Senegal to Boost Wealth Fund, Cut Debt With Oil Income

(Bloomberg) -- Senegal will use a third of income from future oil and gas sales to boost its budget and reduce growing public debt, while the remainder is likely to go into investment funds, a government official said.

The government of President Macky Sall is drafting legislation to overhaul the oil industry and determine how to use future income as a string of major discoveries off its coast are expected to make the West African nation an oil exporter in coming years. A new code will probably be submitted to parliament next month as explorers including BP Plc and FAR Ltd. are expected to make investment decisions within the next 12 months.

The government will also use proceeds from royalties and other taxes for the budget, according to Mamadou Fall Kane, deputy permanent secretary of COS-Petrogaz, the government committee overseeing new oil and gas policies. A stabilization fund that’s still to be created and a sovereign fund for longer-term investments are each set to receive a third as well, Kane said in an interview in the capital, Dakar.

“Oil and gas should help boost your development, especially your investment,” Kane said. “It can also help repay your public debt.”