Ethiopia is rich in renewable energy sources. It is estimated that the country has the potential to generate over 60,000 megawatts (MW) of electric power from hydroelectric, wind, solar and geothermal sources.
While the government has for long owned the power sector exclusively, the people’s access to electricity across the country has been very limited as compared to the potential. The poor participation of the private sector in the generation, transmission as well as distribution can be taken as one of the factors in this regard.
To overcome the limitation, Power Africa, a U.S. Government-led initiative, is working closely with the Ethiopian government.
In 2013, Power Africa was launched as a U.S. Government-led partnership to double access to electricity in the region by facilitating 30,000 megawatts (MW) of new generation capacity and by adding 60 million new electricity connections by 2030.
To achieve these goals, Power Africa uses a partnership model drawing on the expertise of over 150 private and public sector partners, 18 development partners, and 12 U.S. government agencies. Signed into law by the U.S. Congress in February 2016, the Electrify Africa Act of 2015 instructs Power Africa to provide access to electricity for 50 million people and to provide 20,000 MW by 2020.
Most of Power Africa’s investment in the last five years in Ethiopia has been to create an enabling environment in the power sector. Because moving from public financing to project financing is what privatization requires and this in turn requires a lot of legal framework amendments.
This will provide better investment opportunities for private companies by reducing risk, said Samson Atsbha, USAID Energy Specialist, and Program Manager in Ethiopia during a Telephonic press briefing with Andrew M. Herscowitz, Coordinator for Power Africa on U.S. Government-led Initiative to Double Access to Electricity in Sub-Saharan Africa by 2030 at the U.S. embassy.
“This is what we are doing in Ethiopia. Holistically, such amendments assist the private sector,” he said adding, so far, most of the country’s mega projects have been conducted by public finance. Hence, Power Africa is trying to assist the government in bringing power generation issues to private companies, he added.
Accordingly, besides finalizing the existing hydro or other mega projects, the upcoming pipeline project in the power generation sector would be (IPP) Independent Power Producer. Hence, the government would be an off-taker and the regulator of the power sector, he said.
Currently, Power Africa is supporting the government in the development of geothermal and solar in terms of technical, legal and other negotiations. “But if any request comes to Power Africa, it is here to support the government’s efforts.”
Prior to commencing the project, Power Africa has worked closely with the government to facilitate its implementation. As part of modernizing the power sector, the government has approved an energy regulation framework for the first time last year. Also, Power Africa supports the government to approve power directives which can go operational to the power business.
It is not easy to dramatically improve the engagement of the private sector, he added. But there has been positive progress and responses from the government. The initiative to engage the private sector in power generation, transmission and distribution is also an encouraging step forward.
As an input to achieve this, Power Africa has finalized the master plan of all the medium voltage lines across the country using GIS. This is a very helpful tool to minimize cost and expand power connectively to the off-grid community.
Additionally, power Africa is working to improve the capacity and commercial performance of the country’s power utility. For this to happen, it is offering geospatial mapping which helps to operationalize the plan to significantly improve power access by 2025, Samson underlined.
“We have been working hard on the Corbetti and Tulu Moye geothermal projects for over seven years now. We have had an advisor who’s been embedded with the government. We have helped to draft new geothermal laws and regulations,” Andrew Herscowitz, Coordinator for Power Africa said on his part .
Power Africa and others have provided legal assistance to the government. Partners have provided grants for the project. “So we’re hoping that this year, these projects are finally going to reach financial close.” This will have a significant impact because they would be the first privately funded power projects to reach their final stages. This will have a huge impact not just on the power sector but all other markets, he added.
Power Africa has also been working with the International Finance Corporation to develop the solar sector. Particularly, due emphasis has been given to connecting electric lines with the utility. “We’ve been working with solar home system companies to get into the market there. With this, we have been benefiting people in Ethiopia.”
Once Ethiopia opens up the market and demonstrates that private sector investment can move forward, there is the potential to rapidly bring electricity to tens of millions of people.
Tyler Holt, Economic Growth and Transformation Office Chief at USAID in Ethiopia said on his part that Power Africa is working for the best interest of consumers.
Primarily it is also working to provide power with the cheapest price possible to more Ethiopians without giving due emphasis to who is providing the power, be it local or foreign companies. The service is coming to competition for more economic benefits. “I don’t think Ethiopia should be afraid of the thinking that the private sector is not interested to invest here because it is,” Tyler said.
On the other hand, the Ministry of Water, Irrigation, and Energy (MWIE) said it is formulating a power sector road map to facilitate sector reform.
Yihesyis Eshetu, Acting Energy Policy, Strategy, and Information Directorate Director at MWIE told The Ethiopian Herald that the road map will incorporate strong and applicable rules and regulations that govern stakeholders of the power sector.
As the government’s investment alone could not meet the power generation, transmission, and distribution demand, it has opened up the sector to the private sector.
The roadmap is being prepared to enhance performance and quality by governing and treating all stakeholders in the sector without partiality.
The power sector road map will enable the country to have independent power generation, transmission, and distribution companies; he said adding that it is also expected to promote specialization, technology transfer and job creation.
With this, it will have its own role in realizing sustainable electricity supply across the country and in the Horn.
The Acting Director also said the roadmap will widen power generation, transmission, and distribution alternatives and help prevent illegal power usage, wastage and power interruption.
He also noted that the road map is being prepared in line with the 2025 electrification target of Ethiopia.
Ethiopia aims to increase its electrification coverage across the country from the current 58.13 percent to 100 percent by 2025.
The road map is expected to be completed in the near future and will be sent to the responsible government body for review and approval.
The Ethiopian Herald November14, 2019
BY MULATU BELACHEW
