Gas-Based Power as a Transitional Strategy for Sustainable Development:  Economy-Wide Evidence from Senegal

Senegal’s transition from oil-based to gas-based electricity generation presents an opportunity to reduce energy costs, enhance energy security, and support economic development. This study evaluates the economy-wide impacts of investment in gas-to-power infrastructure using a dynamic computable general equilibrium model linked to a household-level microsimulation framework. Four financing options are considered: domestic private savings, government savings, foreign borrowing, and foreign grants.Results show that gas-to-power investment expands electricity supply by up to 10% and reduces production costs, generating positive effects on GDP, sectoral output, and household welfare. Electricity prices decline by around 6–7%, leading to economy-wide productivity gains. Poverty decreases across all scenarios, with stronger reductions under concessional external financing that avoids crowding-out effects. While total CO₂ emissions increase moderately due to higher economic activity, emissions intensity declines, reflecting improved energy efficiency.These findings highlight the critical role of financing strategies in shaping the economic and environmental outcomes of energy investments and support the role of natural gas as a transitional fuel alongside renewable energy expansion in developing economies.