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Ethiopia’s $5bn project that could turn it into Africa’s water powerhouse
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With some 8,500 laborers working around the clock on its construction, the imposingly-named dam is surely one of Africa’s most ambitious infrastructure projects, reaffirming Ethiopia’s ambitions of becoming a big regional player and a major exporter of power.
When completed, the project will generate around 6,000 megawatts of electricity for both domestic use and exports.
The most striking aspect of the nearly $5 billion enterprise is, however, that it is entirely funded by Ethiopia, without any foreign investment. According to the authorities, 20% of the project is financed from bond offerings to Ethiopians, and the remaining 80% from tax collection.
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“It was seen as a strategically important initiative that the government and the Ethiopian people are financing it 100%,” says Zemedeneh Negatu, managing partner at Ernst & Young Ethiopia.
“They have come up with a very creative and innovative way that I think will be a lesson for other African countries who want to embark on such large infrastructure projects, and want to have the flexibility to do it themselves,” he adds.
So far, Ethiopians at home and abroad have contributed about $350 million, and the government says that the 170 meter tall dam is on track for a 2017 opening, with 40% of the work already complete.
Ethiopia’s per capita income might be one of the lowest in the world, but the country has enjoyed an impressive economic growth since 2000, averaging 10.9% annually, which has resulted in a 33% reduction of people living in poverty.
If the Grand Renaissance Dam and other hydroelectric projects, such as the Gibe III dam on the Omo river, are completed on time, The World Bank estimates Ethiopia could earn $1 billion a year from electricity exports. Zemedeneh says that this would make the country the largest exporter of power in Africa, and second only to South Africa when it comes to installed capacity.
The Grand Renaissance Dam is being built on Blue Nile, a tributary of the Nile River which has been powering the agriculture of Sudan and Egypt — through which it flows — for millennia. These countries have strongly opposed the project since its inception, fearing that the dam will reduce their share of the Nile water. The ousted Egyptian president Mohamed Morsi had even threatened to defend “each drop of Nile water with our blood if necessary” back in 2013.
Passions have been calmer more recently, and yesterday the Reuters news agency reported that representatives of Egypt, Sudan and Ethiopia reached a preliminary agreement in Khartoum on how to operate the dam. Zemedeneh is convinced that a compromise will be reached, as he thinks that the dam will ultimately benefit not just Ethiopia but most other East African nations.
“This is actually a regional project because up from Egypt all the way down to Rwanda, countries are going to buy the power that’s generated by this dam,” Zemedeneh says, adding that both Rwanda and Kenya have already agreed to purchase thousands of megawatts once the project is finished.
A lack of reliable power has long stunted Africa’s development, with 600 million people on the continent not connected to the grid and getting by on a mix of generators, kerosene lamps and candles.
“It’s Africa’s Achilles’ heel,” says Zemedeneh. “With anyone who wants to build a factory in Africa, the first thing they ask is infrastructure, and within infrastructure, whether there is sufficient electricity. Industrialization has always been about electricity, and this [dam] addresses this basic need.”
He adds that, after depending on exporting raw commodities for decades, governments across Africa should be pursuing a strategy of industrialization, following the example of China.
“We’ve got to move up the value chain, and it’s what Ethiopia is doing right now. Its strategy is industrial-based — not to export commodities but to manufacture value-added things and other African nations are trying to emulate that. But without electricity there won’t be industrialization in Africa.”
Government, PetroTrans to start court battle
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The Hong Kong-based Chinese oil and gas company, PetroTrans, and the Ethiopian government are going to start court litigation at the International Arbitration Court of the International Chamber of Commerce over terminated natural gas development project.
The Ethiopian Ministry of Mines and PetroTrans will for the first time appear before the Geneva-based International Arbitration Court (IAC) of the International Chamber of Commerce on March 15. Reliable sources told The Reporter that legal counsel for both parties will appear before the arbitration court and the hearings will begin on March 15.
