Ethiopia Signs Power Purchase Agreement with Kenya

ADDIS ABABA – Ethiopia is set to start electric transmission to Kenya this year after signing a Power Purchase Agreement (PPA) with the neighboring nation.

The agreement is expected to boost the annual energy export trade of Ethiopia which currently sells electric power to Sudan and Djibouti. The two neighboring nations imported 1,700GWh of electricity in the last twelve months.

Top officials of the Ethiopian Electric Power (EEP) and Kenya Power and Lighting Company Plc signed the Power Purchase Agreement (PPA) on Wednesday.

As per the agreement, Ethiopia will export 200 Megawatt of energy to Kenya in the first phase of the power export, with a plan to increase to 400MW in due course.

Trial to begin in a few weeks’

The signing follows the completion of the $1.26 billion Kenya-Ethiopia Electricity Highway Project involving a 1,068km-long power transmission line and two AC/DC converter stations at both ends.

The project will ensure access to reliable and affordable energy to around 870,000 to 1.4 million Kenyan households of which 18% will be located in rural areas, the Ministry of Finance said.

“The trial transmission of power will start in few weeks,” revealed the Ministry, ahead of a scheduled launch of full capacity power export in November 2022.

Deal Increases EEP’s Market Base

The finance ministry said the project would also add yet another new export market for the EEP in Africa that could “generate a significant amount of revenue” for the government-owned electric producer company.

In the recently concluded 2021/22 budget year, electric power export to Sudan and Djibouti brought in more than $95.5 million, kicking in 2% of Ethiopia’s annual revenue from export trade.

The latest power purchase agreement will contribute to government’s target to increase annual electric export revenue to $400 million U.S. dollars with a plan to integrate East African countries through electricity in the near future.

The Grand Ethiopian Renaissance Dam (GERD) is expected to play a key role in the plan after the national flag project, with a capacity to generate up to 5,000MW, started generating electricity for the first time last February.

In the long run, the country aims to reach more countries in North, East, and Southern Africa through electricity interconnections from Southern Africa Power Pool and Eastern African Power Pool all the way to Egypt and Sudan in the north, according to the finance ministry.

Official estimates put Ethiopia’s potential power production capacity from hydro as well as geothermal, wind, and solar energy at more than 60,000MW.

Featured image Caption: Kenyan president Uhuru Kenyatta and Ethiopia’s State Minister of Finance Dr. Eyob Tekalign witnessed the signing of the Agreement in Nairobi.

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