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    BusinessTipping the power balance

    Tipping the power balance

    Date:

    Six years ago, Ethiopia announced a project of high importance to the country. It was virtually what Ethiopians have been writing songs for centuries namely constructing a dam on the Blue Nile. Currently, at 56 percent, the dam looks to have reached a critical stage where the three countries – Ethiopia, Sudan and Egypt – have to find in themselves to agree on a timeframe to fill the colossal Grand Ethiopian Renaissance Dam (GERD) reservoir, writes Yohannes Anberbir.

    A woman, who seems to be in her late forties and is dressed in ordinary Ethiopian attire, entered into a local bank and looked around. It was last week; five to seven people were lined up in front of every customer service window of the bank where all seats were occupied. The same thing was going on upstairs. It was in the busiest branch of Commercial Bank of Ethiopia (CBE), located around Arat Kilo in front of Menelik Secondary School. People were rushing in and out of the bank. The woman, who seems to be confused with the crowd, slowly approached to one of the marketing team members and asked to which window that she has to go to purchase a “renaissance bond”.

    Customers close by seemed captivated by the conversation. They gazed at her. It might not be wrong to guess that the woman has compelled those looking at her to think about the Grand Ethiopian Renaissance Dam (GERD) for a moment.

    It has been six years now since the construction of (GERD) was launched. But up until now, Ethiopians are still buying the “renaissance bond,” a security bond the government floated to the public aiming to raise finance for the construction of the four billion dollars flagship project.

    What the woman did last week perfectly embodies what the late Prime Minister Meles Zenawi had anticipated in 2011, as he was laying the cornerstone marking the start of the construction of the GERD. Ethiopians and those who were following the project, which was the first hydropower project on the Blue Nile, the biggest tributary to the River Nile, had no illusions regarding the financial burden the project would entail. True to form, GERD was projected to cost the country some 80 billion birr (more than four billion dollars) until completion. Well, that is the price of realizing a dream; a dream to tap into the Nile which has been left undeveloped for centuries.

    “As we will be financing several other projects in our development plan, the financial toll of this project will be a heavy burden on us,” the late Meles addressed the gathering and the entire public through a televised speech he made while laying the cornerstone in a locality called Guba, in Benishangul Gumuz Regional State.

    According to him, Ethiopia’s effort to ease the financial burden of the planned hydropower project by tapping into foreign finances went unsuccessful, leaving the country with only two options. Either to abandon the project or do whatever it takes to raise the required funds, he said on the ceremony held at Guba a town where GERD is located.

    “I have no doubt which of these difficult choices the Ethiopian people will make. No matter how poor we are, in the Ethiopian traditions of resolve, the Ethiopian people will pay any sacrifice. I have no doubt they will, with one voice, say build the dam.”

    Indeed, all Ethiopians from all walks of life have been purchasing the bond. Teachers, soldiers and civil servants provided their one month income for the construction of this huge hydroelectric power dam for two successive years. Private employees and investors including Ethiopians in the diaspora are making their contributions. GERD might be just one dam, but it is everything for Ethiopians. It is politics, because it is built on the controversial trans-boundary river, the Blue Nile. It is economy; because the government plans to export the power and generate foreign currency; and it is social because it will electrify the country’s rural part where several millions of Ethiopians are still languishing in darkness.

    “GERD is one project which has brought Ethiopians together from the very beginning. The situation is still the same. The public is strongly behind this project both in terms of its financial requirement and moral support,” Debretsion Gebremichael, Minister of Communication and Information Technology and board member of the GERD National Council, told The Reporter. According to him the public has contributed more than nine billion birr in financial support thus far by purchasing the government bond.

    Currently, eleven thousand people are employed on the project. Even simple issues as recruiting employees is viewed very seriously, the minister says. To that end, to make the project area resemble that of the federal state of Ethiopia, which is diverse in nature, the government has allocated quotas for all regions to contribute manpower as per their population size.

    According to Debretsion, the construction of the GERD has reached at 56 percent as of the start of 2017, and so far no serious problem has been encountered. Though there has been a critical foreign currency challenge at national level, the government has decided to make the project first priority.

    “We don’t have financial problems with regards to foreign currency requirement of the project,” Debretsion said.

    Initially, the project was planned to have 5,200MW generating capacity, but thanks mostly to the local contractor in charge of electromechanical aspect of the project, the Metal and Engineering Corporation (MetEC), the project was able to improve its generating capacity to 6,000 MW in the first years since construction commenced and again to 6,450MW at a later date.

