13 May 2012

Ethiopia: Govt Secures WB Loan for Kenya Link Substations

Photo: Ofeibea Quist-Arcton/
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A high-level delegation from the Ethiopian government has secured a loan for the construction of substations for the Ethiopia to Kenya power interconnection project from the World Bank (WB) last week, Fortune has learnt.

Confirming that the Bank has approved the loan, Haji Mohammed, head of Public relations for the Ministry of Finance & Economic Development (MoFED) declined to disclose the amount.

The project aims at providing power to Kenya from the Gilgel Gibe Hydropower Project Scheme, after the two countries signed a memorandum of understanding (MoU) in 2006.

To secure a loan for the substations, Mihret Debebe, CEO of the Ethiopian Electric Power Corporation (EEPCo) and two other delegates from the MoFED were in Washington DC where the bank is headquartered negotiating with officials. A loan agreement between the two is to be signed this coming July 2012, according to Haji. The project will affect 1,165 households with a population size of 5,743, in which farmlands are to be affected mainly, according to a recent action plan made by the two countries' power companies. For the damages, the amount estimated for compensation stand at 10 million dollars.

The two substations are to be constructed in Wolayta Sodo in Southern Regional State, 382km south of Addis Abeba, and in Suswa, Kenya.

The project is planned to be kicked off next year, to start the supply of 400MW of electricity to Kenya by 2016. The current electricity demand of Kenya stands at 1,991MW while its supply is 1,439MW, this demand, however, is expected to grow to 2,500MW by 2015, according to the Kenya Electric Generating Company limited.

The African Development Bank (AfDB) has already approved 231 million dollars for the construction of a high voltage transmission line with a total length of 1,066km, of which 612km are to be located in Kenya.

Ethiopia has already started supplying electricity to Djibouti charging 70 dollar cents for a kilowatt-hour with an initial agreement to supply 200MW. Financed by the Word Bank at 41 million Br, the state owned utility EEPCo is also preparing to sell 100MW of power, for a start, to Sudan in the next few months.

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