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Ethiopia has signed a $4 billion contract for the construction of two geothermal power plants, which will be operated by the country’s first privately-owned utility.

The Corbetti and Tulu Moye plants, to be located in the Rift Valley, are expected to reach completion in eight years and will produce a combined 1,000MW of power.

Commenting on the deal, Azeb Asnake, chief executive of state-run Ethiopian Electric Power (EEP), said: “No doubt the success of this effort will have a significant impact in the country’s future economic well-being.”

The project’s equity investors include the Paris-based asset manager Meridiam, as well as the Africa Renewable Energy Fund and InfraCo Africa - funds that focus on infrastructure.

As Ethiopia’s first privately-owned utility, the project will be operated by the developers for a period of 25 years, Reuters reported.

Private investment

Reuters reported that the Ethiopian government has suggested that the nascent sector could be a model for increased private investment.

“Going forward, the government recognises the added value to be gained by working in partnership with the private sector, specifically in sharing with it the burden of investment for large-scale power generation,” said Seleshi Bekele, minister of water, irrigation and electricity.

Improving power network

In earlier news, the country secured two sets of funding from the African Development Fund (ADF) aimed at boosting Ethiopia’s electricity infrastructure.

The funds include $83.64 million African Development Fund (ADF) loan and $14.15-million ADF grant to finance part of the cost for the Addis Ababa Transmission and Distribution System Rehabilitation and Upgrading Project (AATDRUP).

In addition to the Bank's contribution of $97.79 million, the Japanese International Cooperation Agency and the government of Ethiopia will contribute $90.65 million and $20.59 million, respectively, to finance the total project cost of $209.03 million. Read more…

The project, which is expected to be completed within the next three years involves:

  • Rehabilitation and construction of 545 km of medium voltage lines,
  • Replacement and installation of 582 distribution transformers and 13 primary substations,
  • And establishment of the supervisory control and data acquisition system (SCADA) for the operation/control.

It also includes upgrading of nine existing high-voltage substations and the construction of 3.8 km of 132-kV double-circuit overhead line.

 

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