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Saturday, October 10, 2009

The Pro and contra of Energy investments in Ethiopia

Abstract

As per the Ethiopian power Authority (EEPCO), in Ethiopia the energy sector statistics show a tendency of grow, which make all Ethiopians very happy. On another hand the secrecy of power data, unclear energy investment bids and reserved public debate in
government policies are facilitating that numbers of energy projects are wasting huge amount of money due to loose study, delay on the project life time due to unseen problem and unclear project bid offer.















The following gives my personal comment based on my study of few available references.

The statistics of energy data as per power Authority EEPCO

As Ethiopian we are happy that many development projects are being conducted. It is one ways of making life better for our population. One thing that is good in Ethiopia power sector is the development of master plan for power system

Expansion where it is thought on such a way the master plan expresses the short, mid and long term expansion needs including the regional interconnection programs.
Probably, this master plan could help to the growth of the energy demand and supply statistically expressed on the reverence. With out going economical, technical and environmental impact analysis, just looking at open source offered by EEPCO we can be happy for continue grow from 1991 up to 2007.

The graphically increasing tendency of energy production, sells and the transmission line done as well as the generation station on project indicates that there are works done by TPLF since their arrival to the tope of Ethiopian power. It is good to know that our electricity industry has embarked on a growth trajectory and huge money is allowed for new investments.

I think it is very appreciable to get such amount of investment. In addition of the investment shown on the table we can see other energy generation investments on the following list

1) $408 million agreement with China Gezhouba Group Company for building the 254MW
Genale Dawa 3 hydroelectric facility in southern Ethiopia
2) $555 million contract with Sinohydro Corporation provides for the construction of Chemoga
Yeda hydroelectric facility in northwestern Ethiopia and includes construction of dams on five rivers.















3) EEPCo also signed a preliminary agreement with HYDROCHINA Company for construction
of two 51 megawatt wind power projects in Adama and Mesobo Harena. The EXIM Bank of
China is providing financing for the projects
4) 210 M€ on Ashegoda investment signed with the french comapany

Problems on power projects

When I was reading news on Ethiopian energy investment in the open source of Internet I was very surprised with the impact of the Gibe III environmental issues. Next I could get few data of some others projects. These data are showing us how far the technical and environmental impacts of energy investments are not gotten serious consideration. It is worries full that in Ethiopia, civil society have no ways of being informed about the project’s potential risks and impacts that may lead our population on unwanted direction. As citizen we can not do any thing to influence and follow the national investment strategies. In many times we have no control at all and many times civil society are informed after issues become irreversible. If you search the internet for Ethiopian hydro-energy projects most of them are criticized by weak project study before starting the implementation. As an example, on this post we can get same basic idea about the real problem and information about Gilgibe environmental issue, the Tekeze project and Ashegoda power project

Tekeze hydropower proyect

Tekeze hydropower was expected to generate 300MW power to the national grid. The construction contract was signed for the construction of the dam by EEPCo with the Chinese National Water Resources and Hydropower Engineering Corporation (CWHEC) on June 7, 2002. Tekezze was intended to start generating power in 2007 but the concerned companies were forced to reschedule the deadline to the end of 2008 and additional cost of another 400 million birr about 15% of the total project cost. The date was rescheduled again. As per the reference of August 26, 2009 the project of US$224 million have generated 75 MW from one of its four turbines in the test run. Commercial production is expected to begin in a few weeks.

Gilgel-Gibe III hydropower
As per numbers of reference consulted Gilgel Gibe III construction began in 2006 with out properly assessing economic, technical, environmental and social risks as well as ignoring international standards. The Gilgal gibe III dam with the height of 240 meters is considered to be Africa’s tallest dam and Ethiopia’s biggest investment that is already under construction. The construction of this dam is criticized by environmentalists saying the construction will wreak havoc on the Omo River's natural flood cycle. It is believed that post-construction analyses are being written to provide supporting evidence for a decision made years ago.

In July 2006, the government of Ethiopia directly awarded €1.55B ($2.11B) a no-bid Engineering, Procurement & Construction (EPC) contract for Gibe 3 to Italian construction company Salini by violating Ethiopia’s Federal Public Procurement Directive, which requires international competitive bidding.

