By Eyasu Zekarias
Ethiopian Electric Power (EEP), the state-owned energy enterprise, has announced a significant reduction in its debt from 55% to 20% as part of the government’s ongoing macroeconomic reforms. This change is seen as a crucial step in stabilizing the financial situation of the utility, which has been burdened by high levels of debt for years.
The reduction in debt was achieved through a combination of measures, including the transfer of liabilities to the Accountability and Asset Management Corporation (LAMC), established under the Ministry of Finance in 2021. Additionally, EEP received relief from a new debt amounting to 263 billion ETB, which has further strengthened its financial position.
Demere Assefa, Executive Officer of the Finance Division at EEP, stated, “The institution’s debt has been reduced from 55% to 20%.” He highlighted that the total assets of EEP now stand at 709 billion birr, with 586 billion birr classified as paid-up capital. This substantial asset base positions EEP as a key player in the region’s energy sector.
EEP ranks third among Africa’s electricity management institutions in terms of energy generation capacity. As of July 7, 2023, the company reported a total debt of 367 billion birr. The ongoing economic reforms initiated by the government aim to address the financial challenges faced by EEP and the broader energy sector.
In a recent forum it was noted that while the service is currently operating at a loss, the annual net profit is insufficient to cover even the cost of purchasing four transformers.
Demere Assefa explained that 28% of the state’s energy generation accounts for the energy bills, underscoring the financial pressures on EEP. He elaborated that 25.5% of the total assets consist of power substations, transmission lines, and switchyards, valued at 150.5 billion birr. The remaining 46.5% includes vehicles, buildings, and other fixed and movable assets.
Currently, EEP operates over 19 power generation stations, maintains a network of 20,000 kilometers of high-power transmission lines, and manages more than 144 power substations, along with a fleet of over 900 vehicles. These assets are crucial for ensuring a reliable electricity supply to the Ethiopian population and supporting economic growth.
The government’s decision to implement significant changes in the energy sector, including taking on EEP’s debt and recapitalizing the Commercial Bank of Ethiopia (CBE), reflects a broader commitment to economic reform. By reducing EEP’s debt burden, the government aims to create a more sustainable financial environment for the utility, enabling it to focus on improving service delivery and expanding access to electricity.