World Bank criticised over Ethiopia-Kenya electricity plan

(This is one of a number of articles on this project.)

http://blogs.ft.com/beyond-brics/2012/07/13/world-bank-criticised-over-ethiopia-kenya-electricity-grid-plan/#axzz20ue31UuH

World Bank criticised over Ethiopia-Kenya electricity plan


July 13, 2012 7:30 pm by Andrew Bowman

The World Bank has approved loans worth $684m for the Eastern
Electricity Highway Project, which aims to transport Ethiopian power
to Kenya and beyond.

The project is part of a $1.3bn plan to open up an eastern African
power network, but has attracted controversy due to social and
environmental worries over the knock on effects of hydro-power in
Ethiopia.

The Bank�s International Development Association fund will provide
$243m to the government of Ethiopia and $441m to Kenya to finance the
construction of a 1,000km cross-border power line between the two
countries that is due to come online in 2018. Kenya is currently
seeking to import electricity to meet shortfalls, while Ethiopia hopes
to export its electricity surplus from new hydro-electricity projects
underway.

A spokesperson called it a �landmark transformational project [that]
will change the fundamentals of the power sector in East Africa.�
However, the loans have already generated criticism from human rights
groups.

Indeed, the World Bank itself previously declined to fund one of
Ethiopia�s leading hydroelectric projects on the Omo River after
concerns were raised over its social and environmental impact.

The New York-based non-governmental organisation Human Rights Watch
today accused the World Bank of contradicting its principles by
indirectly enabling the funding of the dams through the Highway
Project, having earlier in the week urged bank president Jim Yong Kim
to deny loans to the project.

Kenya has suffered from severe power shortages in recent times. In a
country tipped by the World Bank to reach middle income status in the
coming years, only 25 per cent of the population have access to
electricity. In rural areas, only 5 per cent of the population are
connected to the grid.

The expected expansion of the oil and gas industry in Kenya following
a flurry of recent discoveries would place further pressures on the
electricity system.

The Kenyan government�s Vision 2030 strategy for economic development
has set some ambitious targets to remedy the situation. It plans to
more than double power generation over the next six years, from the
current installed capacity of 1,533 megawatts to 3,750MW in 2018.
Their projection for the total new capacity to be added by 2030 is
18,920MW, of which 2,000MW would come from imports.

In contrast Ethiopia is seeking to become a major regional power
exporter. The state-owned Ethiopian Electric Power Corporation, the
country�s sole electricity provider, aims to increase its generation
capacity to 37,000MW. It intends to do so primarily through a series
of large hydro-electricity plants commissioned over the past three
years.

The World Bank has celebrated the Highway project as a step forward
for regional development. Jamal Saghir, the Bank�s Director of
Sustainable Development for the Africa Region said: �Once built, this
power line will be a symbol of Africa�s determination to solve its
energy crisis through cooperation in energy trade. It will be a
landmark in achieving more growth and less poverty in the region.�

However, the Ethiopian government�s new dams have aroused major
international controversy. In 2011 Unesco called for the construction
of the Gibe III dam on the Omo River in southern Ethiopia, which will
be the highest in Africa when finished, to be halted due to concerns
over its impact on Kenya�s Lake Turkana, a World Heritage site. The
previous year, the non-governmental organisation Survival
International claimed that Gibe III could make up to 200,000 people
dependent on food aid through its population displacement impact and
disruption to farming and fishing.

As reported in the FT last month, the World Bank, European Investment
Bank and African Development Bank were dissuaded from funding the
project, but the state-owned Industrial and Commercial bank of China
provided a $500m loan.

The $4.8bn Grand Renaissance dam on the Blue Nile has also created
controversy. With an expected capacity of 6000MW the Grand Renaissance
is Africa�s largest hydro-electricity project, and the stakes are
higher. Egyptian government officials have claimed that the dam would
create serious water shortages for their farmers. With similar
difficulties in gaining the support of the major international
development financiers, in 2011 the Ethiopian government began seeking
domestic support through an expansion in bond issuance.

A variety of NGOs are now accusing the World Bank of hypocrisy. In a
statement released today, a spokesperson from Human Rights Watch said,
�Indigenous communities in the Omo Valley are paying a terrible price
for the Gibe III dam. The World Bank should be standing firmly behind
its social and environmental policies rather than pretending that the
dam is unconnected to this project.�

Responding to the criticisms, Sarwat Hussain of the World Bank told
beyondbrics: �The big picture is that Ethiopia has 45,000MW of
hydroelectricity potential, of which only 4 per cent has been tapped.
Then next door you have fast growing Kenya which is energy strapped.

�If you are looking for economic security for East Africa, you can�t
do it without Ethiopia�s resources. Regional power sharing is
essential given only one in three Africans have access to electricity.�
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