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The African Development Bank’s (AfDB) rejection of
the 40.8 million dollar-additional loan request by
the Ethiopian Electric Power Corporation (EEPCo) and
Electricite de Djibouti (EdD), initiated finance
ministries of the two countries to re-request the
loan needed for the Ethio-Djibouti Power
Interconnection Project.
Envisaging on demonstrating ways in which Ethiopia
could export power to Djibouti, EEPCo prepared a
Power Planning Study in 1982 and finalised a
feasibility study for the interconnection of a
Ethiopia-Djibouti Power System in 1989 that was
accepted by governments of the two countries. Hence,
the two countries jointly requested AfDB to finance
the project on loan in November 2002.
Having examined the request for two years, AfDB
approved the loan in December 2004; 30.4 million
dollars to Ethiopia and 25.6 million dollars to
Djibouti. The loan was approved for the construction
of transmission lines and substations, power supply
of boarder towns, project supervision and management
and institutional support for EEPCo and EdD.
Subsequently, EEPCo and EdD hired two consultant
firms, PB Power and RSWI, to supervise the projects.
A study and design made by these consultants with
detailed financial expenditure calculations revealed
that supplementary budgets were essential as
international price increases of steel and
electronic machineries depreciated the value of the
initially set budget, demanding a 40.8 million
dollar-extra budget.
Moreover, though the tender floated by the
consultants for the instalment of electric utilities
aimed to be a single circuit transmission 230kv and
63kv line, Djibouti’s power demand increase
necessitated a change to a more expensive double
circuit transmission line.
In July 2007, the power utiulities requested the
approval of the Bank of the latest figures.
AfDB responded in less
than a month and told the power utilities that the
two country governments must show their commitments
in covering the necessary expenses to launch the
project, while it also told them the Bank will
consider filling the gaps beyond their capacities.
“After that, we had a number of informal discussions
with senior officials of both governments,” a member
of the AfDB country representative office told
Fortune. When the finance ministries of both
countries requested the additional loan, it proved
their commitments.”
“In this context, experts of both countries’ finance
ministries have already started working on the loan
request, repayment, interest and payment terms which
are to be delivered for ADB,” a source at the
Ministry of Finance and Economic Development (MoFED)
told Fortune. According to the source, this
will be finalised before four week’s time.
To meet the Bank’s request of commitment demands, a
technical committee of both countries has decided to
send the request through the financial ministries,
in a meeting it held in Addis last month. Alemayehu
Tegenu, minister of Mines and Energy, and Farah Ali
Anan, minister of Energy and Natural Resources of
Djibouti, signed the agreement.
AfDB responded
positively for both companies in their request for
approval of the French ETDE for transmission line
construction, the Italian Siemens for sub-station
construction and the Indian Kalapa-Taru for boarder
town electrification.
This project is expected to be finished at the
beginning of 2009.
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