AfDB Boosts Ethiopia’s power industry with a USD 104 million loan

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The African Development Bank has approved a USD 104 million loan to the Government of Ethiopia for a project which will sustainably extend power to industries, small businesses to enhance job creation and improve access to basic services in the country’s Tigray and Afar regions.

The government of Ethiopia is working to increase its electrification rate to 90 percent by 2020 to meet growing industrial, commercial and domestic demand. It intends to meet these goals through grid-based rural electrification, additional off-grid supply options, and the development of adequate transmission and distribution systems for power transfer to various parts of the country. The biggest challenge facing the government is mobilizing the necessary resources.

The Mekele-Dallol and Semera-Afdera Power Transmission Supply for Industrial Development and Access Scale-up Project (MDSAPIAP) with its associated transmission lines, substations and rural electrification components, aims to improve the socio-economic development and livelihoods in Ethiopia’s Tigray and Afar states through increased access to affordable and sustainable electricity supply and improved service delivery.

The project is critical to ensure electricity generated from the power plants is transported to remotely located load centers. It will also solve the prevailing power shortages due to inability of existing diesel power plants to satisfy rapidly growing demand in the local potash and salt industries.

AfDB’s Director of Energy, Environment and Climate Change Department, Alex Rugamba stated that, “Domestic infrastructure development and regional integration, especially within the power sector, are fundamental to achieving the goals of the AfDB’s New Deal on Energy for Africa. Extending the grid will help to create electricity access, replace diesel with cleaner and more affordable reliable power for industries as well as urban and rural towns around Dallol and Afdera to stimulate economic activities that enhance job creation, improve access to basic services and limit environmental degradation.”

The MDSAPIAP aims to oversee construction of 130 km of the 230 kV Mekele-Dallol transmission line; 175 km of the 230 kV Semera-Afdera transmission line; and associated new substations in Dallo and Afdera. In addition, it will expand the existing Mekele and Semera 230 kV substations; construct medium and low voltage distribution networks; and provide consultancy services and technical assistance for project supervision, management and capacity building.

By its completion in 2019, the project is expected to benefit an estimated 36 rural villages through improved access to electricity and basic social services. In the Afar region alone, it is expected to help scale-up access to electricity to 75 percent through its extension of reliable grid-based power supply to industries, local small business, schools, health and social centers.

The government of Ethiopia is contributing over USD 18 million to the total project cost of USD 122 million.

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