The African Development Bank (AfDB) has approved two grants totaling $83.6m to boost cross-border trade in electricity between Ethiopia and Djibouti.
The funds are made up of a $69.65 million grant to Ethiopia and a $13.93 million grant to Djibouti. Both grants are sourced from the African Development Fund, which is the AfDB’s concessional financing window.
The Ethiopia-Djibouti Second Power Interconnection project will see almost 300kms of interconnector lines and 170kms of transmission lines being constructed. A new or renovation of substations for both countries is also included in the build.
The Ethiopia-Djibouti Second Power Interconnection project is aligned with the AfDB’s East African Regional Integration Strategy Paper, which is about promoting regional infrastructure for economic transformation.
Batchi Baldeh, AfDB director of Power Systems Development, said the first interconnection line is reaching its power transfer capacity because of several developments coming online in both countries. “Such as the industrial development in the eastern part of Ethiopia, the railway line from Djibouti to Ethiopia, powered by electricity and the port expansion in Djibouti.”
The AfDB financed the first power interconnection project between the countries in 2004. This second project should build on the benefits achieved from the first over the last decade, including a 65% increase in customer connections in Djibouti and a reduction in the use of thermal generation plants from 100% to about 16%. Ethiopia earned $275m in revenue from power exports in that time.
Completing the second project should increase Ethiopia’s power export revenue and boost Djibouti’s access to reliable and affordable clean electricity. It should lower the cost of electricity in Djibouti to below $0.10 per kWh. It is also expected the access to new reliable electricity will make Djibouti a more conducive environment for businesses and job creation for youth, while lowering the country’s greenhouse gas emissions.