Leaders from Ethiopia and Djibouti inaugurated the substation linking Djibouti to the Ethiopian power grid on Wednesday. It was described as a milestone in linking the economies of the two countries by Meles Zenawi, Prime Minister of Ethiopia.

More than 90% of the project was financed by loans and grants from the African Development Bank (AfDB). The project is thought to be very crucial to Djibouti which generated energy from diesel generators.

The memorandum of understanding for power purchase agreement was signed in April 2008 but it took two years to finalize the 25-year agreement.

Setting the tariff was a difficult process according to Alemayehu Tegenu, Minister of Water and Energy. The Tariff was ultimately set at 0.6 US cents per kilo watt during the summer and 0.72 cents per kilo watt in the winter. This tariff is more than the domestic tariff set by the Ethiopian Electric and Power Corporation but less than what the Djiboutian power company charges its subscribers.

The EEPCo is expected to earn 721.8 million dollars by 2037 from this venture. The Energy Corporation could generate more foreign currency than some exports according to Mihret Debebe, Managing director of the EEPCo.  He also added that this is the first interconnection in the region to utilize transmission lines for broadband secured communication.

EEPCo has already signed the second phase of interconnection with Djibouti, to be financed by AfDB, to build a 350km transmission line with double-circuit 230Kv directed from Koka-Dire Dawa substations.
Source: Addis Fortune