Tigrai Onlne December 03, 2013
The Canada-Ethiopia Energy Stakeholders Forum was held in Addis Ababa this week in the presence of representatives of the relevant governments and of Canadian energy companies, industry specialists and financiers. Those attending included the State Minister of Water, Irrigation and Energy, Wondimu Tekle; the CEO of the Ethiopian Electric Corporation, Mihret Debebe; Canada’s Ambassador to Ethiopia, Ambassador David Usher and the Director General of the Americas in the Ministry of Foreign Affairs, Ambassador Taye Atskeselassie.
Opening the Forum, the State Minister for Water, Irrigation and Energy, highlighted Ethiopia’s commitment to the development of the energy sector to meet the targets set in the five-year Growth and Transformation Plan. He noted the necessity of sustainable energy sector development to maintaining the country’s rapid socio-economic development. State Minister Wondimu also underlined the government’s aim of diversifying sources of energy, introducing renewable solar, biomass, wind, waste and geothermal sources. He said the private sector was encouraged to engage in engineering, financing and generating energy development in Ethiopia. He urged Canadian companies to invest in the sector development.
Ambassador Taye Atskeselassie, who hailed the long standing and warm relationship between Canada and Ethiopia centered on development cooperation to help alleviate poverty, said this cooperation was based on the development priorities set out in the GTP. He cited support to women entrepreneurs, improving the investment climate and other areas of cooperation as evidence of the growing relationships between the two countries. Ambassador David Usher noted energy was a strategic sector in which the two countries could work closely: Ethiopia had rich energy resources and Canadian companies had the right capabilities.
The Forum included two panel discussions. The title of the first was “Policies and Strategies and Direction of the energy sector in Ethiopia and the role of the Private sector in Power Generation and Procurement Procedures.” Ethiopia’s energy potential was detailed: 45,000mw of hydropower; 5,000-7,000 of geothermal power; 113 billion cubic meters of natural gas. In addition, due to Ethiopia’s proximity to the equator, there were huge untapped resources of wind and solar energy. With 10% economic growth per annum for over a decade, the demand for energy had been growing at 13% a year, and had now reached 25%. The country was now developing railway transportation, with initial construction of 2,500 kilometers of line, and the development of heavy industries.
The government’s energy policy prioritizes hydropower and the development of other renewable sources. It notes bio-fuels should be used for local production and the transport sector. The ten sugar factories under construction are expected to boost ethanol production, currently used in a mixture with petrol for cars*. The government’s Climate-Resilient Green Economic Strategy aims to build an environmentally responsible and carbon neutral energy sector with zero emissions by 2025, identifying details of energy generation, appliance manufacturing, including solar panels, and engineering procurement and construction of energy-generating plants. The private sector is to be involved in mini-grid energy development in areas where access to electricity from the grid operator is difficult. The recent US$4 billion deal between Reykjavik and EEPCO to develop geothermal power in Korbeti is hailed as a trail blazer.
The panelists also noted the emphasis that is to be given to energy development from various other renewable sources and reduction of energy wastage. Ethiopia’s 25-year master plan for energy development aims to achieve 95% electrification by 2037. The US$156 billion plan has been drawn up in line with the East African Power Master Plan, which aims to connect grids of all the countries of the region. Underlining the growing demand of power from Ethiopia, Ato Mihret Debebe noted that EEPCO will soon be signing a Memorandum of Understanding with Tanzania to export power there. Overall, the panelists emphasized that Ethiopia’s energy sector offered substantial and lucrative opportunities for Canadian energy companies.
The second panel discussion covered “Evaluation Procedures to Financing Ethiopia’s Energy Sector and Access to Finance”, with panelists drawn from the International Finance Cooperation (IFC), the African Development Bank (AfDB), and the Ministry of Finance and Economic Development (MOFED). MOFED explained that much of Ethiopia’s energy finance currently comes from government funds, though off-budget resources coming from donors, development partners and international financers were second tier financial sources. The IFC explained various financial services provided to private investors interested in infrastructure development and said the IFC had facilitated a US$1.8 billion loan for infrastructure development in Africa. He detailed the IFC’s standards and requirements in financing energy development in geothermal and mini-grid projects. The AfDB, which financed the first phase of Ethiopia’s rural electrification program with US$180 million and had continued to support the second and third phases, shared the Bank’s commitment to supporting private firms in energy development. The AfDB also offers advisory services and assistance in mobilization of resources. The AfDB is currently co-financing the US$1.4 billion Ethio-Kenya transmission line as part of the East African power project.
Canadian companies briefed Forum participants regarding their services and their interest in Ethiopian markets. Among the challenges for engagement in Ethiopian energy development, they identified the low feed price for private generation and the absence of multiple grid operators. Government representatives noted the promulgation of the new energy law which gives more space to the private sector as well as the successful negotiation of feed-in prices in the case of the Korbeti [geo-thermal] project. These, they stressed, underlined the very real opportunities of successful, and profitable, energy development in Ethiopia.