A new World Bank program is set to strengthen and expand the electricity network, improve sector financial viability, and enable renewable energy generation through private sector participation in Ethiopia.
Ethiopia has the third largest energy access deficit in Sub-Saharan Africa with about half the population still without access to reliable electricity. Over the past decade, the Government of Ethiopia has made encouraging progress on its electrification program and expanded the grid network coverage to nearly 60% of towns and villages. Yet the electricity deficit in Ethiopia continues to exacerbate the poverty situation, preventing far too many people from fulfilling their basic socio-economic needs and limiting access to opportunity. For Ethiopia to continue to ramp up electricity access through grid connections, it is essential that the electric utilities and backbone infrastructure are fit for purpose.
“Transforming the electricity sector in Ethiopia requires a medium-term approach to address interlinked structural and operational challenges and send a strong signal to the private sector. Through this program, the World Bank will partner with Ethiopia over the next 10 years with a financing envelope of up to $1.4 billion, to help the government crowd in other development partners and the private sector,” said Wendy Hughes, World Bank Regional Director for Infrastructure for Eastern and Southern Africa.
The Power Sector Reform, Investment and Modernization in Ethiopia program (PRIME) will be implemented over several phases. The first phases will prioritize critical infrastructure investments and sector reform actions to improve the overall ability of electricity utilities to add new connections. Leveraging the one World Bank approach, the latter phases of the program will focus on mobilizing private sector participation in the power sector. For the implementation of the first phase, the World Bank approved a $522 million International Development Association* (IDA) credit.
An important feature of PRIME is to enhance Ethiopia’s resilience towards climate change. Ethiopia is prone and vulnerable to climate related disasters. With the electricity production heavily reliant on hydropower, the sector is vulnerable to hydrological variations. The program will help the country to diversify its generation mix and to tap into its vast but underutilized clean resources, including solar, wind, and geothermal.
“With the goal of substantially improving the quality of electricity service, increasing generation from renewable resources, and mobilizing private capital, PRIME is expected to make a significant contribution towards modernizing and strengthening the Ethiopian power sector. This is essential to sustain the country’s fast pace of electrification,” said Ousmane Dione, World Bank Country Director for Ethiopia, Eritrea, South Sudan and Sudan. The program, together with other ongoing and planned energy projects, can potentially support the entire population of the country over the program’s lifetime.
The PRIME project will be implemented by Ethiopian Electric Utility and Ethiopia Electric Power, two fully government-owned public enterprises.