According to sources, the Ministry of Mines is represented by a prominent Ethiopian lawyer, Zewdineh Beyene Haile (PhD, JSD), Managing Partner at Dr. Zewdineh Beyene Haile Law Office. The law office specializes in the fields of international arbitration, private equity investment, petroleum and energy, construction, banking and finance, real estate, public-private investment projects and project financing. PetroTrans is represented by a Swiss law firm, Lalive. PetroTrans first filed the arbitration case to IAC in December 2012. So far the court has been considering claims and counter claims submitted by the two parties as well as various motions and counter motions. Sources said thousands of pages of documents have been presented to the court by the parties.
PetroTrans and the Ethiopian government embroiled into disagreement following the latter’s decision to terminate the petroleum development agreement signed by the two parties in 2011. In July 2011 the Ethiopian Ministry of Mines awarded the Calub and Hilala gas fields found in the Ogaden basin in South East Ethiopia. The ministry also granted PetroTrans eight oil exploration blocks in the Ogaden basin. The petroleum exploration and development agreement was signed by the then Minister of Mines Sinknesh Ejigu and John Chin, founder and president of PetroTrans.
All the concessions were previously held by the Malaysian oil and gas giant, Petronas. In 2011, the ministry put up an international tender after Petronas relinquished the concessions and pulled out of Ethiopia. PetroTrans won the tender and took over all the concessions measuring 93000 sq.km of vast arid land.
While PetroTrans was undertaking preliminary work on the project the Ministry of Mines revoked the petroleum development license in June 2012 saying the company was not expediting work on the project. At that time Sinknesh told The Reporter that the company was engaged only in paperwork. “We do not tolerate a broker company anymore,” Sinknesh said.
This is an allegation PetroTrans utterly denies. In a statement sent to The Reporter in December 2012 the company said it was analyzing and interpreting the geological data that were collected from the concession by other companies. We hired consultants that were doing the work. We were about to start field work when the ministry terminated the agreement,” the company said.
The company previously said it took the case to the arbitration court following its repeated attempts to amicably resolve the problem with officials of the Ministry of Mines failed. After revoking the license officials of the Ministry of Mines declined to talk to executives of the company.
Both officials of PetroTrans and the Ministry of Mines declined to comment.
After snatching the gas fields and the eight oil exploration blocks from PetroTrans the Ministry of Mines awarded all the concessions to another Chinese company, Poly GCL in November 2013.
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Lack of trucks blamed for Djibouti port congestion
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Domestic cargo, fertilizer, and food aid shipments to Ethiopia are facing hold-ups due to congestion caused by the massive quantities arriving in Djibouti port and non-availability of trucks.
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Currently there are 7 vessels at the anchorage waiting for berth while 3 others are alongside, suffering from lack of trucks. Another batch of four vessels is expected in the coming days, rendering the port to become even more congested, according to the Port of Djibouti.
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Djibouti Port management expressed the seriousness of the situation, ie dry bulk vessels’ congestion at the anchorage due to long stay of ships, which are at berth and stated that the main reason of this congestion is the lack of trucks to uplift the direct delivery of bulk cargo.
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During a meeting held in Djibouti on February 25, Saad Omar Guelleh General Manager of Djibouti Port said that the transport problems should find sustainable solution. The meeting gathered more than 20 executives both from Ethiopia and Djibouti, involved in the Maritime sectors such as transporters, operators, receivers, and representative of the Ethiopian embassy.
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“It is our common concern to find joint solutions to clear the vessels. The Port committee is ready to support all with maximum possibility.
We must avoid demurrage fees for our Ethiopian recipients and the ship owners,” the port said in a statement. “The Port also accepts all alternatives to release the vessels and speed up the operations by using outside warehouses. The Port of Djibouti would like to prevent and avoid the unnecessary cost for our customers,” further reads the statement.
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Explaining how serious the situation is, the statement notes ‘the bulk terminal warehouses are full and additional vessels are coming. We remain by protesting to our client that our facility is underutilized. At this moment, we have problem and grain is coming. We require around 300 trucks per day for our all activity that lifts 12,000mt/day. If we get more trucks, it is better.’
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The General Manager further said that alongside vessels are suffering and the anchorage is becoming congested. “This situation is becoming difficult and if it continues it will affect the Port’s image. We should work hard and find solution within one week. The Port is ready to give you all necessary support and facilitate to berth the vessels and store the cargo both inside or outside warehouses at your convenience so as to avoid unnecessary costs,” added the general manager.
