Ethiopia’s electric export performance has been a significant driver of economic growth and development in recent years. The country has harnessed its vast renewable energy resources, particularly hydroelectric power, to become a major electricity exporter in the region. Here are some key aspects of Ethiopia’s electric export performance:
Ethiopia has abundant water resources, which it has leveraged to develop large-scale hydroelectric power plants. These plants, such as the Abbay Dam which is being constructed on the Abbay River, have substantial power generation capacities. Hydroelectric power forms the backbone of Ethiopia’s electric export sector.
The country has also made efforts to establish power interconnections with neighboring countries to facilitate electricity exports. It is part of the Eastern Africa Power Pool (EAPP), a regional initiative aiming to integrate power systems and enhance electricity trade among member countries. The interconnections allow Ethiopia to export electricity to neighboring countries like Sudan, Djibouti, and Kenya.
On top of this, Ethiopia has signed power purchase agreements with various countries and regional entities. These agreements formalize the export of electricity and ensure a stable market for Ethiopian power producers. For instance, the country has an agreement with Djibouti to export power, and it has also signed agreements with Sudan and Kenya for electricity exports.
The country has been actively expanding its power generation capacity to meet domestic demand as well as increase its export potential. The completion of the GERD, once fully operational, will significantly boost the country’s electricity export capacity. Ethiopia’s commitment to developing additional hydroelectric and renewable energy projects further strengthens its position as an electricity exporter.
Its export potential will also enable the country for building strong economic integration and regional cooperation. Accordingly, Ethiopia’s electric export performance aligns with its broader goals of regional economic integration and cooperation. By supplying electricity to neighboring countries, Ethiopia fosters economic ties and collaborations, creating a more interconnected and integrated regional energy market.
Coupled with this, the export of electricity brings substantial economic benefits to Ethiopia. It generates revenue through export earnings, as discussed earlier, contributing to the country’s overall economic growth. Additionally, electric exports create employment opportunities, attract foreign investment, and stimulate related industries such as construction, engineering, and maintenance.
While Ethiopia exports electricity, it also prioritizes meeting its own growing energy demand and improving access to electricity for its citizens. The development of the electric export sector goes hand in hand with efforts to extend electricity access to rural areas and enhance the country’s energy security by diversifying its energy sources.
The Ethiopian Electric Utility (EEU) recently announced that its office has collected more than 35 billion Birr during the recently ended Ethiopian fiscal year. Shiferaw Telila, CEO of EEU said that his office has managed to collect 35.5 billion Birr in the past fiscal year, achieving 95 % of the plan set for the reported period.
Having implemented a 3-year plan, the EEU has been hugely engaged in keeping infrastructural and service expansion and customer satisfaction, the CEO told journalists last week. Considering the low number of customers, the utility has been aggressively working to access 25 million new customers in the next ten years to provide them with a full-fledged service.
According to him, various distribution expansion projects have been implemented in six towns and cities across the country including the capital Addis Ababa. Mentioning that the firm has employed digital payment platforms including telebirr and CBE Birr in a bid to ensure customer satisfaction and ease the bill payments hassles, the CEO explained that the significant amount of revenue generated through exports by the EEU contributes to the country’s overall revenue and can help finance various government initiatives. This additional income can be used to fund infrastructure development, education, healthcare, and other essential sectors.
The utility also created over 19,000 permanent and temporary jobs in the reported period. The export-oriented activities of the EEU can create employment opportunities in various sectors. These include direct employment within the utility itself, as well as indirect employment in supporting industries such as construction, maintenance, and logistics. Job creation contributes to poverty reduction and enhances the standard of living for individuals and communities.
The CEO further noted that, over 1.2 billion Birr was deployed to rehabilitate the electricity infrastructure in the war affected areas. To export electricity, Ethiopia needs to develop and maintain a robust infrastructure network, including power generation plants, transmission lines, and substations. The revenue generated by the EEU can be reinvested in expanding and upgrading the country’s energy infrastructure. This not only benefits the electricity sector but also facilitates economic development in other sectors that rely on reliable and affordable power supply.
“For the current fiscal year, we planned to collect over 45 billion Birr and surpass last year’s performance by 23 % incorporating 600,000 new customers and 100 new rural villages that did not have access to electricity.” Security problems, infrastructure damage, inflation and shortage of inputs and forex crunch were mentioned by Shiferaw as the major bottlenecks in the sector.
A successful export-oriented utility like the EEU can attract foreign investors interested in Ethiopia’s energy sector. The presence of a well-functioning and profitable electricity utility demonstrates the country’s potential and stability, making it an attractive destination for foreign direct investment (FDI). Increased FDI can bring in capital, technology, and expertise, boosting various sectors of the economy.
Moreover, EEU has been implementing the Supervisory Control and Data Acquisition (SCADA) system, which helps to identify power interruption areas and about 11 solar mini-grids are operational while another 1000 are in the final stage.
Approached by the Ethiopian Press Agency (EPA), EEU Corporate Communication Director Melaku Taye for his part stated that, this system enables the utility to seamlessly collect revenue from its customers and ease power wastage. Accordingly, preparation is finalized to launch a mobile-friendly prepayment metering system outlaying 48.8 million USD that is expected to reach five million customers.
The project is equipped with prepayment application, ICT infrastructure, 500,000 single and three phase smart meters and other related inputs, including technical and system utilization. Moreover, this cutting-edge the electric power via their cell phones and averts the hassle of paying the monthly bill.
Mentioning the 15-year existence of the prepayment metering technology, the director indicated that the new technology is unique in enabling customers to pay their electric bill with their cell phones. In addition to mobile payment systems, the-state-of-the-art system would be applicable in many digital payment alternatives such as ATM cards, institution’s call center and agents among others.
It’s worth noting that the electric export performance of Ethiopia is subject to various factors, including infrastructure development, regional cooperation, and geopolitical considerations. However, with its ambitious renewable energy projects and commitment to becoming a regional electricity hub, Ethiopia has made significant strides in leveraging its electric export potential for economic development and integration in the region.
Documents from EEU further stated that, Ethiopia’s electric export performance has significant importance for foreign exchange earnings and creating trade balance improvement. Export earnings, such as those generated by the EEU; contribute to Ethiopia’s foreign exchange reserves. Foreign exchange reserves are crucial for a country’s economic stability, as they can be used to pay for imports, service external debt, and stabilize the local currency.
Moreover, exporting electricity can help improve Ethiopia’s trade balance. By earning revenue from exports, the country can reduce its trade deficit, which occurs when the value of imports exceeds the value of exports. A more favorable trade balance strengthens the overall economy and reduces dependence on external financing.
Overall, the economic advantages of the Ethiopian Electric Utility’s export earnings include increased revenue, foreign exchange earnings, trade balance improvement, job creation, infrastructure development, and the attraction of foreign investment. These benefits contribute to the country’s economic growth, development, and stability.
BY HIZKEL HAILU
THE ETHIOPIAN HERALD TUESDAY 15 AUGUST 2023
