(Vivien Foster, 2019), Rethinking Power Sector Reform in the Developing World report suggests that future power sector reforms should be shaped by context, driven by outcomes, and informed by alternatives with a clear departure from the normative 1990s power sector reform prescription which comprised a package of four structural reforms: Regulation (through the creation of an autonomous regulatory entity); Restructuring (entailing corporatization and full vertical and horizontal unbundling of the utility); Private sector participation (particularly in generation and distribution); Competition (ultimately in the form of a wholesale power market).
(AfDB, 2019), Revisiting Reforms in the Power Sector in Africa, asserts that the power sector in Africa still largely retains the traditional integrated monopoly utility structure, although many have included IPPs, despite the standard model Prescription of the reform targeting all segments of the power sector value-chain in Africa, and in very different ways pointing that the standard model reforms generally did not prioritize social and political goals of expanding access to electricity and clean energy sources, nor improving equity or affordability conditions.
Ethiopia being among the laggards in terms of implementing the standard policy prescription, it has taken the first few steps including setting up an independent regulator and vertically unbundling the state monopoly in to two separate utilities since the beginning of 2013. The reform process continues to unfold albeit a slow and cautious pace.
(A high Level PPP Development Assessment Outcome)
Public private partnerships have become new normal in today’s business landscape across many countries. If properly managed, governments could benefit in mobilizing financial resources, technical knowhow, innovation and efficiency gains from the private sector in the delivery of public goods and services by effectively partnering with them.
Since 2017, Ethiopia has publicly announced that it would leverage PPPs as one of its strategic tools in its development agenda. The accompanying thesis make an assessment of the theoretical and historical developments of PPPs in general and its stage of development and application in the Ethiopian context.
In the assessment, it is learned that the government of Ethiopia has committed resources by formulating a PPP policy, enacting a separate PPP law (Proclamation no 1076/2018) and outlining the institutional roles and responsibilities albeit an early development stages demanding further clarity and maturity.
In April 2019 Siemens signed a Memorandum of Understanding (MoU) with the Investment Commission of Ethiopia, to address the country’s energy and infrastructure sector challenges, to assist the government, stabilize and expand the existing grid infrastructure and explore island solutions for industrial hubs/parks and micro grid solutions for remote villages. The Ethiopian Governments Growth and Transformational plan II has a goal to achieve universal electricity by 2025. Currently 56% of the Ethiopian population does not have access to electricity.
At the G20 summit, Siemens committed to supporting and contributing to Ethiopia’s Growth and Transformation Plan II and its objective of electrifying Ethiopia. Siemens will install a solar-hybrid plant in Sodo supplying reliable, sustainable and affordable electricity to the FruitBox farm as well as to the surrounding communities. The G20 investment Summit-Compact with Africa brings together delegates in the public and private sectors to promote German-African business relations under the compact with Africa.
“The Fruitbox Farm project is a key Siemens lighthouse project aimed at demonstrating the importance of corporates aligning to a national vision that will ultimately benefit the lives of people in different societies,” says Sabine Dall’Omo, CEO for Siemens Southern and Eastern Africa. “Government plans supported by business initiatives are essential and play a crucial role in moving economies forward and ensuring economic prosperity for all,” she adds.
This project showcases how partnerships between big corporations and small startup companies, can help yield positive results, even in remote and rural areas. The impact on locals living in Sodo will be immense. Apart from providing electricity to the Fruitbox, the project will provide electricity to a nearby school which has approximately 300 students and additionally 150 households indirectly impacting roughly 1,500 people. The project goes beyond rural electrification by creating 200 direct new jobs, even in challenging environments. Through this initiative students from surrounding areas will be trained on how to operate and maintain the microgrid and integrating the agricultural value chain through oil and juice production.
Sabine concludes, “Siemens remains steadfast in its commitment to Ethiopia. It is our duty as a business operating in the country to make positive strides, through our technology to build a better, more sustainable future for its people.”
Source: Siemens/Press Release
Following the reform program begun in 2013 including the liberalization of the generation sector, establishment of an independent regulator, unbundling (vertical) of the state power utility and enacting of a public private partnership law, the energy sector has made a fair share of its own version( in contrast to the standard power sector reform model) of reform progress in Ethiopia.
In addition to the ongoing hydro based investments/constructions still taking place ( GERD, Genale, Koisha being the few examples), key mile stones are also being made in new technologies and business models albeit a slow pace and rigor.
Utility scale ((1* 100MW, 2*125MW) solar projects have been awarded to IPP developers and few more are in the tendering stage,