Ethiopian Electric Utility secures $500 million Chinese loan

By Fasika Tadesse | Addis Fortune September 29, 2017

The Ethiopian Electric Utility (EEU) acquires half a billion dollars concessional loan from the Chinese government for the rehabilitation of electric power distribution lines in 54 towns and to construct distribution centres at 17 industrial parks.

This is the highest loan secured by the institution so far. The finance was granted through the State Grid Corporation of China, which is going to undertake the project.

The Chinese government’s commitment was made over four weeks ago, and currently, the two parties are working on detail assessments in selecting the towns and the industrial parks and identifying the volume of work, according to a source close to the case.

On top of rehabilitating electric power distribution lines, the fund will be used to build electric power distribution centres at 17 industrial parks. three of the industrial parks are currently operational, and the remaining are under construction.

The existing and the under-construction industrial parks need a total of 2,000MW electric power, while the total electric power generating a capacity of the country is 4238MW.

“Power supply to these industrial parks is a major challenge for the manufacturing industry,” said Prime Minister Hailemariam Dessalegn three months ago while addressing the Parliament. “In addition to finalising the ongoing power generation dams and distribution centres, rehabilitating and maintaining the distribution lines are a way out of this challenge.”

A month ago, the institution launched a feasibility study for maintaining electric distribution lines in 18 towns with the main aim of avoiding the recurrent blackouts in these towns. The planning department of the EEU is conducting the feasibility study before securing the fund.

Besides the new project, the EEU is working on rehabilitation projects in different towns. With 1.7 billion Br financing from the World Bank’s (WB) International Development Association (IDA) and the Ethiopian government, the EEU is going to launch an electric power rehabilitation project in six towns.

Adigrat, Debre Marqos, Gonder, Shashamane, Wolaita Sodo and Harar are the beneficiaries of this project. The project is likely to start by the mid of this Ethiopian year and is expected to be executed fully within a year of the commencement of the project.

The EEU is also to undertake another rehabilitation project in Addis Abeba with a 200 million dollars financing from EX-IM Bank of China and WB, with the plan of executing the project in 2018.

The pioneer rehabilitation project was started two years ago, in eight cities and urban towns including Addis Abeba, Adama, Dire Dawa, Hawassa, Bahir Dar, Dessie, Jimma and Mekelle. The Chinese state-owned firm, China Electric Power Equipment & Technology Co. Ltd. (CET), sealed the deal with EEU at the cost of 339 million Br and is currently on the final stage.

The EEU was formed after the split of the former Ethiopian Eclectic Power Corporation (EEPCO) to EEU and Ethiopian Electric Power (EEP). The former was entirely tasked with all generating and distribute the generated power. After the split though, the EEU tasked with managing the power installation, distribution and rehabilitation that is produced by EEP and feed it into the national grid.

On top of generating power, the EEP supplies power to larger industries which get power from the high-tension transmission lines or the national grid. EEP also intends to build distribution centres at the parks.

The government has already established a separate directorate under the Industrial Park Development Corporation (IPDC), which will oversee the electric power at the industrial parks. All of the industrial parks will also have their own power managers.

The loan agreement is not yet tabled or approved by the Ministry of Finance & Economic Cooperation (MoFEC). After MoFEC’s approval, the loan proclamation will be tabled to the Parliament for ratification, before launching the project.


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