Power Play

With a huge capacity for generation, the energy sector in Ethiopia is a very strategic factor of the nation’s development. As one of the major drivers of the manufacturing sector as well as the agricultural led industry, Ethiopia continues to invest heavily in the energy sector utilizing different clean resources such as hydro, wind, solar and geothermal, among others. CAPITAL’s Teguest Yilma sat down with Ethiopian Electric Power (EEP) CEO Eng. Azeb Asnake to discuss the overall status of the energy sector in Ethiopia, newly planned projects, concluding projects as well as the CEO’s personal experience heading EEP and the recently inaugurated Dam Gibe III.

With a huge capacity for generation, the energy sector in Ethiopia is a very strategic factor of the nation’s development. As one of the major drivers of the manufacturing sector as well as the agricultural led industry, Ethiopia continues to invest heavily in the energy sector utilizing different clean resources such as hydro, wind, solar and geothermal, among others. CAPITAL’s Teguest Yilma sat down with Ethiopian Electric Power (EEP) CEO Eng. Azeb Asnake to discuss the overall status of the energy sector in Ethiopia, newly planned projects, concluding projects as well as the CEO’s personal experience heading EEP and the recently inaugurated Dam Gibe III.

 Capital: Eng. Azeb, first let me start by congratulating you on your huge success in bringing the vision of Ethiopia’s largest hydroelectric dam, Gibe III to fruition. Two weeks ago, (Saturday 17th Dec. 2016) Gibe III, with a generation capacity of 1,870MW, was inaugurated in the presence of PM Haile Mariam Desalegn and many other dignitaries. The dam actually doubles Ethiopia’s current ability to produce electricity; this is quite an achievement but often times the struggle and work it takes to achieve such a goal is not perceived. A lot of energy, time and finance went into it; 10 years and 1.5 billion euro, and there were some environmental issues as well that you had to address. Tell us about the challenges and what you learned from the process and how you felt at the ceremony when you realized all that you accomplished?

Azeb Asnake (Eng.): First of all I would like to thank Capital for inviting me to be a guest. When we come to Gibe III, the challenges began when I was assigned to be the project manager. You can understand as a woman who has grown up in a society where big projects or big assignments are given to men; when the contract was signed Gibe III project was the biggest at the time and I am used to men being in high positions and taking up such responsibilities.

The maximum hydroelectric dam we had at the time was Beles 460 MW, then Gibe II 420 MW; all had less capacity than Gibe III and all these projects were led by men; so you can understand how I was feeling. I was a little confused, but then I came back home and consulted with my family, especially my husband who told me that I was still a civil engineer.

‘When you choose that field of study, you know that you cannot stay and work only within Addis Ababa’, he said to me. Before that I was working at the Addis Ababa Water and Sewerage Authority and the maximum distance I traveled was to Legedadi; the Legedadi Dam which was about 38 to 40km from Addis Ababa. Gibe III is in a remote area, about 460km from Addis; it’s like a desert and there was nothing there, no facility at the time. That is why I was a little bit shocked. But then, after consultation and after visiting the site, I got used to it and recovered from that challenge.

So, the major challenge was actually related to financing this project because it is huge and required a large capital. Through the government, we have tried to get finance from different sources like the World Bank and African Development Bank as well as the European Investment Bank.

We thought we could get the finances in a short period, but it was not easy at all. There were some groups that did not like the construction of the dams claiming environmental and some other reasons.

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We spent more than three years communicating with these banks, but in fact, groups like Survival International, Friends of Lake Turkana and so on, were attempting to influence the banks, so our efforts to obtain financing were not easy at all.

After we spent three years, we said enough is enough and stopped communicating with those banks and diverted our plans strategically to the Chinese Government and we managed to get finance for the electro-mechanical part, which amounts to about 30 percent of the construction cost.

The rest of the financing was done by the Ethiopian Government; we only got 30 percent of the financing from Chinese investment. This was actually misreported in different media as 40/60; 40 percent from the government and 60 percent from others. That is wrong; 70 percent of the project was covered by Ethiopia and the total cost was around 1.5 billion Euros.