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According to the management, it is very important for the Port of Djibouti to know in advance the planning of the vessel coming by commodity for the next three months minimum, so as to prepare suitable berth. While, the owners of the commodity on their part need to get the transporters ready and available on time, the Port also needs to know which commodities are in priority for Ethiopia be it aid cargo, domestic cargo, fertilizer and wheat or others commodity so as to plan accordingly.
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The Port of Djibouti also calls out to the Ethiopian Embassy in Djibouti, Ethiopian Road Authority and Ministry of Transport and all concerned parties to urge transporters and others to serve the vessels appropriately.
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Ethiopia to manufacture prototype tractor
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The Center of Excellence for Engineering (CEE) a national welding training center under the Ministry of Education, disclosed that it will start manufacturing prototype tractors. The center will also train engineers in manufacturing molds of different parts of tractors.
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Wondwossen Kiflu, State Minister of Education, said, “Our agriculture must be supported by modern agricultural tools and we want our engineers to design and make tractors here.’’
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Wondwossen made the above remark on 21 February at a certificate awarding ceremony to 33 welding professionals that were trained by the German economic cooperation organization GIZ Ethiopia.
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The Swedish charity organization Industries for Africa will assist CEE technically and financially to materialize the center’s dream of manufacturing tractors locally.
The prototype tractors will be released after a year and half, according to plans of the center. Then after, CEE will have more manufacturing units across the nation in order to assemble tractors abundantly. “After making the sample tractors, we will talk to other stakeholders to support us to intensify the work,” Wondwossen said.
“It is a reason to be proud as a nation that we will start the production of tractors. That helps our farmers who use traditional methods of farming to use modern technologies that save energy and increase production,’’ he added.
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Currently tractor parts are imported and assembled in Ethiopia. When manufacturing the tractors locally begins, farmers will have a big opportunity to have their own tractors at lower cost not to mention that saving on foreign currency.
Assefa Kidane, CEE Manufacturing Expert told Capital that the center is not targeting just on manufacturing prototype tractors but it also plans to manufacture prototype milling machines.
According to Assefa, small enterprises will have a lead role in manufacturing and supplying the tractors to regions when mass production begins.
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“When we finish fabricating the sample tractors, we’ll train small enterprises how to manufacture it and then they will make and sell it to the farmers with fair price.”
“We hope that when small enterprises start manufacturing the tractors, a lot of jobs will be created for many people. Beyond that, using other traditional tools for agriculture will be history as farmers can buy tractors for reasonable price. And this will help the country to increase its agricultural production.’’
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Recent evidences of mechanization showed that there are around 12,000 tractors in the country. This amount is very small relative to 80 percent of the population that is engaged in agriculture. Availability of home made tractors with low coast will boost the demand of farmers to buy it and that increases their production.
Recently, Ursus SA, a Polish producer of agricultural machinery, concluded a deal with the Metal and Engineering Corporation (MetEC) to provide a tractor assembly line for Ethiopia.
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The company signed a deal with MetEC to supply 3,000 tractors back in September 2014.
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During the initial stage the company will deliver 180, 80, and 50 horse power tractors to Ethiopia in addition to 110 and 140 horse power tractors that will be delivered later.
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Ethiopia to offer new National Stadium tender
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The Federal Sports Commission of Ethiopia has revealed it will accept tenders next month for the delayed Olympic-sized 60,000-seater national stadium in Addis Ababa dubbed Adey Abeba.
“The process is open to both local and foreign contractors and should take no more than a month to complete,” NasirLegesse, director of the Information and Communication Directorate, at the sports authority told Zawya Projects in an exclusive.
He added that the largest stadium in Ethiopia, which will be built over 67,000 square meters at an estimated cost of $100 million (2,033 billion birr), is financed by the Ethiopian Government and will take an estimated two years to complete.
The design, currently being finalized by local firm MH Engineering plc, is expected to take its inspiration from international stadiums such as the Beijing National Stadium, (the Bird’s Nest), said Legesse.
He nevertheless declined to comment on the reason for the retendering and selection of the new design firm in October 2014.
Previous joint-bid design winners, German firm Laboratory for Visionary Architecture (LAVA) and local firm JDAW Consulting Architects and Engineers were ousted from the project; JDAW has filed a lawsuit before Ethiopian courts seeking to have an injunction against the sports commission.
