New terms for Ethiopian solar device importers

By Fasika Tadesse | Addis Fortune March 15, 2017

The Development Bank of Ethiopia (DBE) is revising terms that private solar device providers need to comply to access 20 million dollars loan secured from the World Bank. The policy bank, got the working capital loan nine months ago with the aim of providing alternative sources of power to those who have no access to electricity.

The revision came following a request from the Ministry of Water, Irrigation & Electricity (MoWIE), which provides technical assistance to DBE to approve the proposals from suppliers in order to avail the fund. Solar Home Systems (SHS), solar lanterns and cooking stoves are the types of solar material supplied by the Private importers.

“We import mainly solar lanterns as the regional energy bureaus do not collaborate with us to distribute the SHS,” said a household solar provider who wishes to remain anonymous.

The revision mainly targets importers who supply SHS, stand-alone solar systems which are usually used to power houses, rather than solar lanterns and simple lamps that are charged through the use of solar panels.

“The Ministry claims that the suppliers focus on importing and distributing solar lanterns which are largely sold in urban areas that already have access to electricity,” explained a source from DBE. “But the target of the fund is to mainly import SHS and provide it to people in rural areas with no access to electricity.”

In Ethiopia, about 25pc of the rural population have no access to electricity.

Five years ago, the WB partnered with DBE to provide working capital loans to private sector solar providers who supply solar items for rural areas without electricity.

The partnership also provides micro-financing to households for the purchase of solar lanterns and SHS through a 20 million dollar credit line under its Electricity Network Reinforcement and Expansion Project (ENREP). The loan was provided last May.

The project was aimed at rural residents to use off-grid solar power to light up their homes, watch television and charge mobile phones instead of using kerosene, candles, dry cell batteries and other fossil fuel based sources of power.

This round of funding was approved in May 2016 for the second time as part of a 200m dollar additional financing to ENREP.

During the first round of imports using the capital finance of WB, 800,000 off-grid products were imported and distributed by eight approved retailers to three million people. The items were distributed in July 2016 after two months of delay at Modjo Dry Port due to customs clearance procedures.

“The imported items are certified here after we go through the necessary assessments and laboratory checks,” said Tekea Berhane, corporate communications & service head at Ethiopian Conformity Assessment Enterprise (ECAE).

Even though the fund was availed in May, private importers are still waiting for approval from DBE for their submitted proposals. The approval was extended following the revision of the terms.

“The Ministry has a vested interest to use the funds to import materials itself that is why it is creating different issues in order to cause delay of the approval of the fund,” a person close to the case told Fortune.

However, Bacha Beyene, head of the Rural Electrification Fund Office (RE) of the Ministry, explains they are independently searching for funds to import solar panels, although they have not found any yet. The office is unable to import solar panels after the last import a year ago.

Solar lanterns imports have increased over the last four years by 90pc.

During the first edition of Growth and Transformation, imports of solar lanterns soared by 90pc annually. In 2015, the country has imported 16 million dollars worth of solar lanterns products, 64pc higher than the preceding year.

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