Capital: Hopes are that GIBE III will not only help Ethiopia meet its power need but also neighboring countries’ increasing demand for cheap, renewable electricity. How much is Ethiopia actually earning from exporting power annually? When do you expect to start exporting from GIBE III to places like Djibouti, Sudan, Kenya, Yemen, Tanzania, and Somaliland?

Azeb: We have a very ambitious plan whereby we go to Sudan and from Sudan to Egypt and through Egypt to Northern Africa and then to Europe, that is one corridor.

The other corridor is through Yemen as you mentioned; we will have a substation 25 to 26 km into the red sea, then Yemen and through the Middle East, which was the plan. We had actually signed a Memorandum of Understanding with Yemen but as you know, because of the situation there, we could not proceed further.

Now we are looking into other ways of reaching the Middle East. The demand is very high; as you said Ethiopia develops renewable energy sources because we have the potential and the commitment to develop green energy and the policy the country follows is a green policy.

As you mentioned there is Djibouti, there is Sudan and there are the border towns of Kenya that we are exporting to now. Next month we will sign a contract with Tanzania as well.

We have many other prospective countries who are interested in obtaining power from Ethiopia; Somaliland, South Sudan, Burundi, Rwanda. It is green energy and relatively cheaper for them because they use thermal and diesel and other similar types of fuel which are expensive and harmful for the environment. So the prospect is really very big.

When we come to Gibe III and its contribution to export; whether it’s Gibe III or the Renaissance Dam or Genale Dawa, whatever we generate comes to the national grid and the surplus will be exported. We do not export as long as there is a need for it locally; the export comes whenever there is surplus that cannot be consumed locally.

We especially get a surplus during the rainy season, when we have extra water and the dams are full we opt to export the surplus generation.

The Power Purchase Agreement (PPA) was negotiated and signed quite a few years back, so the tariff is very low and when we started this export, we wanted to start with something and attract neighboring countries to use our energy.

Capital: Can you re-negotiate the PPA?

Azeb: We will have the opportunity to renegotiate of course because in the PPA there are provisions that allow us to sit again and renegotiate the tariff. With Kenya for example, we have already started constructing the line and the substations that go to Kenya; so up to 2000 MW can be exported through this line at maximum capacity.

We are doing this because our vision is to go to Tanzania and neighboring countries through Kenya. The capacity is big and the tariff has already been agreed upon a few years back; still small but there is, again, a provision that lets us renegotiate.

Capital: You mentioned Genale Dawa which is a project we don’t hear much about.

Azeb: Genale Dawa is a 250 MW producing dam and located in the Oromia Region. It is a very big project, but in Ethiopia we always see the bigger picture and those with the smaller capacity we don’t say much about. In other African countries even 8 MW is a really big deal, but in Ethiopia that is not the case.

Genale Dawa is one of the projects that will contribute to the amount we targeted in the second Growth and Transformation Plan (GTP2) and it will be ready by next Ethiopian year. The plant is almost completed, and we are working on the transmission line and substations. The source of finance is 60 percent from the Chinese government and the rest from Ethiopia.

Capital: There have been plans for other types of renewable energy production, for example the Ayisha wind farm in Somali Regional State; where are you with that project? What about the environmentally friendly Repi waste energy project? Solar energy?

Azeb: Yes, it’s not only Hydro by the way. As a strategy, we are now following the principle of mixing our energy sources. We have solar, wind and geothermal sources. With wind as you know, we already have about 324 MW from Ashegoda and Adama 1 and 2. And now we also have another 120 MW from wind at Ayisha. For Ayisha we signed the contract about four months ago so it is a new one. You might have heard much about it because studies have been conducted there and many developers were interested in becoming involved. Ayisha is a very big area with huge potential.

We have another one which is under tender process for 300 MW from wind in Ayisha and in Debre Berhan and different areas where we have the potential. There are also geothermal projects like the Aluto Langano project; it’s an old plant which has the capacity of 6 MW and now we are expanding that to 70 MW, and it is already under construction.

Other than that in the GTP2 we have other projects for example on the Baro River we are going to have a 1700 MW plant.

The Repi waste energy is another one which will be ready in June 2017.