The new project will overtake the pole position from the country’s current Addis Ababa International Stadium, which has a 30,000-seat capacity.
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Checkered flag for direct Ethiopian floriculture sale in European markets
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The Ethiopian Horticulture Producers and Exporters Association (EHPEA) got recognition from the Global Partnership for Safe and Sustainable Agriculture (Global GAP) for its adherence to a high standard code of practice in floriculture production.
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Global GAP applauded EHPEA upon the successful recognition of its Code for Sustainable Flower Production Silver level version 4.0 as an acceptable trade practice of international standard. Global GAP announced in a statement, that the EHPEA Code for Sustainable Flower Production Silver level version 4.0 is successfully recognized as an equivalent of a GLOBAL GAP certificate.
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Tewodros Zewdie, Executive Director of EHPEA, told Capital that EHPEA and Global GAP have been working for a year to conclude the recognition process.
According to EHPEA, the letter signed by Dr. Kristian Moeller, Global GAP Managing Director, declared that EHPEA has the right to contract Certification Bodies (CBs) that have achieved indicated ISO accreditation.
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See also: The 6th HortiFlora trade show to see large participation
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Gebremichael Habte, Fresh Produce Business Expert, told Capital that the new recognition will minimize the cost of certification that was paid to foreign certification companies. “Now local producers do not need to obtain additional certification from abroad certification bodies to sell their product in European markets,” he added.
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The recognition given by Global GAP holds as long as the conditions that dictate the Silver level version 4.0 production procedures remain unchanged.
Gebremichael advised that producers should make the best use of this opportunity to supply their product for European retail markets directly. According to the expert, the agreement will also insist local certification companies to expand their capacity.
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Global GAP’s roots began in 1997 as EuroGAP, an initiative by retailers belonging to the Euro-Retailer Produce Working Group.
British retailers working together with supermarkets in continental Europe become aware of consumers’ growing concerns regarding product safety, environmental impact and the health, safety and welfare of workers and animals.
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To reflect both its global reach and its goal of becoming the leading international G.A.P. standard, EuroGAP changed its name to Global GAP in 2007.
Their solution to the product safety question led to harmonize their own standards and procedures and develop an independent certification system for Good Agricultural Practice (GAP).
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The standards helped producers comply with Europe-wide accepted criteria for food safety, sustainable production methods, worker and animal welfare, and responsible use of water, compound feed and plant propagation materials.
Harmonized certification also meant savings for producers, as they would no longer need to undergo several audits against different criteria every year.
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Ethiopia producing sufficient plastic pipes meeting local demand
Addis Ababa – Yonas Abate from the Ministry said they are working with the Ethiopian Customs and Revenues Authority and Ministry of Finance and Economic Development to implement an import substitution scheme for plastic pipes.
The plastic sector has made remarkable growth in the past five years, jumping from an annual output of 28,656 tones of product five years ago to 61,656 in this year. Impressive achievement has also been registered by the sector in creating job opportunities and linking markets.
Some of the producers told fanabc.com that power shortages and lack of notification for demand on the side of the government, which is the biggest customer of their products, are some of the challenges in the sector.
There are currently close to 200 plastic factories in Ethiopia.
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Turkish Akgun Group ready to muscle up its plant
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Oyap Ethio-Industry and Trading Plc. an Akgun Group subsidiary, is scaling up its PVC manufacturing to have stronger presence in the local and international market domains.
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Oyap Ethiopia Industry and Trade, a PVC profile manufacturer based in Burayu town in the western outskirt of Addis Ababa, is undertaking an expansion work to double its production. The expansion will be completed in the coming three months, according to the company’s officials.
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The company that was established ten years ago is a pioneer PVC producer.
“We are producing 20,000 meters of PVC per day. This will be doubled after three months,” Ufuk Akgun, a board member of Akgun Group said. The company head said that they are working to be the leading PVC producer in Africa with views of expanding its reach of international markets.
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Currently, the company is supplying its product for governmental and private construction projects in the country. “Our production is higher than the local demand. Due to this we are exporting the product to other countries,” Akgun said.
“When the expansion is completed, the company will introduce double glassing material that is produced locally,” he said.
