7 June 2014

Ethiopia: AU, Reykjavik Geothermal Sign Over U.S. $5.5 Million Deal to Generate More Power in Ethiopia

The African Union Commission (AUC) and Reykjavik Geothermal last week signed a grant agreement for financial support totaling USD 5,594,821 to drill two-reservoir confirmation wells at the Reykjavík Geothermal ehf owned by Corbetti geothermal prospect located in Ethiopia.

The grant, which was signed through AU's Department of Infrastructure and Energy, was said to be aimed at alleviating infrastructure requirements needed for proper project implementation. The signing ceremony was held at the Grand Hotel in Reykjavik, Iceland on May 26, 2014 at a Donors' Coordination meeting held by AUC to mobilize financial and technical support to the Regional Geothermal Programme as well as the Geothermal Risk Mitigation Facility (GRMF).

The GRMF was established by the AUC, the German Federal Ministry for Economic Cooperation and Development and the EU-Africa Infrastructure Trust Fund in cooperation with the German government-owned development bank, KfW. The objective of GRMF is to encourage public and private investors (project developers) to develop geothermal prospects for power generation in Eastern Africa by providing cost-sharing grants for surface studies and drilling of reservoir confirmation wells. Fifty million euros, (approx. 62 million USD), has been made available for such grants. An increase of the fund is also planned.

The Minister of State of Mines of Ethiopia, Tewodros Gebregziabher said, "We are very happy with Reykjavik Geothermal for the signing of a project which will be of great benefit to the people of Ethiopia."

The AUC Commissioner for Infrastructure and Energy Elham M. A. Ibrahim (Ph.D.), in her remarks expressed her gratitude for this achievement in geothermal development, which will in turn improve the quality of life of the people of Ethiopia. Thanking all stakeholders for their on-going support, she wished other eligible countries success in the coming application rounds. Thorleifur Finnsson of Reykjavik Geothermal indicated that the Corbetti project would contribute an additional 20 MW to the Ethiopian power grid by the end of 2015 as a pilot project, with expectations to extend to generate 300 MW when the Corbetti project is completed.

GRMF provides financial support in the form of a grant to winning applicants for surface studies and exploration drilling and testing programmes on various levels.

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