Capital:  Finance is one of the key challenges in power sector development. Do you think you will be able to secure adequate capital to run the ambitious projects that is tabled in the current GTP?  And what is your strategy?

Azeb: Regarding the finance, we now have a new strategy to involve private investors. So accordingly, all our solar projects which are planned to be developed during this GTP 2 period will be financed by private developers.

The developers will build the plant and generate power and then we buy it from them. So far we are working with international private developers but we are asking them to work together with the local ones because capacity building is another aspect of this intervention. We are now in the tender process; it should be a competitive bidding if it is a private investment.

We have received a very good response; many international companies are interested. Even with hydro, the TAMS dam project that will generate 1700 MW will be financed by private investors as well as others like Corbetti in Geothermal.

This is one strategy, as you have said our plan is ambitious. In GTP2 we are aiming for 17,000 MW target. This means what we have now in addition to those under construction like the Renaissance Dam and the others that I mentioned, plus about 7000 MW that we have to develop.

Capital: During GTP1, the target for energy production was over 10,000 MW but that goal was not reached. Now in GTP2 the goal is to generate 17,000MW? Do you think this is feasible?  How confident are you that this will happen within the given time frame?

Azeb: You may face problems, but then you still have to plan and work towards that plan. It is not easy for the private sector as well to get the financing because they also have to go to the banks and get the finances. But it is their responsibility to get the finance and we also have to assist them, provide them with guaranty as a government because after they generate the power, EEP will need to buy it from them.

There are many issues that they raise like tax issues as well as issues like tariffs, we have to facilitate the way for them when it comes to all those questions. Otherwise the investment costs are too big and the government cannot carry all of the load.

Capital: When it’s finished, the USD five billion GERD will produce over 6,000 MW of electricity and become Africa’s biggest hydroelectric plant. Could you give us an update on GERD?

Azeb: Regarding the Renaissance Dam, the construction is going very smoothly. The source of financing again, you know it is all local. As you know it is a very complex dam, not only politically, but technically as well.

Gibe III, we say is the biggest dam in the country; but when you see the volume of the roller compacted concrete for example, Gibe is around 6 million and Renaissance is about 10 million meters cube of concrete. The meaning of that is the dam is heavy and you know building foundation is very complex; you have to dig very deep until you get a solid ground; that is one complexity.

The other component of the project, the electro mechanical part; one unit is more than 300 MW, the maximum we had so far was 187 with Gibe III. I don’t mean that Gibe III is small, but one unit is more than Gibe I. when you go big, everything related to it will be more complicated.

There is a saddle dam on the side because you have to protect the water and not lose it, and there are many more complicated structures. But then, despite that, the progress of the project is very smooth and we have now reached around 57 percent.

There were political situations as well, the hydro politics is tough and Ethiopia has a lot of work in all this. But we are happy that things are going smoothly.

Capital: Is there a set date for the completion?

Azeb: Well, you always have a set date but you never know what you face in the middle when you see it from a technical point of view. For example, for the foundation of the Renaissance Dam, there was 2 million meters cube of soil we had to excavate. But when we actually dig the ground, what you face is totally different.

As I said, you have to get a very solid ground so until such time you have to excavate. This means you take time; whenever the volume increases, then you spend more time digging so we can only do anestimation. What you see in the contractual agreement is only an estimation of time.

You do geological investigations before you start anything. All those studies are indicative; they give you indicative information and not accurate information. You really don’t know what is exactly going on in the ground.

When you start the actual work, what you face is different. The same has happened to Gibe III. The volume I remember was 2 million meters cube, but then what we finished with was 4 million meters cube, double the amount we expected. This means double time, resources and everything else. Next year we are planning to start holding the water for the Renaissance Dam, this will mean we have accomplished the major milestone.

After you hold the water up to the minimum operating level, you can start generating power, you don’t need to finish the whole project to start generation.

By the way Gibe III has saved us from power shading and the likes because most of our dams didn’t have water due to the El Niño effect and Gibe III started holding water during the tide season. So that amount of water that has been impounded in the dam saved us.

With the Renaissance Dam, our plan is to start impounding during the coming rainy season in June and July. We hope the flow will be okay and it will reach the minimum operating level, then we will start generating.