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According to Akgun, the company vies to supply its products, which are produced according to western standards, for the government housing project. Previously, the government has been using imported PVC materials for its housing projects.
Akgun said that Oyap also has a plan to raise its capital to 40 million dollars in the coming couple of years. “We will undertake another expansion on the PVC manufacturing plant that will be completed in the coming one and half year,” he added.
“Our target is to be the leading PVC producer in Africa,” Akgun added. “We are going to install high-tech machineries on the latest and the coming expansions,” he said.
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The company wants to supply markets in neighboring countries on its immediate market reach widening plan, and it also plans to export to European and North American markets in the mid-term.
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Currently, Oyap-Ethio Industry and Trading Plc. and Akgun Construction, a sister company of Oyap, investment in Ethiopia has reached USD 10 million.
Akgun Construction, a member of the Akgun Group based in Istanbul, is the construction wing of the Turkish company that mainly operates in Germany and Turkey.
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The two companies that are under Akgun Group, a multi-billion dollar company, are the first companies that established an industry zone in Turkey about three decades ago. Akgun has businesses in Europe, US and Asia.
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Akgun Group is waiting the green light from the government to embark on setting up a giant industry zone in Sendafa, Northeastern outskirt of Addis Ababa.
“We have already accumulated the adequate finance for the project that will take place in phases,” he said.
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Ethiopia’s apple production hampered by absence of seed propagation
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A crop researcher with the Ministry of Agriculture (MoA) lamented that the potential apple growing land situated in the highlands of Ethiopia remains uncultivated.
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Asnake Fikre, Crops Research Director with MoA, told Capital that the government does not have the capacity to propagate apple seeds and it wants investors to distribute the seeds to farmers. “We firmly believe the works that have been done to start off the production are too small. We know that farmers do not get the seeds in the market because no company is interested to propagate it.”
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In Ethiopia, areas situated 1,900 meters above sea level are said to be suitable for growing apple but the country continues to import the fruit from India and South Africa instead of using potential areas in the South and Northern regions.
Currently, a kilo of apple is sold for 60 Birr in the market. Chencha, Arbaminch, supplies a small portion of the local apple consumption.
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Related article http://eco-opia.org/2013/04/21/ample-apples/
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Asnake further mentioned the long gestation period apple trees will take before it comes to fruition. “There is a strong tendency among farmers to choose cereal crops that give harvest in a short time and it is hard to convince them to shift to growing apples using some of their land. But if they wait patiently for two years, apples could bring them more income.” He added that the government is conducting researches and assisting farmers to scale up the production of temperate fruits including apple.
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Getaneh Seleshi, a researcher at Holeta Research Center, said that the government is not giving sufficient backing to encourage more apple producers to go into the business. “Importing fruits that can be grown locally doesn’t make sense. The government must intensively work to convince farmers that apple production can bring large money.’’
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In related news, Israel’s Agency for International Development Cooperation (MASHAV) gave training to farmers and development agents in Bosena Warana Wareda in Debrebirhan to motivate the farmers to venture into the apple business.
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Ofer K kahani, MASHAV agriculture expert said, “We help the farmers in Butajjira and Debrebirhan to grow apples through providing trainings. We are also attempting to lure Israel investor to invest in apple farming in Ethiopia”.
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GCAO Preparing Legal Framework for Public Advertisements
Addis Ababa – GCAO held a consultative meeting with stakeholders on challenges and solutions to advertisement works under the theme “equitable and accessible public advertisement for media development”.
During the occasion, GCAO State Minister, Ewnetu Blata, said the aim of the meeting is to identify gaps and opportunities so as to use them as inputs for the legal frame work that would be prepared by the office.
Some 40-50 federal offices spend more than 70 million birr annually for public advertisements, he added.
When the legal framework is fully implemented the private media will also benefit from subsidy and transparency, it was indicated.
http://www.fanabc.com/english/index.php/component/k2/item/2366?Itemid=674
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Filed under: Ag Related, Economy, Infrastructure Developments, News Round-up Tagged: Agriculture, Business, East Africa, Economic growth, Ethiopia, Grand Ethiopian Renaissance Dam, Investment, Millennium Development Goals, Sub-Saharan Africa, tag1
