Addis Fortune (Addis Ababa)

7 February 2011

Ethiopia: Project X - Turning the Energy Tide

The Ethiopian Electric Power Corporation (EEPCo) has launched the construction of a hydroelectric generation plant projected to have a generation capacity of 6,000MW, three times more than what all its dams currently operating are producing, reliable sources disclosed to Fortune.

Known among senior managers of the EEPCo, its board of directors, and top government officials as Project X, this brand-new project forms part of the three dams the corporation plans to initiate this fiscal year, in its bid to meet the 10,000MW generation plan the administration of Prime Minister Meles Zenawi has envisaged in the GTP.

It is also part of the government's desire to make Ethiopia the centre of a renewable energy source in East Africa over the next five years.

"We have massive plans for power generating projects," Meles told MPs during the question time on Thursday, February 3, 2011. "At least, we will start the main, and bigger, one this year."

He was referring to Project X, according to sources at the EEPCo.

This is also a project specified in the corporation's roadmap for this fiscal year. The management has undertaken to establish a project office and sign contract agreements for Project X.

Identified at a location 40km from the Sudanese border, in Benishangul Regional State, the construction of this dam on the Abay River has been awarded to Salini (Costruttori) Construction, according to sources.

This is the same Italian construction company that built Gilgel Gibe II (420MW) and Tana Beles (460MW).

From left: Mehiret Debebe, CEO of EEPCo; and Alemayehu Tegenu, minister of Water and Energy; stand with Prime Minister Meles Zenawi at the inauguration of Tekeze Hydroelectric Plant on November 14, 2009.

Girma Birru, former minister of Trade and Industry (MoTI), and board chairman of the EEPCo, signed the contract as soon as the directors agreed on Salini, before he left for Washington DC where he will serve as Ethiopia's special envoy to the US, these sources revealed to Fortune.

The managers of Salini have already started mobilisation works by sending heavy-duty construction machinery to the site and building camps, eyewitnesses told Fortune.

The EEPCo's senior management board, under Mehiret Debebe, appointed two of its experienced staff members as project managers for the new dam that insiders say could be renamed the "Millennium Project," two weeks ago.

Semignew Bekele and Kifle Horo served as the EEPCo's project managers during the construction of Gilgel Gibe II and Tana Beles dams, respectively. They are responsible for Project X's electro mechanical and civil engineering works, respectively.

"The project is so gigantic, the corporation felt it should be managed by two of its proven senior staff," said a knowledgeable expert, demanding anonymity due to the sensitivity of the project before the EEPCo officially disclosed its plan.

Salini is believed to have taken the hydro component of the project, according to reliable sources. The electro mechanical part of the project may be awarded to a Chinese company in order for the Ethiopian government to solicit financing from the Chinese government, these sources claimed.

Ethiopia now has capacity of producing around 2,000 MW from hydropower, geothermal and diesel. Gilgel Gibe and Beles hydropower projects supply 47pc of the country's Electricity power.

Forecasted to take an average of five years to complete, a project of this size is estimated to consume the total Federal Budget that was approved for this fiscal year by Parliament, experts said.

However, the EEPCo's managers were reluctant to comment or disclose any information about the nature and progress of the project, due to concerns over premature disclosure.

The successful completion of this project is hoped to increase the current electric power provision capacity of the corporation to 8,000MW. This will help the EEPCo to realise its ambition of meeting the 24pc demand for power if the economy grows at an annual rate of 11pc, as projected in base case scenario, and 32pc if the economy expands at a best case scenario rate of 15pc, according to the roadmap of the corporation.

The EEPCo plans to enhance its generational capacity by 255pc; transmission capacity by 155pc, to 8,495km; and transmission lines from 25,000km to 126,038km. Achieving this plan will enable the corporation to increase the number of its customers from 953,007 to nearly 1.9 million, and towns with access to electricity to 5,163, it projected.

The EEPCo plans to finalise the construction of three dams launched a few years ago and start the construction of five new projects, according to the roadmap. While the corporation wants to see the completion of the project at Finchaa-Amertineshe in March 2011, the new hydro dam projects include Geba, Chemoga Yeda, and Genale Dawa III.

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