As per the references I have attached,
1) The World Bank declined to consider project funding because the contract also violated the Bank’s own procurement policy.
2) The European Investment Bank has decided to pull back its funding of Euro 1.55 billion for hydropower dam following pressure calls by environmentalists. According to the reference, the hydropower dam would devastate the ecosystems of Ethiopia's Lower Omo Valley and Kenya's Lake Turkana.
3) International Rivers' Africa director Terri Hathaway said the Gibe 3 Dam violates the AfDB's policies on environmental and social assessment, poverty reduction, resettlement, public disclosure, and trans-boundary water management.
4) The project's impact assessment reports were also published long after construction began and are said to disregard the project’s most serious consequences
5) As per numbers of publication, in July 2006, the government of Ethiopia directly awarded a no-bid Engineering, Procurement & Construction (EPC) contract for Gibe III to Italian Construction Company called Salini. As per the reference, the embasy of Italy in Addis posted Lessons Learned from Gibe II saying the Project was defined without a comprehensive sector support strategy. Possible negative consequences are:
1. limited coordination and policy influence for the long-term sector development in
synergy with other interconnected sectors;
2. limited scope for supporting best practices for (socio)environmental impacts of
large infrastructures;
3. absence of an accompanying program for social development and capacity building;
de-link with grant program and projects financed by IDC in Ethiopia

If these are true how the Gibe III will be implemented with out basic study? This is Ethiopian development project, I wish to support the government using all of my ability but there are things that hard to assimilate and write a supportive idea. How could these big companies like European Investment Banks, African Investment Banks and Italian company make investment without reliable data?

Ethiopian government is ruling in Ethiopia since 1991, what is the reason of constant mistake in many of the investments conducted in Ethiopia? As per the Ethiopian power authority, the ambitious power master plan for year 2007-2015 is indicated on the map attached. This map make me more tension when I think the amount of error and money lost if the government continue insisting on his careless and unlawful investments. It make me more worry full when I think on the loan that my children’s and my grand children’s will live paying unseen loan.

Ashegoda wind power project

It known that the Ashegoda wind turbine project are done with wrong site selections. As stated on my blog post, since year 2006 the government is running another energy project of Ashegoda Wind Park and Mesobo-Harena (40-60MW each one) for Tigray development by doing wrong site selection and taking a loan from foreign bank on behalf Ethiopian project. As per consulted references, on this wind project there was no enough time to make the required study before the implementation bides and based on this fact there was few interests on this project by well known international wind companies. Finally, suddenly was announced that the French Loan of 208.6 million Euros from a French financier was obtained to implement the project. This project is about a loan of 210 M Euros to Ethiopian future generation including my recently born kids will pay like many others.

It is common that the EPRDF rulers take what ever decision that comes to their mind and there is no means to discover on time and try making public comments. Reasons are:
a) The TV, radio and major paper publication media are controlled by the government.
Free and independent journalists are persecuted if they publish some thing that is
inconvenient for the government.
b) After the may 2005 national election the political atmosphere in Ethiopia has further
restrained public debate
c) It is said that the NGO law passed of January 2009 force to disengage civil society
from participating and commenting the policy-making process that include
governance and human rights issues

As Ethiopian it is my concerns to comment on these general issues on what ever opportunity occur to me so that ideas become summarized and be more open to the public eye.


Conclusion
There is no question that Ethiopians needs power and energy investments help Ethiopians to get more jobs and more business opportunity and better life at longer run. We are witnessing a numbers of energy projects of huge investments. Based on:
1. the late control of investments from European and Investments banks and
2. On hurry nature with small consideration to technical and environmental issues on the government side it is good to highlight the need to make enough reflection to check whether invested money is on the right place or not. It is also very important to consider their economical and technical efficiency as well as the environmental impact acceptability.
The idea is the energy investments need more consideration regarding to the study, evaluation and lawful biding and environmental evaluations. I believe there are one reasonable way of doing things, one best engineering design, reasonable economical investment and lawful bid offer, which shall be open to the public comment and discussion. It is believed that public comment on engineering investments make safer, economically stronger and ensures nation development.
The critics originated on Takaze and Gilgel Gibe dams, the critics on Ashegoda wind energy projects suggest doing a big question mark on Ethiopian government’s ways of making investment in Ethiopia.

Reference

1) http://www.upi.com/Science_News/Resource-Wars/2009/09/23/Ethiopia-embraces-renewable-energy/UPI-43101253752164/
2) http://www.internationalrivers.org/en/node/3174
3) http://www.renewableenergyworld.com/rea/news/article/2009/08/ethiopias-tekeze-dam-begins-generating-power
4) http://www.powermag.com/renewables/hydro/2012.html
5) http://www.internationalrivers.org/files/Gibe3FS_051509final.pdf
6) http://www.afrol.com/articles/33459
7) http://www.itacaddis.org/italy/images/uploaded_pictures/GGII%20-%20Informative%20Note%20-%20Sept%2007.pdf
8) SHORT TO MID TERM POWER SYSTEM EXPANSION NEED(Year, 2007-2015) by EEPCO, Augost 2007, Addis Ababa.















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