Ethiopia: Gibe III gets Sino-powered

Ethiopian and Chinese officials
From left, Mihiret Debebe CEO of the Ethiopian Electric Power Corporation, Luo Zhigang President of Chinese Dongfang Electric Corporation, Xu Jun General Manager of DEC, Girma Birru Minister of Trade and Industry and Alemayehu Tegenu Minister of Mines and Energy during the signing ceremony for the 459 million dollar project works at the Sheraton Addis on Wednesday, May 12. This agreement is said to be a great success for the corporation that has been struggling to finance the construction of Gibe III hydropower station, which will be the largest in sub-Saharan Africa, with a capacity of generating 1870 megawatts of electric power.

By Solomon Bekele, Capital

Ethiopia and China have signed a 459 million dollar agreement for work on sub-Saharan Africa’s biggest hydropower station, Gibe III.

“This is a tripartite agreement for the Gibe III hydroelectric project. The Italian firm Salini Constructtori S.P.A will keep on doing the construction part. The Chinese Dongfang Electric Corporation (DEC) will carry out the hydro-mechanical and electro mechanical part of the project,” the chief executive of the Ethiopian Electric Power Corporation (EEPCo), Mihiret Debebe said after he signed the agreement with DEC President Luo Zhigang on Wednesday, May 12 at the Sheraton Addis for the project’s Electromechanical (EM) and Hydraulic Steel Structure (HSS) works.

The cost for EM and HSS construction is 495 million dollars, or 6.4 billion birr. Capital learnt that 85 percent of the cost will be covered by a loan from the Industrial and Commercial Bank of China (ICBC) offered at a reasonable interest rate and with a lengthy repayment period.

“We have been looking for financiers to grant us loans for so long. That brought an unnecessary delay to the project. Considering this, EEPCo signed a memorandum of understanding with DEC on Oct 21, 2009. DEC from the start had shown great interest and commitment to carry out the works and arranging the required finance to execute the EM and HSS works under turnkey delivery,” Mihiret added.

The chief executive of EEPCo added that Gibe III is expected to be completed in 2013-14 and about 40 percent of the project is set to be finished this budget year.

During the signing ceremony, the Mr. Luo Zhigang outlined his company’s credentials: “We are the major power equipment manufacturer in China. We export to more than 30 countries. In China we have a dominant 40 percent share market in hydropower and 33 percent in thermal power. With this rich working experience we are hopeful to complete the Gibe III project in time.”

Construction of Gibe III began in July 2006 upon the signing of an engineering procurement agreement between EEPCo and the Italian company Salini Constructtori S.P.A. at the cost of close to 140,000,000 Euros. It was then envisaged the project would end in June 2012.

Asked about this, Mihiret replied the Ethiopian Government and EEPCo have been looking for finance for the project: “But we were not able to secure grants for long. Due to this it became very difficult to implement the project under the planned fast track mode. Therefore we were forced to look for alternative sources of financing for the project and now are ready to provide the required funds. This is a big achievement for the project.”

DEC has already submitted its technical and financial proposals that are an integral part of this agreement. According to Mihiret, the scope of works under the Electromechanical and HSS works in the contract consists of: “The design, procurement, manufacture, shop testing and painting, delivery to site, erection, commissioning and acceptance testing with proper interfacing with the civil works.”

Taking the signing ceremony opportunity, the DEF President told the audience that on the same day two years ago his province suffered a serious earthquake that led to the destruction of his factory with a death toll of 600 staff. He added the opening ceremony for his newly-constructed factory took place on Monday, May 10. “We are happy that two days after the opening of our factory we signed this contract,” Mr Luo Zhigang explained with a smile.

Capital learnt that DEC delivered 33,000 megawatts of power generating equipment for their clients both for home consumption and abroad.

Gibe III is facing protest from some international pressure groups who claim it will damage the environment. They say the project will disrupt ecosystems and communities that live around the world’s largest desert lake, Kenya’s Lake Turkana. Lake Turkana supports 300,000 people and is rich in biodiversity. The dam will severely curtail the lake’s inflow, increase salinity, affect fisheries and push its vulnerable ecosystem to the brink of collapse, the environmentalists argue.

The Ethiopian Government says the project will enable the people around the lake to be more productive in their agricultural activities, including fishing. It added an environmental impact assessment has been done that found the project will help the ecology of the area for many years. In addition, the government believes the project will enable flood control, regulate the flow of water, and assist the area’s adaptation to climate change.

The project would also enable flood control; regulate the flow of water and the area’s adaptation to climate change.

The power project site lies between the boundaries of Wolayita and Dawro Zones, some 470 km south of Addis Ababa. It is located along the lower course of the Omo River, some 155 km from the Gilgel Gibe II hydropower station. The main project has a 240m high rock filled dam with a crest width of 10m and a length of 630m.