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After spending years studying and millions of dollars restructuring the state power monopoly, the Ethiopian Electric Power Corporation (EEPCo), the Council of Ministers dissolved the almost 60-year old corporation and split it in to two.
The new institutions, the construction division that focuses on building and managing power generating stations and the utility division that will manage transmission and distribution,are expected to make the country’spower supply more efficient and reliable.
EEPCo’s restructuring has been a work in progress for a long time. EEPCo, along with foreign consultants, has spent years researching ways to make the power utility more efficient.
“The restructuring will make the company more efficient while at the same time allowing everyone to keep their jobs, in addition to creating 4,000 additional jobs to keep up with all of the work,” Debretsion Gebremichael, Board Chairman of EEPCo, told the management of the corporation while announcing that it had decided to dissolve EEPCo as of December 10, 2013. “No more EEPCo” Debretsion said.
The new plan calls for EEPCo to spread out and diversify by making more power plants and developing ways to distribute the power more easily and efficiently. Based on the new scheme, the corporation will separate working responsibilities, including construction and transmission, which is expected to help them work quicker and save electricity while eliminating supply problems.
Decades of restructuring
The idea has been around ten years but has been scrapped many times.
EEPCo halted the restructuring that proposed splitting the corporation into four separate entities, previously recommended by an Italian consultant’s study which was expected to begin in November 2011.Italian consultants Ben and Company provided the first details of the restructuring in their report, though it had been talked about over the last decade.
However, apparently, EEPCo continued to operate like it has been.
Israel Electric Corporation (IEC), which was selected by the board of directors of EEPCo from various undisclosed foreign-based electric utilities, was expected to take over the management of the electric utility that handles the operation, distribution and sales of electric power but failed at the last minute.
After the classification, Engineer Azeb Asnake was assigned to head the construction division, which consists of five main departments. Azeb, who is also project manager of Gibe III hydro power project that has the capacity to generate 1875 MW, will also continue to head the project which she describes as her ‘baby.’
The utility division, named the Electric Power Utility Company, will be managed for the next two years by the Indian Company Power Grid that also conducted the study for the restructuring in the last couple of months.
Abdulhakim Mohammed, who has been working as a Generation Construction Executive Officer has been assigned as senior advisor to Azeb Asnake.
Meheret Debebe, who served EEPCo for the last 17 years, has also been appointed as Energy Advisor with a Ministerial Portfolio for Prime Minister Hailemariam Desalegn.
In the past decade, Meheret helped the corporation make a noticeable difference in the sector. In the next three years, the corporation plans to generate 10,000MW of electrical power boosting it from the currently estimated 2,000MW of power generation capacity.
EEPCo also requires a whopping 182.2 billion birr for power generation, transmission and distribution system expansion in order to achieve its objectives envisioned in the country’s five year governing economic plan, GTP that will be completed by 2015.
From a total amount of the envisioned budget, the biggest share of 122.8 billion birr will be committed to constructing dams and harnessing other power generation schemes such as geothermal, wind and solar power.
From this total, the electric generation projects consume 65 percent of the total cost. After the GTP, the corporation will consume 200 billion birr every year for the projects.
EEPCo’s ambitious plans have made it one of the most prolific federal entities in terms of new endeavors as it seeks to dramatically expand its power producing capacity. Recently, it revised the first 25 year electric sector master plan. The plan calls for generating 37,000MW of electricity as well as increasing the amount of electricity being exported.
According to the plan, by 2018 the number of households that use electricity will double and the master plan calls for every house to be able to receive electricity if they want to.
When this factor is combined with export demands that are forecast to grow to 4,030MW by 2037 from 165MW in 2012, the best case scenario is for electric sales to be about 61 percent higher, with the highest growth coming in the next five years.
Different regions and industries will receive power based on their projected demand. According to the study, five industrial zones Kilinto, Bole, Meleka Jebedu, Kombolcha and Hawassa will require 1,127.7MW of power until 2019. Of the stated industrial zones, Kombolcha and Melaka Jebedu will need 336.9 and 315.3 MW respectively. Industrial zones requiring power from 2019 onward are Bahir Dar, Gonder, Mekele and Jimma, with a total demand of 1,200 MW.
Additional industries are projected to require 1,966MW. This includes: cement factories (729MW), steel and metal factories (691MW), general industry (530MW) and mining (16MW). The report added that the expected demand is scheduled to increase, hitting its maximum need in 2019.
Ethiopia liberalised the energy sector after ratifying a new Energy Proclamation that allows private investors to generate, transmit, distribute, sell, import or export electricity. This move comes to facilitate the recent restructuring of EEPCo.
The new proclamation that allows private power companies to operate in the country, competing with the state power utility EEPCo is expected to attract more investment in the energy sector where the government has planned to generate 10,000 MW of power from various sources by the end of the GTP.
Currently, EEPCo is the only government body that is responsible for power generation, transmission, distribution, and sale of electricity.
The Ethiopian Energy Authority (EEA), which will replace the current Ethiopian Electric Agency, will control these investments in the country and will also set prices for the private and state power distributors.
According to the proclamation that was ratified by the House of People’s Representatives in November of this year, the EEA will be headed by a board of directors and the board will review tariff proposals for the national grid and submit them to the Council of Minister’s for approval. Moreover, the board will approve off-national-grid tariffs directly without any approval from higher bodies.