With one month to go before the start of the Ethiopian New Year (2008) which falls on September 11 – based on the Julian Calendar not the Gregorian Calendar which most of the world follows – Ethiopia is humming economically, as any tour of the capital city Addis Ababa and other major regional cities will show.

However, the constant buzz of diesel-powered electricity generators provides the clue to a major problem which all of them face, the incessant power blackouts, which are not only an irritant but also a major cost to public enterprises, private businesses, and the public at large.

Nevertheless there’s one big national project – only overtaken in size by the 6 000 MW Grand Ethiopian Renaissance Dam (GERD) project still being built on the Blue Nile River – that many people hope will solve the country’s power outage problem at least for now. Even though the government denies that a lack of power generation is the cause of the problem.

Located in south western Ethiopia, the 1 870 MW hydroelectric plant on the 246 metre-high Gibe III dam is 98.5 percent complete, according to the government and will start production of at least 500 MW by the New Year.

The dam has ten turbines, each with 187 MW generating capacity. The ministry of water, irrigation and Energy (MoWIE) says three turbines are ready to start and a fourth soon will be.

'Controversy won’t go away'

While the Gibe III dam project has received much less publicity than the much larger GERD, it has not been spared criticism since its formal launch in 2008.

The world’s longest river, the Nile, has two main sources, the Blue Nile which rises in Ethiopia and which provides about 86 percent of the river’s water and the White Nile which originates in Uganda.

The GERD has caused concern in downstream countries, especially Egypt, which depends very heavily on the Nile for its livelihood.

International advocacy groups like Survival International and International Rivers have criticized Gibe III because they say it will jeopardize the survival of the world’s largest desert lake, Lake Turkana and displace thousands of semi-nomadic tribal people in southern Ethiopia and northwest Kenya.

That’s criticism which Minister of Water, Irrigation and Energy Alemayehu Tegenu rejects. He has just returned from the United Nations Educational, Social and Cultural Organization (UNESCO) in Rome where he answered questions about the dam’s “consequences”.

“There are lots of critics of the impact of Gibe III project, upstream and downstream, with completely untrue allegations. Upstream, the dam is in a deep gorge, so the water will not come out of the gorge. In the gorge there are no settlers, so it will not affect upstream,” the minister told ANA.

And he said downstream the dam would make the flow of water more regular, which would not adversely affect pastoralists. The government in fact planned to “improve” their livelihoods with irrigation schemes which would end their dependence on rainfall agriculture, he said.

Tegenu also dismissed the concerns over Lake Turkana, saying the project didn’t start with the aim of impounding the water. He says the drying up of the lake is not related to the hydro dam and is rather the result of land degradation of the eco-system around the lake.

“Our concern is to save the lake, as some part of it is also located in Southern Ethiopia, so we have to manage the basin properly to save Lake Turkana . In this regard we have agreed with the Kenyans to manage the basin properly. We will have one common project which will be handled by United Nations Economic plan (UNEP), Through this project we will solve the old Turkana problems,” Tegenu said.

Saved by the Chinese

While Gibe III has missed several deadlines for starting generation, the $1.5-billion project which the government hopes will boost Ethiopia’s electricity production to about 4 200 MW, has also faced funding constraints.

Because of the determined opposition of international NGOs, the government has had to forsake funding options from the likes of the European Investment Bank and the World Bank and look instead to China for the funding to finish the project.

A Chinese $460-million loan came with one important condition; some of the hydro construction contract was taken away from the Italian firm Salini Impreglio3 and given to the Chinese Firm Dongfang Electric Corporation (DEC).

Salini is well known in Ethiopia for the construction of various hydro projects, including the 184 MW Gibe I, the 420 MW Gibe II, the 460 MW Tana Beles multipurpose hydro project and most of the GERD project.

The late Prime Minister Meles Zenawi had said Ethiopia would not accept criticism from those who had already developed their own countries but wouldn’t allow countries like his to develop. Meles said Ethiopia would now turn to non-western development partners like China to help it build the future Gibe IV and V hydroelectric generators on the river.

Part of export strategy

Tegenu said Gibe III would bring electricity to an additional 1500 villages, as part of the government’s ambitious Growth and Transformation Plan II (2015-2020), in which developing Ethiopia’s abundant electricity generation potential figures prominently.

Ethiopia has an estimated 45 000 MW hydroelectric generation potential, second only, it claims, to that of the Democratic Republic of Congo (DRC). Ethiopia also has 10 000 MW of geothermal generation and 1.5-million MW wind power potential.

Last June, Ethiopia signed a contract with the company, China Electric Power Equipment and Technology, for construction of a 430km transmission line, to be financed with $120-million African Development Bank loan, to supply 400 MW of electricity to Kenya, by the end of 2016 or later. Most of the power will come from the Gibe III dam.

The transmission line will have a carrying capacity of about 2 000 MW of electricity, with a view to eventually supplying other east African nations further away, like Uganda, Tanzania, Burundi and Rwanda.

Tegenu said Ethiopia regarded its hydro-electric power as a means of regional integration. It is already selling 65 MW of power to neighboring Djibouti which landlocked Ethiopia overwhelmingly depends on for its export-import trade and 200 MW to Sudan which Ethiopia sees as a significant trade partner and alternative route to the sea. He said Ethiopia also regarded hydro-electric power as a source of hard currency and as the basis for its expanding green economy strategy which envisages the country being carbon neutral by 2025.

According to the World Bank, the country could in future earn about $1-billion annually from power exports, once projects like Gibe III and GERD come on stream.

Power Exports, complementary or antagonistic to local demand

While the government trumpets its vast renewable energy projects as being a future source of economic development, helping Ethiopia to reach middle-income status in ten years time, local realities threaten to be spoilers.

Hailu Desta, a café owner in Addis Ababa, despairs when he thinks of the amount of money he has to spend on diesel generators to keep his business ongoing, forcing him to shelve plans to build a pizzeria on top of his cafe business, while the government is exporting electricity.

“While it’s good that the country is constructing power projects, everywhere trying to light up the country and the neighborhood, I hope they soon fix the local power problem which is creating difficulty.”

That’s a frustration the minister has heard before and understands, asking for patience to solve this problem.

“There are some interruptions in the country. To end them we have started to improve our network to relieve substations from overloading, to improve the network to carry the appropriate load,” he said.

“We have set three plans for this, short, medium and long-term. By these plans we have already started solving the problem of power interruption. It will soon be reduced; as it’s the issue of electricity infrastructure and not of power shortages or because of the surplus power we export to neighbouring countries,” he said. In other words it is faulty sub-stations, power lines and so on , not a lack of power generation capacity, which are frustrating Desta’s dreams of building a pizzeria, Tegenu would have us believe.

Dr Eyob Tesfaye, an economist working for the United Nations, doubts this claim but says that, ironically, the power cuts are a a good sign.

“Electricity cuts are an unavoidable hiccup for a country whose economy is growing at a tremendous rate,” he said.

“Energy is at a heart of Ethiopia’s industrialization drive, creating backward and forward linkages, especially in the country’s agricultural products based economy where value added products are being given priority,” he said.