The Chinese government has shown interest in financing the construction of new hydropower projects in Ethiopia.
China is already involved in the continent’s hydropower sector with its Export-Import Bank financing the construction of a 1,350-MW dam to be built in Mozambique’s northern Tete province. The construction is set to commence in 2010 (Mozambique to Build New Dam for Hydropower).
Ethiopia’s electricity company, the Ethiopian Electric Power Corp. (EEPCo) will attempt to implement a strategy that will boost the country’s power coverage to 50% from the existing 33% in the next five years, but approximately $12 billion in funds will be needed for this project to materialize.
The East African country found out it hard to solicit funds from the World Bank and IMF and it is now looking for alternative financing sources. The international financial institutions are reluctant to finance power projects, especially those in the Abay basin; however, China seems the perfect fit.
During his recent visit to Beijing, the Ethiopian Minister of Finance and Economic Development (MoFED), Sufian Ahmed, submitted a list of infrastructure development projects that require financing to the Chinese government. The concerned Chinese authorities have expressed their interest to finance the power projects. As part of the on-going negotiations between the two governments, MoFED and a Chinise construction firm, Sinohydro Corporation Ltd., signed a MoU on July 13 for the construction of two hydropower projects – Gibe IV and Halele Werabesa.
Gibe IV will have an installed capacity of 1,479 MW and the investment cost is estimated at $1.4 billion. Hallele Werebesa will have the capacity to generate 422 MW; the investment cost is not yet determined. The MoU was signed by Sufian Ahmed and Chen Yushan, Sinohydro chief representative in Ethiopia. According to a press release issued by MoFED, the purpose of the MoU is to create the necessary conditions for the cooperation of the two sides to mobilize resources required for the feasibility study, design and construction of Gibe IV and Halele Werebesa hydropower projects.
Studies indicate that the hydro-power potential of Ethiopia is 45,000 MW. However, the existing capacity is nearly 782 MW. The country’s electricity coverage has increased from 17% to 33% over the past three years. Though this is still one of the lowest growth rates in the world, it marks the fastest growth in Sub-Saharan Africa. Currently six new projects with the capacity of 3,270 MW are under different stages of implementation