Capital: A high level delegation from Saudi Arabia recently visited GERD, and the Saudi government has said it will cooperate on energy development. How do you think they will be involved? Is there any project you have tabled for them to finance?

Azeb: The Saudi delegation has showed interest in developing some projects in the country, energy projects. It is still at a discussion level but what I know is that they are interested in getting involved in the energy sector because they have seen the prospect.

Capital: Let’s talk about power interruption. Although power production is growing, we still experience power cuts. Why do you think that is and how do you think the transmission line and distribution will be modernized in the near future, if at all?

Azeb: That is a kind of paradox. We talk about generation because the fact is that we don’t have a problem with generation now because there is Gibe III which can generate enough power. But then it is not only generation, even though it is the major part of availing energy to the consumer.

The transmission lines, the sub-stations, the small distribution lines should be available as well. The situation with our system right now is that our sub-stations are saturated; most of the substations if you look at different areas are working beyond their capacity.

When you see the distribution lines, whenever there is wind or rain, even without those, a fault can be created and power interruption occurs. The capacity of the substation is really critical so what we are doing now is to rehabilitate or improve the capacity. So yes, we have this problem, which is why you see a lot of interruption.

We should have a system that can sustain the generation and on the other hand the demand is increasing rapidly. Our studies show that per annum, the demand increases about 30 percent.

You can witness the investment in the industry parks, the railways which require power; all these are new demands coming onto an existing system, so the gap is really big.

Capital: So as the economy is growing and new power consuming centers like industrial parks are being built how do you then plan to provide even more, consistent power supply?

Azeb: As I mentioned we have started to upgrade the substations and transmission lines. In Addis Ababa and the surrounding area more than 60 percent of what is generated is consumed. We call this a very important area with regards to energy; so we focus on this area and major load points such as Bahir Dar and Hawassa where there are big investments.

We have signed with two contractors to upgrade the substations and that project is going well. Within less than a year, we will finalize this upgrading project and this interruption will hopefully be reduced, if not completely stopped.

Capital: Because most construction materials are imported, investing in energy requires a lot of hard currency. EEP’s plan, I understand, is for at least half of the inputs to come from local suppliers? Is there any development with regards to this strategy? 

Azeb: This is again another strategy that we are following now. We have learned a lot from GTP1, and we have tried to come up with solutions for most of the problems. One of the issues is the local capacity building; this is directly related with the foreign currency situation and building the capacity of the local contractors, manufacturers or consultants.

So in all our projects that we have planned for GTP 2, the strategy is that any contractor should come with a local counterpart as a joint venture, not even as a sub-contractor, with minimum 30 percent of whatever is being manufactured needs to come from a local source. This is what we are doing in order to support the local capacity.

As an example in the Geba hydropower project with a capacity of 390 MW, the contract was signed a year and a half ago but we are still waiting on financing. With the implementation of GTP 2, in that contract there is a joint venture. Twenty five percent of the total value of the contract has to come from local companies and it is a joint venture, meaning they will be involved in the project from A to Z and pass through all the processes.

When they are sub-contractors, they will only take sub-part of the work. That means the capacity building part of it will not be fully addressed. That is why we oblige the foreign contractors to joint venture with locals. With the manufacturing part, a minimum of 30 percent needs to come from a local company. It is an obligation in our contract, so this way we think the capacity will be better.

Capital: In January 2016, the East African Power Pool (EAPP) moved forward with the adoption of the regional energy master plan. This calls for bringing all African power grids together as one pool. What exactly is the master plan?  

Azeb: This event took place quite some time ago. Currently I am the Chairperson of the East African Power Pool and yes, the master plan has been under study for a few years and then it was presented to all 10 members of the power pool. This master plan is a regional master plan, prepared based on each country’s development plan; for example, the power export Ethiopia is planning is part of this master plan. This master plan was a collection of master plans from the utilities. Ethiopian energy sector, the vision I mentioned for the export of power is part of the master plan. It is an indication, it gives a direction and your plan is not scattered here and there.

