The African Development Bank (AfDB) has approved a third round loan agreement of US$115 million to help finance the construction of the cross-border electricity transmission line project between Ethiopia and Kenya.

In September, the AfDB approved the second phase of funding for the project with US$348 million loans to Ethiopia and Kenya. The US$1.26 billion project is a 1,068 km high-voltage transmission line with a power transfer capacity of up to 2,000 MW.

According to the AfDB, the project will position Ethiopia as the main powerhouse and Kenya as the main hub for power trading in the East African region; and on completion the project will promote power transfers, economic trading and regional integration.

It will further contribute to the social and economic development of the countries in the Eastern Africa Power Pool. The Pool is co-funded by the World Bank, the French Development Agency, and by the Governments of Ethiopia and Kenya, and it will ultimately connect the power grids of five East African countries: Kenya, Rwanda, Uganda, Burundi and the Democratic Republic of Congo.

The completion of the Ethio-Kenya power line will enable Ethiopia to start substantial electricity exports to Kenya. It currently exports electricity to Djibouti and Sudan. Overall, Ethiopia plans to invest over US$12 billion to increase its hydropower generating capacity from the current level of 2,000 MW to 10,000 MW by 2015, and then to over 40,000 MW by 2035, making the country Africa's largest power exporter.