Ongoing projects in Africa

The water tower of Africa
Ethiopia is currently in the middle of the biggest hydro construction programme ever seen in Africa. National generating capacity has already jumped from 745 MW in 2009 to 1,886 MW thanks to the completion of the Gilgel Gibe II and Tana Beles schemes. This will be doubled by the $1.8bn Gilgel Gibe III scheme in the Omo-Gibe Basin, which is nearing completion.

Most funding for Gilgel Gibe III has been provided by the Industrial and Commercial Bank of China, the African Development Bank (AfDB) and the government of Italy. One innovation in project finance on the scheme is that contractors are to be paid in a mixture of Euro and Birr in order to support the local currency. Construction costs are put at €1,470m, of which €448m will be paid in birr and €1,022m in euro.

Other similarly ambitious projects have already been planned but all are dwarfed by the 5,250 MW Renaissance Millennium Dam Project, which is being built on the Blue Nile, 710km kilometres west of Addis Ababa. Much of the power produced will be exported and an agreement has already been signed with Kenya’s KenGen. The most unusual element in the venture is how it is being funded. Although total construction costs are put at $4.1bn and the government does not appear to have raised anything like this sum, international construction and engineering companies have already begun work.

In April 2011, the government awarded a €3.35bn engineering, procurement and construction contract on the project to Salini Costruttori, which is already working on other dam schemes in the country. Alstom has been awarded a €250m contract to oversee the power engineering element of the scheme, while the project will be owned and operated by the Ethiopian Electric Power Corporation (EEPCo). Officials have stated that construction is already 25% complete. The state-owned Ethiopian Development Bank has been given the task of raising the money and is seeking to generate as much as possible though a bond issue, which is available to Ethiopians or those of Ethiopian descent. However, it seems likely that some form of payment guarantee must have been granted to the project contractors. Nevertheless, Addis Ababa is displaying the kind of optimism that has been rare on the continent since the early days of independence.