Friday, February 15, 2013

Ethiopia resorts to unorthodox funding plan for Grand Renaissance scheme

Fears that construction of a mega hydroelectric plant in Ethiopia could stall owing to financial constraints have forced the authorities to turn to desperate measures to raise funds.
To ensure implementation of the Grand Renaissance dam project remains on course, the Ethiopian government in now turning to options like musical concerts, a lottery and an SMS campaign to raise funds after global financiers gave the project a wide berth.

A senior official says govern- ment is hoping to raise over $100-million through this strategy in the coming weeks to supplement funds being raised from donations and the sale of government bonds to finance the construction of the plant, which has a price tag of $4.8-billion. The project will have an installed capacity of 5 250 MW.
“As a country, we are com- mitted to implementing this project and the response from ordinary Ethiopians has been unprecedented,” says Fekadu Ketema, head of communication at the National Secretariat, which is overseeing the implementation of the project.
However, the International Monetary Fund (IMF) has warned that mobilising large domestic resources and channelling them to one project could have dire effects on the economy.


Last year, IMF country representative in Ethiopia Jan Mikkelsen said the country’s determination to fund the dam from local resources was starving the rest of the economy of funds.
The caution from the IMF and other critics of the project has done little to slow down its implementation as Ethiopia has made it clear the plant is critical to pushing the economy forward and will end the dependence on agriculture.
According to Ketema, Ethiopians are determined to implement the project and $500-milllion has been raised from ordinary citizens.
International financial institutions refused to fund the project owing to the manner in which the Ethiopian government awarded the construction contract and its failure to undertake a comprehensive environmental-impact assessment.
By the end of last year, about 14% of construction works had been completed and it is expected the project will be 26% complete by the end of this year.
The project, which is the largest hydropower plant in Africa, is being constructed by Italian company Salini Costruttori and is slated for completion in 2015.
The dam is being constructed on the Blue Nile and is touted as the solution to Ethiopia’s perennial energy deficit.
http://www.engineeringnews.co.za