Contrary to the usual trend, the Ethiopian Electric Utility (EEU) discloses that it is looking into ways of applying inflation based regular tariff revisions.
About four years ago, the government had approved a significant electricity tariff revision which was applied progressively in different phases which came to a close this year. However, it is widely argued that the inflationary conditions have made the revision meaningless.
EEU, which is responsible for the retail of electricity across the country, through its officials recently stated that the inflation has consumed the tariff adjustment.
The public enterprise’s financial soundness has been pinned to be critical and owing to the fact that it is under the Ethiopian Investment Holding, the sovereign fund that controls 27 huge public enterprises, financial resources are key.
A proper tariff system has been noted to not only benefit the financial stability of the utility company but also in realizingaccess to finance for projects to improve its services.
So to attain the target, government has been applying tariff adjustments for certain periods for the service but devaluation and inflation have made it a hurdle to gaining needed results.
According to ShiferawTelila, EEU CEO, the price hike and inflation has affected the financial position of the utility firm.
The CEO explained that the tariff revision issue is the mandate of the central government, “however, conducting a comprehensive study and tabling the results to government shall be carried out by EEU.”
Shiferaw told Capital that the government has been applying the adjustments for about four years now. As he highlights, possible further revisions as per study are applicable. Moreover, he expressed that government has also taken directions to consider tariffs harmonized with inflation rather than imposing periodic adjustments.
Esubalew Tenaw, Director of Change and Good Governance Directorate at EEU, further explained that the sector needs huge investment. As Esubalew revealed, the global and local price hike for instance on petroleum, inputs and steel has become a challenge to the energy sector.
“Wecannot revise our tariff in connection with the inflation rate so the price adjustment that was applied in the recent past was taken by the price hike,”Esubalewexplained.
Most of the electric development is dependant of imported materials.
Shiferaw said that even if the equipment is produced here, the input is still coming from abroad, “Thus, about 65 percent of the sector investment demandsforeign currency.”
At the end of June last year, EEU had garnered 4.3 million customers. In the 2021/22 budget year, EEU’s revenue stood at 20.9 billion birr increasing by 5.5 percent from the preceding year.
In the revised three year plan, the utility has targeted to generate 40.2 billion birr revenue form electricity sales by 2025 from 7.9 million customers.
With regards to its infrastructure,it has medium voltage transmission lines stretching 54,300 km,lower voltage lines at67,706 km and44,977 transformers.
As per the last census in Ethiopia there are 16,652 villages and towns and of that 7,962 have been covered by EEU, while 11 areas have access to power under the off grid scheme.
EEU gears towards inflation-oriented tariffs
Gov’t to repossess land from plot hoarders in Addis
The central government is conducting a comprehensive detailed study to identify and take measures on individuals and companies possessing plots of lands which are not being utilized in Addis Ababa, Capital has learnt.
The information that Capital obtained from those close to the case indicated that the government is undertaking a study that is keenly followed by the Office of the Prime Minister (OPM).
According to sources, the government is claiming that plots in the city are not possessed by real investors or developers. In contrary those who take plots through lease or other schemes are holding the land and transferring it to others after years.
It has been stated that there are individuals and business people who take lands in different forms in the Capital, while some owners masquerade with little excavation to show slight progress in construction, which is far away from their true intentions.
Experts in the case have cited that the government is looking deeply into the matter in addition to the measures that the city administration is currently taking. The manner in which the city admin is handling the issue has been seen to not be fully effective thus the central government is diving into the case to provide a lasting solution.
There are also claims that some officers in connection to the land cases are involved in extension of land holdings for years without provision of ample reasons. It is further noted that land has been one of the major sources of misdemeanor in the city.
Based on that, the detailed study will identify the plots of land in the city those are not developed with convincing reasons.
Sources said that the government will take stringent measures to repossess the plots of lands and transfer the same through different schemes including leasing to real investors that have a good reputation.
“There are the so called investors or developers that are engaged on land selling. This must be stopped at some point,” sources said.
On a separate occasion, the government had expressed its keenness to take back idle lands for the city and economic development. Similarly, it has pushed land holders to start development activities.
For instance, recently the Addis Ababa City Administration held discussions with those who did not develop their plots of lands taken through lease, and insisted for provision of valid reasons for slow development on the lands.
At the same time, early this week, prior to the action taken by government, the Land Development Bureau of Bole Sub City held discussions with developers who did not develop their land as per the lease agreement.
Sources underlined that despite efforts by the city administration, the central government is not satisfied by the measure that is taken to push investors to start construction.
“This is the major reason for the central government’s involvement on the case, which the OPM closely follows,” a source added.
One of the intentions of the study is to solve such cases sustainably.
Sources said that in the city there is an individual who possess up to 30,000 square meters of land in different areas under different names and without tangible development.
On his latest appearance in parliament, Prime Minister Abiy Ahmed highlighted the land issue as he expressed his frustration.
“Unlike the constitution, in Ethiopia land is controlled by illegal brokers and crooked government officials rather than the government or the public,” the Premier said, adding, “Illegal brokers have taken the land which needs crucial change.”
He cited that because of illegal actors, the government is not able to carry out ongoing development projects in Addis Ababa.
