2 February 2009

Ethiopia: Power Utility Plugs in Generators to Offset Deficit

Never has EEPCo been so busy in overseeing the construction of its five-mega hydroelectric power plants. Yet, national annual demand for electric power is increasing by 21pc, a huge increase by any standard. This is creating a power deficit that has currently forced the company to practise load shedding, quietly. In addition, EEPCo has embarked on a historically unprecedented effort to utilize rented diesel generators to offset temporary setbacks, reports Tamrat G. Giorgis, Fortune Staff Writer.

Paul Gilbert, a British electrical engineer based in Nairobi, Kenya, was not new to Ethiopia when he arrived here two weeks ago. Last time he was here, he tried to develop a feasibility study for Rolls-Royce, an aviation company that had been interested in building a hydroelectric power plant with a generating capacity of 60mw at an investment cost of 75 million dollars.

It was an idea that did not go far; an attribute to the company's perception that a project not guaranteed by the World Bank (WB) was too much of a risk to bear.

Gilbert is back in Ethiopia not to get involved in the construction of a billions Birr hydroelectric dam. Seated in his temporary container-cum-office inside the compound of the Nazareth substation of the Ethiopian Electric Power Corporation (EEPCo), in Adama town, 99Km east of Addis Ababa, he was to start a brief stay to run the operation of generating electric power from a battery of generators installed in the past two months by Aggreko, a British company.

In the middle of an interview on Thursday morning, January 29, 2009, Gilbert was briefly interrupted by a bleep from his mobile and, looking down, he breathed a sigh of relief. It was a text message from a staff member of Watt International Plc, a local agent of Aggreko, alerting him that a switchboard had arrived at Bole International Airport. It is a replacement for one of two switchboards damaged en route to Adama, while being transported by truck from the Port of Djibouti.

A containerized electric installation, it is a switchboard for one of the 75 units brought into the country over the past three months, on rental for six months. These units comprise about 46 diesel generators permanently fixed inside containers, and manufactured in a plant in Dubai, United Arab Emirates UAE) by a Lincolnshire (UK) based company. These brand new "Stamford" generators are temporarily installed inside one of the 120 substations of EEPCo in Adama, to generate 30mw power for the next six months.

"We may probably stay a little longer," Gilbert, operations manager of the diesel generators at Nazareth substation, told Fortune.

If this is uncertainty on how long he is staying, the reasons for this are widely shared by those in charge of the country's power generation and distribution business. And if there is anyone overly optimistic that the gap in the nation's ability to generate power enough to meet the demand could be accomplished in the next six months, it is Alemayehu Tegenu, minister of Mines and Energy. Speaking to an audience at the Ghion last week, he put his hope on the start of power generation from Tekeze Hydro Dam, beginning the next major rainy season.

However, others inside the company are sceptical.

"Who knows how nature will behave in the future," said a senior EEPCo official, cautious on the Minister's words of comfort.

Paul Gilbert, operation manager.

The plant at Tekeze is one of a series of hydro dams under construction, but hoped to be the earliest to start generation from its four mega turbines. The country has spent an awesome 2.5 billion Br, paid to the China Water Resources and Hydropower Construction Group (Sinohydro). Although it was originally scheduled to be completed in 2007, a geological challenge unforeseen during the project study forced Sinohydro to request an extension by a year.

However, over a year from the second deadline, the plant has yet to begin generation; this time around, blame goes to nature for failing the company to harvest a little over 1,140m above sea level water from the past rainy season. Its shortfall is 60 metres. Had water been abundant, streams flowing to Tekeze forcefully, EEPCo would have the ability to generate an additional 300mw electric power from Tekeze.

EEPCo generates a total of 814.14mw power from its interconnected (national grid) and self connected systems; but hydropower accounts for 98pc of its total generation capability. This hardly satisfies the growing demand for power that is increasing by 21pc annually. This growth has led to the current power generation deficit estimated to reach between 80mw and 120mw.

This is not the first time EEPCo is confronted with a deficit in power generation. In 2003, it bought diesel generators now installed in Dire Dawa (40mw), Awash Sebat (30mw), and Kaliti (10mw). This was in addition to a nationwide power shedding scheme the company had applied for months.

The company is doing neither of the two now: There is no officially announced power shedding programme as in the past, although EEPCo switches off its button during morning peak hours (between 9:00am and noon) and late in the afternoon (between 6:00pm and 8:00pm). It is part of an effort to put hold on the supply side.

At the same time though, EEPCo's managers have decided to rent diesel generators for the first time in the corporation's 52-year history. They believe it is much cheaper and sensible to rent than buy to address what is deemed a short-term problem.

Foreign companies were delighted to respond to EEPCo's publicly announced tenders. Aggreko outbid the American APR Energy and the Kenyan-Chinese consortium, Encom International, to install and operate 41 diesel generators with a net power of 30mw, to be fed into the Nazareth Substation.