    Currently, the project is approaching its final stages to start generating the first phase of electric power, the minister said.

    According to him, two generators are ready at the site to be installed soon and final preparation work is underway on the main dam, so that the water sufficient to generate power in the first phase is stored.

    The tough task ahead

    The world largest river, the Nile, which is mainly sourced from Ethiopia, touches up on ten riparian countries in the Northern, Eastern and Central Africa. Even though the river is a blessing to the riparian nations and to their populations; it is a curse at the same time. Egypt and Sudan are the only two states benefiting from the water for centuries; Egypt is by far the largest beneficiary thus characterized as “The Gift of the Nile”. For centuries the Egyptians existed and even thrived on the Nile which also gave life to their civilization which is known as one of the most notable early civilizations in the world.

    Thus, issues related with the volume of the Blue Nile, which originates from Ethiopia, is a life and death matter for Egyptians, who build their existence on the desert.

    An accord drawn up by the British in 1929 protected the exclusive right of the Egyptians to use Nile’s water. Whereas, a subsequent agreement between Sudan and Egypt in 1959 divided the water between the two downstream countries notoriously ignoring other upstream states like Ethiopia, which were contributing bigger shares to the Nile waters.

    The 1959 agreement awarded Egypt 55.5 billion cubic meters of the Nile’s 84 billion cubic meter average annual flow, while Sudan received 18.5 billion cubic meters. Another 10 billion cubic meters is lost to evaporation in Lake Nasser, which was created by Egypt’s Aswan High Dam in the 1970s, leaving barely a drop for the nine other states that share the Nile’s waters.

    In the backdrop of this historical relationship, Ethiopia did the unexpected and unveiled a project on the Blue Nile, which is to be one of the largest hydroelectric power plants in the world. The fact that this announcement come at time where Egypt was been challenged by the simmering Arab Spring fed into the already heightened controversy and political war of words between Ethiopia and the two downstream nations specially Egypt.

    In the beginning the debate was about so called “historical water right” which Egypt is purported to have over the Nile. However, this line of debate fizzled quickly and the issue become about the potential impact this mammoth power project would have on the water interest of Egypt. Guided by international water rules regarding the use of trans-boundary Rivers, Egypt started to exert its diplomatic pressure claiming that the dam will have “significant harm” on the river flow downstream. Ethiopia on the other hand, countered saying there is way to make the dam operational without causing “significant harm” on Egypt.

    This point, however, is very difficult to substantiate for both sides without observing the actual impact and it seems that the time has now come. As can be imagined everything rests on the modality with which GERD will proceed to filling its reservoir, which according to Debretsion can hold water equivalent to two fairly sizable lakes.

    “Actual power generation would entail the dam being able to hold the needed water and this is something we do in consultation with the downstream riparian nations since we have our agreements,” he told The Reporter. So, the rate at which the GERD would hold water is something that officials are discussing with downstream countries, he explained.

    The official capacity of the reservoir is around 74 billion cubic meters and how this amount is attained is the most controversial of all the issues regarding the GERD. Unofficial sources indicate that Ethiopia would prefer to fill the reservoir within a maximum of seven years. According to the same sources, this rate will not entail any “significant harm” on the downstream nations.

    Meanwhile, the position that is advanced by the Egyptians appears to be on the far end of the isle. For one, the Egyptians have issues with the capacity of the GERD reservoir. The Egyptians have repeatedly asked their Ethiopian counterparts to reconsider the size and capacity of reservoir and went to extent of reducing the capacity to low level of 14 billion cubic meters. That does not stop there; the Egyptians also anticipate a filling time of 12 years given their advice to reduce the reservoir to 14 billion cubic meters is accepted by the Ethiopian side.

     “Although we have not reached at a final agreement, we are in talks to decide in how many years we are to fill the dam. As far as, we are concerned, we have reached a critical stage in our project where the dam is completely ready to hold water,” Debretsion says.

    But, the challenge is in agreeing on a reasonable timeframe to fill the whole dam with water, he admits. According to him, the three nations need to arrive at an agreeable timeframe to fill the whole dam, possibly supported by professional recommendation by the two hired consulting firms.

    Surely, the relative position of Ethiopia and Egypt is far part from one another at this point. And this perhaps could be the single most important negotiation agenda that the three countries have to agree on. Debretsion feels the same. He said this is the most challenging task that the three riparian countries have to accomplish in the near future. 

    “The dam filling timeframe is the only factor that could affect downstream nations and we need to have consensus on that point,” he concludes. 

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