Tuesday, May 28, 2024
BusinessEEP exits electric power generation sector

EEP exits electric power generation sector

To concentrate on plant operation management

The Ethiopian Electric Power (EEP) has made it public this week that it is formally ceasingits power generation operation and will focus on the management of the existing plants, transmissions linens and substations.

Abraham Belay (PhD), CEO of EEP, told employees during a meeting on Thursday that in accordance to the ongoing reform activities the organization has initiated, EEP would no longer be involved in developing power generating plants. It will rather concentrate on managing the operations of the plants and power transmission lines.

According to the CEO, the organizational reform measures undertaken at the EEP required overhauling where financial and human resources were found to be mismanaged. Hence, the state owned EEP will no longer be involved in power generation activities. Accordingly, the existing and future power projects will be handled by private companies.

The highly indebted power company is now reinitiating power projects across the country. The Great Ethiopian Renaissance Dam (GERD) was one of the contentious mega projectsthe EEP has been managing over the past eight years and still remains at 67 percent completion. The project, so far, has consumed USD 3.5 billion (at current bank rate of USD 1 for 28).To be exact, 98 billion birr has been spent for the construction beyond the initial budget planned. It is to be recalled that GERD is to generate 6,000 megawatts. Currently, the project has been restructured and pre-generation of 800MW is underway to be completed in two years withthe overall project scheduled to be finalized by 2022.  

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Reverberating GERD, however, is not the only task the new leadership of EEP, under Abraham has succeeded to venture on. The USD 452 million Genale-Dawa-III hydropower plant,is also the other delayed project on back of unsettled compensations in relation to the project. Abraham said that 2.9 billion birr has been paid to communities relocated from the project site and the dam, has now started to be filled with water.

In addition to that, the controversial Reppi waste-to-energy plant will also resume operations despite disagreement with the contractor, Cambridge Industries. According to EEP, 95 percent of the construction of the plant has been finalized and within three months, the plant is said to initiate power generation. However, whether the plant will generate 50MW is not certain as EEP argues, while Cambridge Industries said that the initial agreement was to generate 25MW power.

While such modalities have been outlined, EEP has requested the government to at least partially share the external debt burdenhanging over its operations over the years. In addition to this, domestic creditors have also agreed to restructure the repayment periods, Abraham said. Currently, EEP is only able to repay interest rates than principal credits it owes to both domestic and external creditors. The company, as many state-run enterprises, has been barred, and couldnot access commercial or non-concessional loans. 

In his address to members of the parliament, earlier this fiscal year, Prime Minister Abiy Ahmed (PhD) mentioned that EEP is liable for close to 200 billion birr outstanding external and domestic debt.

Under the purview of the public private partnership (PPP) framework, there are 13 major hydro and solar power projects slotted for feasibility studies to be conducted by EEP. These projects will require an investment of close to USD six billion with the private sector financing the projects. 

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