27 May 2016

Ethiopia Receives World Bank Support to Expand Access to Electricity

press release

Washington — The World Bank Board of Executive Directors approved a $200 million International Development Association (IDA)* additional credit to improve the reliability of the electricity network and services in Ethiopia.

The past decade has witnessed a remarkable achievement in Ethiopia's electricity sector. Between 2005 and 2012, electricity services were spread to 7,000 towns and rural village from the initial 648, and the number of electricity customers reached over 2 million from 800,000 at the beginning of the period. Accordingly, demand for electricity grew at more than 15 percent per year. In order to accommodate the increasing power needs, the Government of Ethiopia (GoE) focused on expanding power generation capacity, which tripled within a decade (from about 850 MW to above 2,000 MW) and may reach 4,000 MW by the end of 2016.

"Our support will scale up existing achievements and improve the quality of service by strengthening and expanding the electricity transmission and distribution networks" said Issa Diaw and Elvira Morella, World Bank Task Team Leaders of the Project. "It will also support the Ethiopia Growth and Transformation (GTP II) goals by providing access to modern energy services to households in and beyond the grid coverage."

The project will directly benefit over 9 million Ethiopians, of which 50% are women. It will connect 150,000 households to the grids, offer access to 2 million households to modern off-grid energy services and enhance the reliability of the electricity network in the project areas. This credit will also finance expanded investments in on-grid electrification, scaling up of credit facilities for the financing of stand-alone renewable energy systems and energy efficient products and additional technical assistance in support to sector modernization.

While major strides have been made in expanding generation capacity, the extension of transmission and distribution infrastructure has not kept up with demand growth. Recent electrification efforts have rightly focused on expanding network coverage, but connectivity has lagged behind due to a number of reasons including the absence a robust program and dedicated resources to roll out connections. Expanding electricity supply and access is critical to the structural transformation of Ethiopia's economy and society. Ethiopia's first Growth and Transformation (GTP I) aimed to increase the number of electricity customers to 4 million while the GTP II has set an even more ambitious target - to reach 7 million customers by 2020.

The World Bank's International Development Association (IDA), established in 1960, and helps the world's poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people's lives. IDA is one of the largest sources of assistance for the world's 77 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.3 billion people who live in IDA countries. Since 1960, IDA has supported development work in 112 countries. Annual commitments have averaged about $19 billion over the last three years, with about 50 percent going to Africa.

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