After completion, the project will enable Djibouti to import 60MW of energy
The Indian government is finalising a 100 million dollar pledge for the Ethiopia and Djibouti power interconnection line, which will transmit 230kV of electric power to Djibouti.
The line will extend from Semera, Afar Regional State to PK12 substations in Djibouti. It will enable Djibouti to import 60MW of electricity from Ethiopia, as well as help the nation earn a total of 50 million dollars annually from exporting power to Djibouti.
The feasible study of the project was completed by Tractebel Engineering S.A, one and half century old Belgian engineering company with a presence in 33 countries and 1,600 staff members. Tractebel conducted the feasibility study with a financial backing from the Kuwait Fund.
The extended line, which is going to be a double circuit, will be in Djibouti's territory for the first 190Km, while the remaining 103Km will lie in Ethiopia. The power channelled to Djibouti will be sourced from Kombolcha town power supply point.
Out of the total finance, five million dollars will be used for extension, 4.2 million dollars for the construction of substations in Nagad, and the remaining 90.8 million dollars will be used for a line installation and construction of substations.
Though Kuwait has shown an interest to fund the project, the two countries are now negotiating with India to secure the finance according to sources close to the case.
The agreement between the duo will be a surplus energy purchase agreement, where Ethiopia will sell the surplus power available after consumption. Ethiopia has an estimated potential of 45,000MW hydropower, 10,000MW of geothermal energy and 1.3 million megawatts of wind power.
The country's generating capacity is based mainly on hydropower reservoirs- 94pc of the total- as nine of its major rivers are suitable for hydroelectric power generation. Last year the country produced a total of 12.5 billion kWh.
The two countries are also working on drafting the Power Purchase Agreement (PPA) before launching the project. Ethiopian Electric Power (EEP) is handling the deal.
The agreement for the project between the two countries was signed in July 2013, during the 12th joint ministerial meeting of the two states in the presence of foreign affairs ministers of the two nations.
The second transmission plan came into the scene as Djibouti needs reliable electric power to meet the growing demands following the massive population growth and construction of ports, according to a source close to the case.
Djibouti runs seven ports and is planning to add three more. It also served 70pc of Ethiopia's import-export activity.
For the first and existing transmission line, African Development Bank (AfDB) has pumped in 95 million dollars. The 283Km Ethiopia-Djibouti transmission lines were officially inaugurated in October 2011. The 230kV line enables Djibouti to import up to 60MW of electricity, allowing Ethiopia earn an estimated of 1.5 million dollars a month. It also eased Djibouti's reliance on fossil fuel powered plants and generators.
AfDB pledged 43 million dollars for Ethiopia and a loan of 54.79 million dollars to co-finance the project with the then Ethiopian Electric Power Corporation (EEPCo) and the Ministry of Economy, Finance & Planning Electricité de Djibouti (EdD).
Seven years back, the country exported 331GWh of electrical energy, but this figure almost doubled to 700GWh last year. The revenues the nation has been generating from exporting electric power has likewise grown to 73.4 million dollars last fiscal year.
Neither the Indian Ambassador to Ethiopia and Djibouti nor officials from Djibouti Ministry of Communications responded to queries via email from Fortune