National generating capacity stood at just 745 MW in 2009 but should exceed 10 times that figure sometime between 2017 and 2019, while the government hopes that 20 GW can be installed by 2030. African governments often announce such grandiose targets but the difference in this case is the pace of the progress that has already been made. The Gilgel Gibe II and Tana Beles schemes have already been completed, while the 1,870 MW Gilgel Gibe III project is scheduled for completion by the end of this year, when national capacity will reach 3,756 MW.
An estimated 89% of the water flowing through the Nile in Sudan and Egypt originates in the Ethiopian Highlands, so there is certainly plenty of water on offer. At 246 metres high, Gilgel Gibe III will be one of the highest roller compacted concrete dams in the world and one of the biggest hydro schemes of any kind in Africa. Yet it has attracted relatively little attention because work on a much larger scheme has already begun. The high profile 5,250 MW Renaissance Millennium Dam Project is being built on the Blue Nile at a cost of $4.1bn.
Located 710km west of Addis Ababa and near the border with Sudan, it will be the tenth biggest hydro scheme in the world when completed. The €3.35bn engineering, procurement and construction contract on the project was awarded to Salini Costruttori of Italy, while Alstom secured the €250m contract to oversee the power engineering element of the scheme. The state-owned Ethiopian Electric Power Corporation (EEPCo) will own and operate the project, which is now about 20% complete. The funding arrangements for the venture are as exceptional as the scale of construction. The government is seeking to finance the entire venture on its own, despite the fact that the construction budget is equivalent to the entire government budget for 11 months. Addis Ababa is trying to raise as much of the Renaissance Millennium Dam Project’s costs as possible by issuing five, seven and 10 year bonds in the venture to Ethiopians or those of Ethiopian descent. It has made buying the bonds a matter of national pride.
Alemayehu Tegenu, the Minister of Mines and Energy, revealed that the government had raised more than 5bn birr ($279m) by last November, mainly through bond sales. He says: “This dam may not be constructed only by selling bonds, but the utility can finance some part of the financing. The option we have designed is financing by the people of Ethiopia, the utility and the government.”
The remarkable aspect of the case is the construction is already well under way because funding has been guaranteed.
Industrial and Commercial Bank of China, the African Development Bank (AfDB) and the government of Italy have already financed other dam projects in the country and could be called on again to support the Renaissance Millennium Dam Project. The Chinese government more generally and also the World Bank may also be prepared to commit themselves. n NF