The decision of Senegal’s new president, Bassirou Diomaye Faye, to renegotiate mining and oil contracts has been cautioned by business analysts and politicians.
Faye, speaking through his Energy and Mines Minister Birame Souleye Diopon on April 11, said the government would renegotiate oil, gas, and mining contracts if necessary once a promised audit is completed.
Faye, who is Africa's youngest democratically elected president, had vowed on the campaign trail to prioritise renegotiating oil and gas contracts. He emphasised that the contracts signed by those previously in power are "very unfavourable" to Senegal.
However, Australia's Woodside Energy, which operates in the Sangomar oil field in central-western Senegal in association with Petrosen, has urged the government to “respect contract sanctity.”
'Contract sanctity'
"Our experience has shown that the most successful jurisdictions have been those that work in partnership with industry, respect contract sanctity, and create investment certainty," a spokesperson for the company, Christine Forster, told AFP.
Senegal's former president, Macky Sall, told Bloomberg News the decision could come with consequences.
"Frankly, thinking that we can change the contracts already signed with the companies is not possible. That would be a disastrous turn for Senegal," Sall said.
According to the previous government and documents published by the Extractive Industries Transparency Initiative (EITI), up to 60 percent of the future oil and gas revenues would go to the Senegalese state.
Ibrahima Bachir Drame, who is the former communications manager of Petrosen, says that "explicit renegotiation clauses do not exist in oil contracts" but "clauses that regulate potential disputes."
Drame cautioned that a renegotiation of contracts "would be a risky business" and "the reputation of Senegal around the world of investment could put off potential suitors."
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