7 July 2013

Ethiopia: New Agreement Enhances Ethio-Djibouti Power Exchange

Ethiopiawill sell electricity to seven neighbouring countries once the Grand Renaissance Dam project is complete

Mohamed Ali Youssouf,left, minister of Foreign Affairs & International Cooperation of Djibouti and Tedrose Adhanom (PhD), minister of Foreign Affairs, signed the agreement that will enable Ethiopia to export additional electric power to neighbouring Djibouti.

Ethiopia and Djibouti concluded an agreement for a second two billion dollar electrical power system interconnection, during the 12th Joint Ministerial Meeting.

The signing ceremony was held last Wednesday, at the Addis Hilton Hotel, by the Ethiopian Foreign Minister Tedrose Adhanom (PhD) and his Djiboutian counterpart, Mohamed Ali Youssouf.

The transmission line, which covers areas from Semera, inEthiopia'sAfarRegionalState, toJaba,Djibouti, will be a 230kV electric power transmission project, similar to the first transmission line. It will allowDjiboutito import between 35Mw to 70Mw of electricity fromEthiopia, according to the agreement.

Djiboutiwill, in actuality, not import more than 50Mw of electricity, according to the Ethiopian Ministry of Foreign Affairs.

"Though we are interested in selling electric power to different countries in the horn, includingDjibouti, there is sometimes higher electricity consumption in the Dire-Dawa area. Because of this, they would most likely import only up to 50Mw," an official from the Ministry, who requested anonymity, told Fortune.

Both countries will be tasked with seeking financing for the project, says Suleiman Dedefo, Ethiopian ambassador toDjibouti.

"We have regularly been doing the task for them. But now, we are expected to do it together," he added.

Eighty percent of the financing for the first power transmission line, which cost 1.5 billion dollars to construct, was secured from the African Development Bank (AfDB), with the balance being contributed by the two countries. The line will meet 60pc ofDjibouti's power demand, withEthiopiaearning up to 1.5 million dollars a month from the exchange, at a rate of 70 dollars a KWH.

The joint ministerial meeting was also intended to consolidate and guarantee port utilisation between the two parties. The agreement allows Ethiopian Shipping & Logistics Service Enterprise (ESLSE) to continue operating all port activities fromDjibouti's shores.

The Djiboutian, however, want to ensure that they receive their share of the transport service.

"Whenever there is a tender, we have to take our sizes into account. We still need a 30pc quota," Mohamed Aden Cheikh, director of Operations at the Djibouti Ports & Free Zone Authority, told Fortune.

Ethiopia, however, is adamantly resisting the quote put forth byDjibouti.

"We cannot do that and there can in no way be an excuse over it," Suleiman told Fortune.

The two parties have also reached an agreement to develop the capacity ofDjiboutiPort, which is becoming very crowded, Suleiman added.

Until 2008, the transit transport system betweenEthiopiaandDjiboutiwas of a uni-modal nature. All Ethiopian cargo in transit through thePortofDjibouti, whether import or export, was dealt with in the same manner - stuffed, unstuffed, loaded and, finally, unloaded at the port. An overhaul of the difficult and time-consuming system was long overdue, according to Temesgen Yihunie, Maritime Logistics Officer with the ESLSE.

"We are exerting all our efforts to keepEthiopia's import and export happening throughDjibouti," said Yacin Houssein Douale, director of Bilateral Relations with the Djibouti Ministry of Foreign Affairs and International Cooperation.

Three new ports would be built inDjiboutiover the next 10 years, Yasein told Fortune.

"Our life is interdependent and our destiny is intertwined," Tedrose said.

At the moment,Ethiopia also exports electric power to Sudan- with the World Bank providing a 41 million dollar soft loan to the Ethio-Sudan transmission line project for the test run of the electric power exporting systems between the two countries, last year. After the completion of the Grand Ethiopian Renaissance Dam,Ethiopia plans to export power to seven neighbouring countries, including Egypt,Sudan,Kenya,Uganda,Somalia, South Sudan and Djibouti.

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