“Neither the government nor the land owners or the public is benefiting from the land. At least in the city, land should be owned by individuals who bring benefit as opposed to illegal government officials and brokers,” he recommended.
He said that even through the government has facilitated fully developed industry zones and parks, investors don’t want to operate there.
“Investors want land in other areas and use it to access bank loans and they may do some foundation and sell it or complain that there are barriers from government or banks,” he elaborated.
The PM added that the case is very wide and complex and urgently requires sustainable solution. He added that an inclusive national dialogue may have a solution to this since it is a constitutional issue.
Regarding the new initiative, the government is expected to take measures in the near future.
EthSwitch, Oromia Bank, Mastercard partner for seamless transactions
EthSwitch, Ethiopia’s national payment switch, Oromia Bank and Mastercard partner to accept debit, credit, and prepaid cards of Mastercard through the bank’s ATMs.
As per the partnership, tourists, and local citizens carrying Mastercard payment cards can withdraw local currency from Oromia Bank ATMs processed by the EthSwitch network.
“Oromia Bank is the first bank to accept Mastercard payment cards using EthSwitch as the payments processor – a milestone we are extremely proud of,” Yilebes Addis, CEO of EthSwitch, stated, adding, “The mandate of EthSwitch is to contribute to the modernization of the national payments system and enhance financial inclusion in the country. Through this partnership we are progressing this goal by enabling interoperability of ATMs and making it easier for people to transact.”
ATM usage has increased rapidly in Ethiopia since its deployment in 2001. By the end of the 2020/2021 fiscal year, Ethiopia’s banking industry had processed a total of over 225 million ATM transactions, of which over 38.3 million were inter-bank transactions facilitated by EthSwitch.
Since its inception in 2008, Oromia Bank has made significant contributions to Ethiopia’s banking industry, having pioneered new banking practices including interest free banking services.
“We remain committed to developing appropriate payments channels to provide people with more convenient, secure, and reliable ways to access funds in the country. This partnership with EthSwitch and Mastercard is the latest example of how we continue to collaborate on this journey,” Teferi Mekonnen, President of Oromia Bank, said.
In the next phase, Oromia Bank will collaborate with EthSwitch and Mastercard to enable people to pay for goods and services with their Mastercard payment cards.
Low-carbon transition signaled to have daunting implications, report reveals
Lack of swift and bold action towards a low-carbon transition has challenged least developed countries (LDCs) according to the latest report of ‘Least Developed Countries Report 2022’ of the United Nations Conference on Trade and Development
As the report indicates, over the last 50 years, 69 per cent of worldwide deaths caused by climate-related disasters occurred in LDCs, including Ethiopia. Currently 46 countries have been evaluated as least developed countries of the world, 31 from Africa’s, 8 from Asian and seven from the Islands including Haiti.
According to the report, although LDCs bear the least historical responsibility for climate change, they are on the front lines of the climate crisis. They have committed to climate-resilient development pathways by 2030 and delivery on net-zero emissions by 2050.
The 46 LDCs are home to about 1.1 billion people or 14 per cent of the world population but have contributed minimally to CO2 emissions. In 2019, LDCs were estimated to have accounted for about 1.1 per cent of total world CO2 emissions from fossil-fuel combustion and industrial processes, the main sources of greenhouse gas emissions globally. Even in per capita terms, the CO2 emissions of LDCs barely reached 10 per cent of the world average. In contrast, the carbon footprint of an average person in a developed country or a non-LDC developing country was at least eight times larger than that of an average person in an LDC.
As the report states, while they are at the forefront of the negative consequences of global warming, LDCs contribute barely 4 per cent of current greenhouse gas emissions, yet account for 65 per cent of the global population lacking access to electricity. Hence, nowhere is the need for a “just energy transition” starker than in the LDCs.
Additionally, the COVID-19 pandemic shock and its compounded adverse effects on trade, investment and development as the pandemic abruptly revealed deficiencies in development paradigms that have severely reduced the capacity of the State to generate domestic resources for economic, social and environmental investment.
As the report indicated, a combination of pre-existing factors and the war in Ukraine, LDC populations have experienced a sharp decline in living standards and increasing inequality, while the countries’ current account balances have come under additional pressure from rising external debt payments and soaring international energy and food prices.
Of the 1.1 billion people living in LDCs in 2020, an estimated 244 million were undernourished, 466 million had no access to electricity, 665 million lacked accesses to safely managed drinking water, and 874 million had no access to clean fuels and cooking technologies. These figures dramatically demonstrate the efforts that will be required to build adequate resilience to climate change, embark on sustainable adaptation, and meet the targets enshrined in Sustainable Development Goals (SDGs).
The 27th United Nations Climate Conference Conference of the Parties (COP27) – presents a unique opportunity to accelerate action towards the goals of the Paris Agreement, the Bridgetown Covenant, the Doha Programme of Action for the Least Developed Countries for the Decade 2022–2031 (DPoA), and, more generally, the 2030 Agenda for Sustainable Development. These goals aim to achieve a mutually beneficial climate and development-friendly nexus.
“LDCs represent the litmus test against which history will judge how effectively the efforts of the international community to make the low-carbon transition take into account the development dimensions and reflect the principles of equity and differentiated responsibilities and respective capabilities,” the report read.
