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AfDB approves US $97.79 million for financing energy transmission and distribution upgrade in Ethiopia

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The African Development Bank (AfDB) Board of Directors approved on Wednesday, November 22 a US $83.64-million African Development Fund (ADF) loan and US $14.15-million ADF grant to the Federal Democratic Republic of Ethiopia, to finance part of the cost for the Addis Ababa Transmission and Distribution System Rehabilitation and Upgrading Project (AATDRUP).

The Bank had financed the Addis Ababa Distribution Master Plan Study completed in 2015, which provides the basis for the AATDRUP. The project, which is expected to be completed within the next three years, involves rehabilitation and construction of 545 kilometres of medium voltage lines, replacement and installation of 582 distribution transformers and 13 primary substations, and establishment of the supervisory control and data acquisition system (SCADA) for the operation/control. It also includes upgrading of nine existing high-voltage substations and the construction of 3.8 kilometres of 132-kV double-circuit overhead line.

The project will support the Government of Ethiopia to relieve existing or imminent constraints on the electricity infrastructure to enable it to meet the growing demand in the capital city and its environs. It also aims to replace obsolete equipment in order to reduce energy losses and remove overloads, hence improving the quality of electricity supply, and to help address the connection backlog of an estimated 432,000 customers, occasioned by inadequate distribution system capacity.

The project is aligned with the Bank’s Ten Year Strategy (2012-2022) and the High 5s priorities, especially Light up and power Africa, and contributes to the New Deal on Energy for Africa. It is also in line with the Bank’s current Country Strategy Paper (2016-2020) for Ethiopia, which is articulated around greater focus on infrastructure development as its principal pillar, especially energy, transport, and the water and sanitation sectors. The Bank’s intervention is aligned with Ethiopia’s long-term development blueprint, the Growth and Transformational Plan II (2016-2020), which includes energy infrastructure development as the main pillar of the nine priority areas.

The project will benefit the Ethiopian population as a result of delivery of adequate and reliable electricity supply to meet the rapidly growing demand in Addis Ababa. In doing so, it will ensure acceptable quality and reliability of electricity supply for housing development, new commercial and industrial centres, the new light rail system and development of small and medium businesses.

The AfDB played a lead role in the preparation of the project by financing the distribution master plan study, assisted with quality assurance and structuring the project for bankability.

In addition to the AfDB’s contribution of US $97.79 million, the Japanese International Cooperation Agency (JICA) and Government of Ethiopia will contribute US $90.65 million and US $20.59 million, respectively, to finance the total project cost of US $209.03 million.

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