By Edward McAllister
DAKAR, Nov 4 (Reuters) - In a report last week detailingsub-Saharan Africa's dire economic outlook, the InternationalMonetary Fund singled out Senegal as a rare bright spot. One keyreason: it does not produce oil.
While low crude prices have hobbled exporters Nigeria andAngola this year and African growth staggers to its slowest ratein more than two decades, Senegal's economy will expand by over6 percent.
Today, however, Senegal is on the verge of its own oil andgas boom. With recent finds promising billion-dollar payoffswithin a decade it would do well to learn from the mistakes ofothers.
"The oil and gas could boost the economy, but at the sametime resources can turn into a curse," said Ibrahima Aidara, aneconomist at the Open Society Initiative for West Africa.
In Africa's top producer Nigeria, billions of dollars of oilrevenues have vanished while many in the country remainimpoverished. Long-time rulers in Equatorial Guinea, Republic ofCongo and Gabon have long used patronage systems fed by oilwealth to help maintain power.
Already, claims of corruption and opacity in thegovernment's managing of the nascent sector have raised concernsin Senegal, one of West Africa's rare, relatively stabledemocracies.
"You cannot hide in your office and make policy, becausethis affects everyone," Aidara said.
Companies including Royal Dutch Shell, Exxon Mobil and ConocoPhillips spent 60 years exploring inSenegal before Edinburgh-based Cairn Energy struck oilin deep waters in 2014.
Cairn reckons it could be sitting on upwards of 1 billionbarrels and plans to start production in 2021.
Dallas-headquartered Kosmos Energy boasts about 50trillion cubic feet of gas reserves off the coast of Senegal andneighbouring Mauritania - the equivalent of nearly two years'worth of U.S. production.
Senegal's government forecasts that just one planned naturalgas project will bring in at least $10-13 billion - almostequivalent to the country's gross domestic product - over thenext 25 years.
"We are experiencing the period before a new age forSenegal," said Mahi Kane, a director at PricewaterhouseCoopersin Dakar who has seen the number of energy firms seeking adviceon tax and legal issues rise five-fold in the last three years.
"WE NEVER BENEFIT"
When Ghana started exporting oil at the start of the decadeon top of gold and cocoa it was considered one of Africa'shottest investment destinations. But its oil sector developmenthas been slower than some had anticipated.
A slide in crude prices since 2014 has meant oil has notbrought Ghana the wealth some had hoped for and the West Africancountry is currently receiving aid from the InternationalMonetary Fund to reduce inflation and lower the budget deficit.
In Senegal, where the average annual income barely tops$1,000, not everyone is optimistic the looming oil boom willreverse their fortunes either.
Hundreds took to the streets in the capital Dakar last montharguing that the oil will only benefit international companies.
"The country only gets 10 percent," said Adama Seck, 50, theleader of a small independent political party, referring to thegovernment stake in some contracts.
"We never benefit from our resources," he said, as policefired tear gas and demonstrators scattered.
Despite its relatively high standing in anti-corruptionrankings, Senegal has not been immune from high-level graft.
Karim Wade, the son of former president Abdoulaye Wade, wasjailed last year for illegally hiding away funds in offshorecompanies in the British Virgin Islands and Panama.
Wade was released by presidential pardon this year butremains in the spotlight as the Senegalese Democratic Partychose him to run in presidential elections in 2019, though it isunclear whether he is still eligible to run.
"Despite its strong institutions, persistently high levelsof government corruption leave Senegal vulnerable to theso-called resource curse," said Anaïs De Meulder, Africa Analystat global risk consultancy Verisk Maplecroft.
LACK OF TRANSPARENCY
Critics of the government's handling of the oil portfolio sofar point to one high-profile deal involving President MackySall's brother, Aliou Sall.
In 2012, Aliou Sall was a director of Petro-Tim, a companycreated that year and registered in the Cayman Islands, that wona 90 percent stake in two offshore permits.
In July 2014, Timis Corporation - run by Australian-Romanianbusinessman Frank Timis - bought Petro-Tim's stake. A monthlater, Timis Corporation farmed out 60 percent of its stake toKosmos Energy, which runs the project now.
"The lack of transparency is worrying," said Mamadou Diallo,an opposition member of parliament who believes state oil firmPetrosen should have exercised its right to increase its 10percent ownership. "There is a use of political positions sothat the deal is not favourable to the people of Senegal."
Aliou Sall stepped down from his post at Petro-Tim lastmonth, citing a "campaign of demonisation" against him bycritics. He took a job at Timis Corporation.
The government says it will ensure oil benefits Senegal. Theoil ministry is rewriting its 1998 petroleum code to update taxlaws, strengthen the environmental code and add legislationabout hiring local workers.
Many oil contracts and company royalty payments have alsobeen made public as Senegal seeks to join the ExtractiveIndustries Transparency Initiative (EITI).
President Sall last month set up a commission to oversee howthe new resources will be managed and plans are being discussedto funnel some 30 percent of oil revenues into Senegal'sSovereign Fund for Strategic Investments (FONSIS), the fund'sCEO Amadou Hott said.
Still, Cheikh Toure, a national coordinator for the EITI inSenegal, believes civil society must play a bigger role inmanaging the sector.
"How do we make sure that we put in place good laws andconditions that will convince investors that they will beoperating in a safe environment and that the country willbenefit?" he said. "We have a long way to go." (Editing by Joe Bavier and David Clarke)
