development (ADFD) and AFD, with the latter providing USD 25 million to finance the Kiffa hybrid power plant.

UNDP and ADFD

• UNDP and ADFD are in the process of approving a project worth approximately USD 9 million to finance the installation of mini-networks using hybrid technologies in four localities in Mauritania. The Bank may also contribute to financing the interconnection of the national electrical network to the OMVS network in the event of eligibility to the AfDB public sector window.

Other

• Below is a detailed list of other donors in the energy sector

Table 12: Intervention of Other Major Development Partners in the energy Sector (amount in USD million)⁸ 2017

Mapping of ongoing projects across the power spectrum⁹

Investment opportunities for the private sector

Mauritania has a natural potential that can help it to calmly address development challenges. Large gas deposits have been discovered in Banda. The exploitation of this gas could help to generate electricity at low cost and in sufficient quantity to envisage exports to Mali and Senegal. Mauritania’s renewable energy potential is substantial. The solar photovoltaic (PV) potential is estimated at 2 000 to 2 300 kWh per square metre per year (kWh/ m2/year). The lowest radiation measurements here correspond to the highest volume of solar resources in Southern Europe. The country’s wind power potential is equally high, but it is located around the coastal areas with peak wind speeds of up to 9 metres per second (m/s) in the region of Nouadhibou. This resource potential indicates that renewable energy sources can compete with power generated in most regions using heavy fuel oil, with cost balancing to take output swings into account.

Additional investments required to meet renewable energy targets

To reach the Sustainable Development Goal 7 ”Ensure access to affordable, reliable, sustainable and modern energy for all” by 2030, Mauritania requires to spend an additional amount of 0.7% GDP per year in the development of soft and hard electricity infrastructure (IMF October 2019 estimations, “Evaluations des investissements financiers nécessaires pour atteindre les ODDs en Mauritanie”). According to the IMF, the average electricity consumption per capita requires to increase from 156 KWh per capita (2017) to 374 KWh per capita to ensure universal access. According the “Stratégie de Croissance Accélérée et Prospérité Partagée” (SCAPP) 2016-2030) the Government aims to reach 70%, (95% urbain and 40% rural) by 2030 (Islamic Republic of Mauritania: Strategy for Accelerated Growth and Shared Prosperity,” IMF, (May 2018): https://www.imf.org/en/Publications/CR/Issues/2018/06/01/Islamic-Republic-of-Mauritania-Economic-Development-Documents-45918); Therefore, the national electricity access objective in to achieve 85% access in 2030 (SCAPP 2019).

Sample sources of concessional funding

• African Development Bank financing solutions: https://www.afdb.org/en/projects-and-operations/financial-products/
• A list of available sources are available here:  https://www.get-invest.eu/funding-database/?_search=1
• Africa Renewable Energy Fund (AREF): https://www.gogla.org/africa-renewable-energy-fund-aref
• Africa Power Platform: http://www.africanpowerplatform.org/financing/grants.html
• Seed Capital Assistance Facility (SCAF): https://www.scaf-energy.org/
• Energy access Africa: https://energyaccess-africa.com/2016/10/10/funds-available-for-energy-access-companies-and-projects-in-africa/
• Energy Africa Infrastructure Fund: https://energyaccess-africa.com/2016/10/10/funds-available-for-energy-access-companies-and-projects-in-africa/

IRENA/ ADFD: https://www.irena.org/ADFD/Project-Facility/Funding-Offer

Contact information of local donor representations

French Development Agency (AFD)

About opportunities in the country

About private sector participation