Building the economy from the ground up: Ethiopia is focusing on major transport and energy infrastructure projects to transform its economy.
The government has decided to focus on two main areas in terms of infrastructure: transport and hydroelectric power. The country's most important transport project is the 750km electrified railway that will connect Addis Ababa with the Port of Djibouti, replacing the old metre gauge line and cutting travel time from two days to just ten hours. The government hopes that this will encourage hauliers to switch cargo from road to rail. Ethiopia has been landlocked since the secession of Eritrea in 1991 and although Mombasa and the planned new port of Lamu in Kenya are promoted as alternative entrepots, Djibouti is likely to remain the port of choice for Ethiopian traders.Chinese banks have provided the $4bn funding for the project, which is being developed by China Railway Group and the China Civil Engineering Construction Corporation. The line is now more than 90% complete and is due to begin service next year. Ethiopia will also benefit from the ongoing development of port terminals at Djibouti, including Doraleh Container Terminal, which is operated by DP World. China Merchants Holding is also developing the new Djibouti Free Trade Zone over the next 10 years, at an estimated total cost of $7bn, while the Turkish government intends to set up a processing zone at the plant.
Another rail project developed at a far lower cost has probably attracted more attention. The first phase of the $475m Addis Ababa Light Rail opened in September, making it the first urban light railway in sub-Saharan Africa. The first 17km line runs from the city centre to industrial areas on the southern edge of Addis Ababa, while a second line that will connect the east and west of the city is still under construction. The two lines will carry up to 60,000 passengers an hour at up to 70km an hour.
Again, Chinese companies are involved at every stage: funding was provide by Export-Import Bank of China, construction carried out by China Railway Group and the system will be operated by Shenzhen Metro for the first five years before being handed over to Ethiopian Railways Corporation. China Electric Power Equipment Technology Company is still completing the dedicated power grid for the system. The terms of the loan give a three-year grace period with repayments then made at the six-month Libor rate plus 2.6%.
The price tag for the new Djibouti-Addis Ababa railway is matched by that for the new airport planned for Addis Ababa. With four runways, it is scheduled to have handling capacity of 120m passengers a year when it opens sometime after 2025. This may seem overly ambitious for a country with limited private sector opportunities but is based on the success of Ethiopian Airlines, which has established Bole International Airport as an important hub between Africa, Asia, the Middle East and Europe. Bole itself is currently being expanded at a cost of $35001, increasing its operating capacity from 6m to 22m passengers a year by 2018. Manufacturing, processing and service zone are planned at the new airport to promote it as a business centre as well as a passenger airport.
Hydro revolution
As Table 1 demonstrates, the pace of dam construction has picked up hugely in recent years. National generating capacity stood at just 745 MW in 2009 but has already reached 1,886 MW and will soon double again, thanks to the completion of the 1,870 MW Gigel Gibe III dam in June, although its reservoir is still filling. Built on the Omo River at a cost of $1.8bn, Gigel Gibe III is just 150km downstream from Gilgel Gibe II. With two more dam projects planned on the Omo, environmentalists are concerned about the impact on local people and Lake Turkana on the border between Kenya and Ethiopia, not least because the lake receives 90% of its water from the Omo.
Much of the production from the plant will be exported: Kenya is to receive output from 400 MW of capacity, Djibouti 200 MW Sudan 200 MW. The $230m transmission line between Ethiopia and Kenya is already under construction and is expected to be completed by the end of 2018. Siemens and Islolus Inginiera are undertaking the work for the Kenya Electricity Transmission Company with funding from the World Bank and the African Development Bank.
The 6 GW GERD dam, which was previously known at the Millennium Dam, is being built on the Blue Nile, close to the border with Sudan. It will be the biggest hydro scheme in Africa and the tenth biggest in the world, giving Ethiopia the highest generating capacity in sub-Saharan Africa after South Africa. In April 2011, the government awarded a 3.35bn [euro] ($3.6bn) engineering, procurement and construction contract on the project to Italy's Salini Costruttori, which is already working on other dam schemes in the country. The reservoir's capacity is more than one and a half times the Blue Nile's annual flow. The project will be owned and operated by the Ethiopian Electric Power Corporation (EEPCo), which believes that it is the biggest dam that can be built at any point on the Nile in terms of generating capacity. It will also be the biggest dam in Africa, at 170 metres high and 1,800 metres long. Construction work is about 45% complete and is on course to be finished by July 2007. Power from the project could be exported to Sudan, South Sudan, Kenya, Egypt and Rwanda, as well as greatly increasing power supplies in Ethiopia.
Table 1: Ethiopian hydro schemes (>100MW) Date commissioned Project River Generating capacity 1973 Fincha Fincha 100 MW 1989 Melka Wekena Shebelle 153 MW 2004 Gilgel Gibe 1 Omo 184 MW 2009 Tekeze Tekeze 310 MW 2010 Gilgel Gibe 2 Omo 420 MW 2010 Tana Beles Belesa 435 MW 2015 Gilgel Gibe 3 Omo 1870 MW 2017 GERD Nile 5250 MW Table 2: Planned new hydro projects Project Status Generating capacity (MW) Gilgel Gibe IV Under feasibility study 1450 Gilgel Gibe V 600 Tekeze II 450 Beko Abo 1600 Mendeya 2000 Wabi Shebele Under preliminary study 87 Birbir 467 Lower Dedessa 613 Dabus 427 Beshilo 700 Tams 1000 Genale Dawa V 100 Total 9572 Source: Grandmillenniumdam.net
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| Title Annotation: | COUNTRY FOCUS: ETHIOPIA |
|---|---|
| Comment: | Building the economy from the ground up: Ethiopia is focusing on major transport and energy infrastructure projects to transform its economy.(COUNTRY FOCUS: ETHIOPIA) |
| Author: | Ford, Neil |
| Publication: | African Business |
| Geographic Code: | 6ETHI |
| Date: | Dec 1, 2015 |
| Words: | 1032 |
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