Capital: Your new office building sounds interesting. The 2.5 billion birr facility features an eco-friendly design, using solar energy for up to 60 percent of its power consumption. However it was expected to be completed a decade ago; what caused the delay and could you explain why you needed to sign a new contract?

Azeb: Actually, a contract was not signed before, but the design and everything was done. Because of financing constraints, it was not possible to sign a contract and proceed. But now, two or three months ago, the contract was signed and the contractor is starting to mobilize to the site around Mexico Square.

You know that is an image for the energy sector as a whole. The time frame that is given for the completion is an indicative one. The project is financed from our own sources; there is no loan or anything like that.

Capital: In 2006 you took over GIBE III hydroelectric power dam as project manager. Four years ago you became CEO of EEP, one of the largest continental electric generation and transmission enterprises in Africa. You are one of the very few ladies leading this type of organization in the country and the continent. And you are the first woman to become a hydroelectric power project manager. You were recognized as ‘Outstanding Woman in Power in East Africa’ at the East African Power Industry Award held in Nairobi on September 22, 2016; you also received the African Project Leader Excellence Award during the 2nd Annual ‘Women in Construction Congress’ held in Johannesburg on May 28, 2014. What do you think about all you have achieved and what would you like to say to aspiring young girls/women? 

Azeb: As I mentioned at the beginning of this interview, our upbringing matters a lot. As long as you have the commitment and you say to yourself ‘I can do it’,  then I think you can do it; it is possible because I see that in my own career.

In whatever case, I always say that as long as you give the chance to women to get educated, then that is the first step. After that, give them the chance to practice what they have been educated on. I take myself as an example, that as long as we have the commitment, as long as we have the basics, then it is possible.

I believe we need to educate girls; we don’t only have to look at the capital city and the metropolitan life, we have to go to the country side and make schools available. I am very happy that the government has this intention, and schools are now almost everywhere; that is really the first step.

If we give them the chance to be educated, then women are very smart; we can do several things at a time, we think fast… So the base is education and that is what happened to me.

For my young sisters, I always advise them to always try; we don’t have to limit ourselves, it might be difficult but we should always try. We have to be open to opportunities and be able to learn all the time. Just because I am the CEO here, it doesn’t mean I know everything, every day I learn from everyone. This is how it should be for everyone, not only women, but everyone.

We are always expected to make mistakes because society thinks women don’t know things. In order to avoid all that, we always work hard, and I think that is another dimension that makes us stronger.

All of these awards and so on, it is an encouragement for me to work more.  I am very happy to be recognized like that, but at the same time this is an assignment that is given to me.

The responsibility here is also that someone has that confidence in you when they give you that assignment. And this is the energy sector, which is very sensitive. It is instrumental to Ethiopia’s growth and to the economy and everything else, so it is a very big responsibility.

All of these things make one to strive to do more and work hard and fortunately, I have a very good team. Especially at Gibe III, I was really very fortunate with young and committed engineers. It was not an easy place to work in; the temperature is always 40 degrees and there is malaria and so many other issues. It required real dedication to accomplish something. All of them now are matured engineers because they have learned a lot from that project.

Capital: The energy sector is a very male dominated area, and you have not only survived but also excelled in the field. How do you balance your personal life and work?

Azeb: That is true. Women are mothers and wives as well. I always say I have four children including my husband and Gibe III, because they all need your attention. So I had to manage between my personal life and my assignment. Especially before I became a CEO here, when I managed the Gibe III project, I had to go to the site frequently and stay there. During that time, my children were young and so they needed my presence, but then my husband is a very good person, he is also a Mining Engineer and Economist. He understands what it takes to run this kind of project, so he took care of the children during that time.

It is very difficult unless there is the understanding from your family. I took my children to the site as well because they had to see what I was doing. When my son was a small child, he said to me “when you finish this work, there will be electricity all over…” Because they often witness the interruption so I tried to make them understand what is going on. I always say I am lucky and blessed because they understand me.

When I come to the work area, my staff and colleagues, our board and ministry, they are really supporting me in different ways. Financing, for example is a really critical dimension that I cannot control by myself, so their involvement helps me a lot. But you know to be assisted, you yourself need to be ready to be assisted, you should be the one to initiate the matter, this is how it is for me.