China agrees to invest $1.8bn in Ethiopia’s power grid

The State Grid Corporation of China has announced that it is to invest $1.8bn in Ethiopia’s electricity transmission and distribution networks, New Business Ethiopia reports.

The deal agreement was made following a visit to Beijing by Abiy Ahmed, the prime minister of Ethiopia, in which he held talks with the China Export and Credit Insurance Corporation (Sinosure), which agreed to organise the funds.

Ethiopia has made the development of its estimated 60GW of renewable energy a cornerstone of its 15-year Growth and Transformation Plan. The country now has about 4.5GW of installed capacity for a population of more than 100 million whose demand for power is growing at about 30% a year.

At present, 30% of the country has access to electricity and, in areas where there is grid coverage, only 60% of households are connected. To improve the situation, the government has set out a plan to construct 9,000km of distribution lines and 19,600km of transmission line.

Although the Ethiopian economy has been growing by more than 10% a year since 2006, it is struggling to service its foreign debts. During Prime Minister Abiy’s visit, China agreed to cancel all interest accumulated from its debts, estimated at between $12bn and $20bn.  

However, lack of funds is putting a brake on infrastructure investment. According to Addis Ababa newspaper The Reporter, the Ministry of Transport has announced that the construction of Ethiopia’s electrified railway between Awash and Hara Gebeya has made little progress in the past nine months due to lack of funds.

Dagmawit Moges, the transport minister, told the Ethiopian parliament that the construction of the project, which stretches from the eastern to the northern part of the country, has only managed to reach 54% completion over the past five years.

Image: The Grand Renaissance Dam is set to more than double Ethiopia’s installed generating capacity  (Government of Ethiopia)

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