Aggreko has agreed to be paid a total of 220.1 million Br - both in Birr and foreign exchange - for its help to operate the temporary station for six months. EEPCo will provide 800,000 litres diesel bought from the National Oil Company (NOC) of Ethiopia, for 180 million Br.

The scenario inside the Substation was busy last week, with civil work still in progress to build beds for two plastic depots each with the capacity to hold 100,000 gallons of diesel. Electrical engineers, mainly from India, were testing the first section with one of the two switchboards already in place on Thursday. Although delayed by a few weeks from the original schedule, the engineers appeared to be satisfied for they have tested their equipment, and were able to generate two megawatts power the night before.

This field of generators in Adama, rented from a British company, are seen as a short-term relief to the power deficit EEPCo suffers; they start operating today adding 30mw power to the national grid.

"Less than three weeks ago, this was a muddy place," said Gilbert. "We have now turned it to a temporary power generating station."

If the site in Adama has transformed into a clean mini-power generating plant, the other site in Bishoftu (Debre Zeit Substation) still remains muddy, with graders and other earthmoving machinery shuttling up and down, levelling the soil. Awarded to Encom International for 230.63 million Br as a rental cost, the site has a long way to go before it starts generation of an additional net 30mw power EEPCo is expecting. The generators, transformers, switchboards, and monitoring panels have arrived at the Port of Djibouti, and await transportation into the site.

When completed at the end of February 2009, EEPCo will have to provide the 100,000 gallons diesel fuel paid with a projected budget of 180 million Br. The selection process for the oil company that will supply the diesel is still in progress, according to company officials. NOC and YBP are bidding neck to neck.

Unlike its substation in Adama, the manner in which EEPCo came to acquire the additional plot adjacent to its own substation has yet to come clean. Displaced farmers have been complaining bitterly about insufficient compensation for the loss of their plots and the environmental damage the temporary power station will leave behind.

Three farmers in Kajima Kebelle, on the outskirts of the town of Bishoftu, 45Km south east of Addis Abeba, have been temporarily displaced from their plots.

Alemayehu Girma, 48, and a father of three, is one of them. He will have to stop growing teff, wheat and sorghum, not only for the coming six-month when the temporary station is scheduled to stay, but also for a longer period because, according to estimates of experts from the zone's agricultural bureau have the plots will not be suitable for farming for the next three years.

The compensation that will be paid to these farmers - one of whom is a woman - is 7,000 Br each for the two and 2,000 Br to the farmer whose plot is smaller, neighbours told Fortune.

Alemayehu demands more than a mere increase in the compensation amount, although this is a demand EEPCo's officials told him on Thursday it would be worked out following his appeal. He could not comprehend how he lived all his life besides a substation that feeds electric power to far away places while his own village is condemned to darkness.

"I feel like we hold the torch for others," Alemayehu said. "If you had come to this village at night, you would have seen how dark and gloomy it is."

The trouble is that Kajima Kebelle is yet to be incorporated into the municipal territory of Bishoftu. This undermines the prospect of his village getting electricity; if it is not part of the town's administration, it has to wait until such time that EEPCo succeeds on its effort to cover 50pc of the country with electricity through its rural electrification or universal access programmes. It has now managed to improve the coverage from 17pc a few years ago, to 33pc now.

For farmers such as Alemayehu across the country to be provided with electricity, EEPCo has to increase its generation capacity enormously. It is trying, with at least five plants, including Tekeze, which are under constructions. When all these are finalized, the nation will have a total generation capacity of 3964mw.

Nevertheless, while demand is increasing exponentially every year, the country's ability to put additional power into the national grid is severely constrained. The 30mw power to be added this week from the diesel generators in Adama is the first addition in five years, after Gilgel Gibe hydroelectric plant that was inaugurated in February 2004; it generates 184mw power.

But, experts project that for a nation whose annual demand for electricity of 21pc is much higher than the five per cent projected a few years ago, the chances for EEPCo getting back to square one is inevitable. They advise the government to initiate the construction of new power plants almost every year, and not lose opportune time in between. There is a gap of one year since the government initiated a new project to at Fincha-Amerti Neshi, a dam on Neshi River, in Oromia Regional State, projected to generate 100mw.

Such gaps in initiating new projects anymore years and the continuous surge in demand could pose a long term challenge to EEPCo's much hyped desire to export power to neighbouring countries. Minister Alemeyehu promised at the Ghion-meet that under no circumstances would power be exported to other countries before domestic demand is fully satisfied.

Even after the start of generation from Tekeze, EEPCo will still continue renting diesel generators. That there will soon be public tenders to select companys to install them in Mekanisa and Gofa is a good indication of the severity of the shortfall, if not a good signal for Gilbert to contemplate staying in Ethiopia much longer than the six-month stint he is now here for.

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