Ethiopia: New Plans for Hydroelectric Production

20 July 2011 FDI Team

Background

On 29 June 2011, the Ethiopia Electric Power Corporation announced that it would build four hydroelectric dams on the Nile River. The major hydroelectric dam project is part of a plan to spend $4.5 billion to raise power generating capability. The project will be in addition to the Grand Renaissance dam, which is also being constructed on the Nile. It will provide much-needed energy and income for Ethiopia, but could have serious implications for Egypt and Sudan as they face possible threats to their water rights.

Comment

The new dams will help Ethiopia in its aim to become a prime exporter of electricity to neighbouring countries such as Egypt and Sudan. Construction of the four dams will commence after 2015. When completed, they will be capable of producing 11,000 megawatts of electricity. They will be in addition to the Grand Renaissance dam, which will be completed in seven years’ time and will generate 5,250 megawatts. Overall, the Ethiopian plan for hydroelectric production is to produce 20,000 megawatts of power within the next ten years. Twelve billion dollars is expected to be spent on these and other projects over the next 25 years.

The projects will not require foreign investment but, rather, will be funded through the sale of government bonds and through donations. It equates to a five-fold increase in the current power-generating capacity, which is around 2,000 megawatts. In the longer term, Ethiopia is said to have the potential to generate up to 45,000 megawatts of electricity from water. By selling hydroelectric power to neighbouring countries, Ethiopia may become a leading power exporter in northern Africa.

The plans for more dams may, however, violate the water rights of other countries on the Nile. Egypt has previously refused any deal that would reduce its share of the Nile and give more access to other countries. Moreover, the 1929 Nile Waters Agreement gives Egypt the majority of water rights to the Nile River. Furthermore, the projects on the Nile raise concerns about the damage to local ecosystems, because the cumulative effect will mean much lower water levels downstream. As a result, there is a need for governance by an independent party, such as the Nile Basin Initiative, to ensure minimal environmental damage and no destructive exploitation.

Stella An

Research Intern

FDI Global Food and Water Crisis Research Programme

 

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