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    Ethiopia Power Competitive Landscape


    June 10, 2022 - Fitch Solutions Sector Intelligence

     

      THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

      Ethiopia Power Competitive Landscape

      • 10 Jun 2022
      • Ethiopia
      • Power

      The construction of power projects is primarily funded by the Ethiopian government, the World Bank, the African Development Bank, the European Investment Bank, private loans and bilateral government loans. The state retains a dominant footprint via state-owned Ethiopian Electric Power (EEP), with the main foreign players in the power sector coming from Italy, China, India, France, Germany and Norway. China has emerged as the biggest foreign player, as state-owned companies have been backed with cheap funding and have been able to invest heavily in manufacturing, energy and transport. The Export-Import Bank of China is a major backer of projects involving Chinese companies.

      Ethiopia Electric Power

      EEP was established in 1956 and has a dominant position in the Ethiopian power sector. It was known as the Ethiopia Electric Light And Power Authority until it changed its name to Ethiopian Electric Power Corporation (EEPco) in 1997, when its regulatory powers were given to a separate entity. In 2013, EEPco was officially renamed again and split into two corporate entities - EEP and Ethiopia Electric Services (EES). EEP supplies power in bulk, mainly to EES, which is responsible for the distribution of electricity. EEP's mandate also included capacity expansion - particularly hydropower - and exporting electricity. However, in 2019 EPP announced that it was formally ceasing its involvement in developing power generating plants to focus instead on the management of the existing plants, transmissions lines and substations. The change is part of the company's ongoing restructuring plans. Accordingly, the existing and future power projects will be handled by private companies. It was reported in October 2020 that the Ethiopian government was considering unbundling EEP into two entities responsible for generation and transmission respectively, thereby ensuring that independent power producers also have more access to the grid. At the time of writing, we are still awaiting updates on the proposed unbundling.

      China Machinery Engineering Corporation

      China Machinery Engineering Corporation (CMEC) was founded in 1978 and listed on the Hong Kong Stock Exchange in December 2012. The conglomerate's core competency is engineering contracting but also integrates trade, and research and development. CMEC has a significant international presence across more than 160 markets. Its contracting business covers areas including electric power generation, transportation, electronic communications, housing and architecture, plant construction, environmental protection, and mining and resource exploration.

      China Gezhouba Group Corporation, founded in 1970, is a core member of China Energy Engineering Group and is involved in hydropower construction in Ethiopia - including the Geba River Hydro Power Plant in Oromia and the Genale Dawa IV hydropower project located on the Jubba River. The company undertakes design, construction, investment and operation across all infrastructure sectors. The company is present in around 140 markets.

      Dongfang Electric Corporation

      State-owned Dongfang Electric Corporation is a major player in the Chinese market and is also one of China's biggest international contractors - specialising in power stations and large-scale engineering projects in more than 80 markets. The company has also won construction contracts in the nascent renewables sector in Ethiopia through the 120MW Aysha wind power project, under the China-proposed Belt and Road Initiative. We forecast the project to be complete by the end of 2022.

      Webuild

      Italy-based industrial conglomerate Webuild (formerly Salini Impregilo) specialises in construction and is heavily involved in dam-building in Ethiopia. It delivered the 1,780MW Gibe III hydropower project, which was completed in 2015 and is currently working on the Grand Ethiopian Renaissance Dam. In May 2016, the company also secured a EUR5.2bn contract to build the Koysha Hydroelectric Dam on the Omo River, with Servizi Assicurativi set to finance the project. Webuild has more than 70,000 employees and operates in more than 50 markets. It specialises in the construction of dams and hydroelectric facilities, infrastructure and civil and industrial buildings.

      This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.

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