The government has identified seven hydropower projects to be implemented by independent power producers in a public-private partnership (PPP) model. Out of the seven hydropower projects, Ethiopian Electric Power (EEP) selected four that require amendments to their previous feasibility studies, while three of them need new feasibility studies.
Expected to generate 2,300MW of electric energy, the projects are located in Amhara, Oromia and Somali regional states and require a total of 4.3 billion dollars in investment.
Chemoga Yeda is a 280MW hydropower project located in Amhara Regional State. Geba I and II (395MW), Halele & Worabesa (420MW), Birbir (464MW) and Dedesa (300MW) are situated in Oromia Regional State. Genale Dawa-GD5 is a 100MW project slated for Somali Regional State, while Genale Dawa-GD6 is a 246MW project spanning both Somali and Oromia regional states.
The projects join eight solar power projects that are in the pipeline slated for private sector participation, costing close to 900 million dollars and expected to generate 1,100MW of power. These solar projects were approved by the Board of Private and Public Partnership, which is comprised of 10 members from the Ministry of Finance, the National Bank of Ethiopia, the Ministry of Water, Irrigation & Electricity and two representatives from the private sector.
The feasibility study of the seven projects, which includes a resettlement action plan, as well as an amendment to previous environmental and social impact assessments, is expected to cost up to five million dollars, out of which one million dollars was granted from the African Development Bank.
A tender to hire a company to conduct a feasibility study was floated seven months ago. During the evaluation process, EEP will shortlist six companies from the 37 companies that have participated in the bidding process.
The shortlisted companies will be sent to the AfDB, which will be selecting the winning company, according to Bizuayehu Tesfaye (PhD), director of Energy Resource Development at Ethiopian Electric Power.
“In three months, the result of the evaluation will be unveiled, and the consultant will be hired to start the job,” said Bizuayehu.
Revising the feasibility studies of the four hydropower projects could take up to half a year, while upgrading from pre-feasibility to feasibility will take up to one and a half years.
The winning consultant will also prepare Power Purchase Agreement and Implementation Agreement structures, prepare bid documents and participate in the bid evaluation together with EEP and the PPP Director General at the Finance Ministry.
The Ministry of Finance will review the tender document, float the bid for the developer firms and participate in the evaluation with EEP.
The aim of the revision for the four projects is to harmonise the projects with existing situations, as well as change the modalities of the projects from engineering, procurement & construction (EPC) that have been started by the government to PPP models, according to Bizuayehu.
In the EPC, the contractors carry out the detailed engineering design, procure equipment and materials, and deliver a functioning facility or asset to their clients. However, in PPP models, the public agency and a private sector entity collaborate for mutual benefit and ownership.
The need to devise the PPP policy was arrived at due to shortages in government financing to achieve the goals set out in the Second Edition of the Growth & Transformation Plan, according to Haji Ibsa, communications director at the Ministry.
As the power demand of the country escalates due to the growth of population, industry and other factors, more power generation becomes a necessity using all the resources the country has, said Tigabu Atalo, a consultant in the energy sector.
Developing hydropower has a high social and environmental impact, and there will be high risks and uncertainty factors as the development would take longer, up to nine years, and there are possibilities of economic, political and social changes and regulatory variations, according to him.
"There must be a stable regulatory environment and risk mitigation plan to create confidence in the developers," Tigabu suggested.
eepBp Take Away:
Although Ethiopia claims a generation capacity of about 4300 MW, all the power plants produce only a little less than 2000MW( generate a maximum of 2600MW with an overall loss of about 700MW) which is a lot lower capacity to meet the growing energy demand.
So, it is imperative for the country to invest in all the available resources taking in to account the required energy mix to meet the current and future demands. Technically, medium size power plants do have greater aggregate load factors and it is beneficial to generate more energy than the bigger alternatives.
Given the PPP model is still at an entry level(especially for hydro), it is important for the country to conduct feasibility studies by its own cost and through independent studies to attract the private sector, the feasibility studies covering all the domains including environmental, social economical, regulatory, land related issues and the mitigation options.