Thursday, June 4, 2009

Shedding Light on Power Crisis in Ethiopia

The crisis in the power supply has reached such a critical point that blackouts now occur every other day. With the water level in the currently operating hydropower generation dams going down by an average of one to two centimetres everyday, the expected rains in the coming few months will determine whether the power utility can continue supplying energy given the current state of affairs. Nevertheless, Miheret Debebe, chief executive officer of the Ethiopian Electric Power Corporation (EEPCo), says – in an exclusive interview with OMER REDI, FORTUNE STAFF WRITER – that it is not all doom and gloom as there are upcoming power generation stations to be commissioned in a matter of months.

Fortune: It is obvious that Ethiopia is now in such a serious power crisis that you have been forced to introduce load shedding with a frequency that now has reached every other day. What exactly has happened to the power generation sector to make you introduce this schedule?


Miheret: The current situation of power shedding is because of the imbalance in supply and demand. We have short, mid and long term planning. This is the supply-demand forecast and the planning that follows this forecast. From the demand side, this year we anticipated between 17pc to 20pc growth in actual demand, despite the surface demand growth being 24pc.


There is a gap between the demand and supply side growth because forecast depends on different methodologies, knowledge base and experience of the sector. Other major factors, such as economic growth, social development, environmental situations, industrial, commercial and domestic GDP growth, have their own impact on the growth of energy demand. Population growth is a very important factor for the increase in energy demand. To mitigate this demand, definitely there should be supply side planning and this supply side planning starts based on the master plan, which includes all the factors I have mentioned.


Q: Let us discuss the work on the supply side because obviously, the supply has not grown as much as, or at least close to the demand, has it?


The supply side planning follows ways to mitigate this demand growth in the coming five, ten or twenty-five years, focusing on what should be the generation, transmission, distribution and the universal electricity access planning aspects. The generation planning is very critical factor in this regard. But the generation has its own limiting factors to meet its own schedule.


Around the world, generation projects are not completed on time or ahead of schedule; they are delayed significantly due to forced or voluntary situations. For both reasons, our projects are delayed and that is one factor causing the deficit.


The second factor is the hydrology; especially considering that Ethiopia depends on hydrological resources for 95pc of its power generation. This factor was not in our favour; the situation in the existing dams is not in line with the metrological or hydrological forecast anticipated for this year. There is quite a big gap between the water volume we had anticipated and what we actually got from the Belg season. In addition to the low level of water we got in the dry season, the dry season has also aggravated the evaporation at the dams.


The other factor is that though we have had an emergency plan of a capacity the country could afford, the plan was to supply power to meet half of the 24pc demand growth. That means the emergency plan was meant to increase the supply by 12pc. If we had planned to mitigate the entire (24pc) demand growth, that means the country should deploy four times what we have invested today to rent generators. And this is beyond the country’s foreign currency capability.


Q: How did you get the funding for the emergency plan?


It is a complex subsidy element. We initially planned to get financing from the World Bank and the Ethiopian government. Though we started work on the same day with the same objective, financing from the Ethiopian side went efficiently and the emergency generation started in December 2008.


The World Bank financing has been delayed; even the bureaucratic decision making process has not been finalized up to today. Hence, yet again, we now have the capacity to generate only half the emergency plan we had prepared for. The lengthy bureaucratic decision making process at World Bank has delayed half the financing for the emergency plan and thus we rented half the generators we initially wanted to.


The minimum duration of generators rental agreement we can enter to is about six months. So if [the World Bank is going to release the fund afterwards] we enter another agreement for the remaining generators, we will put the country into a serious loan burden for a facility that we can use for weeks or one month [because the rainy season is already closer].


So we have to drop this option and it creates a big gap. All these factors contributed to the big deficit. In any country’s practice, this is [load shedding] how you mitigate the deficit in such situations.


Q: So can we say it is not feasible to rent those diesel generators for six months because it puts a lot of loan burden on the country?


It is not about feasibility. We started the same scheme for six months with Ethiopian and foreign financing. With the Ethiopian financing, the same was completed in a few months and started operations in December last year. With the foreign financing, because of the financiers own conditions and decision making processes, the scheme has been delayed even without approving the tender up to today.


So, even if it is approved today, negotiating, signing a contract agreement and placing orders to rent the generators will take until July and they can be used only after July. By then, the scheme will have lost its service purpose; we have already lost the time we want to fill the gap.


Q: Your plan was for more diesel generators to be rented for the short term and now you are actually using half of your actual plan. Even so, I expect it is a lot of financial burden on the government. Let us talk about this burden. How much do you pay in terms of kilowatt hours for the rent and how much do you charge your customers in the same measurement?


Though the plan was to generate 120Mw from the emergency scheme, we are now getting 60Mw for 20 hours a day continuously.


Of course it creates a lot of financial burden. Yet, for the short term, it is a big scale and feasible practice in any global experience, as in the case of Afghanistan, Iraq and some African countries like Uganda, Kenya, Tanzania, Ghana and almost everywhere because the continent is suffering a huge energy crisis now. This is the best short term solution as the containerized generators are mobilized, installed and synchronized fast.


Their impact - we pay more than 0.20 dollars for a kilowatt hour and collect less than 0.5 dollars from the consumer. This is a huge subsidy from the government and the corporation. We are doing this only to mitigate the negative socio-economic effect, not as a business objective.


So roughly, we are now spending about 100 million Br to 120 million Br per month for fuel, in addition to the capacity costs we have to pay to the owners of the two generators, which is 10 million dollars for each for the six months rental period. The 20 million dollars for the 60Mw is the least cost available. In addition, we have to pay for fuel and other costs. The monthly breakdown of the six months’ rental cost is about three million dollars.


Q: Do you anticipate any possibility of the rental of these generators being extended for a longer period than the six months?


Well, hopefully, since the problem depends on the start of the rainy season, whether it would start in early or late July, the deficit could last a bit longer. In that case, it could extend for couple of weeks or for a month.


Q: You are now almost close to the end of agreement period, which began in December. Do expect any power supply from the almost finalized hydroelectric power generation stations, such as Gilgel Gibe II and Tekeze to replace these generators?


The agreement period ends around June. Already in Gibe II, only about 200m of the 25.85Km tunnel remains to be completed. So you can imagine what huge progress it is. But still, the last one metre is a challenge for us. Once we complete the breakthrough on the tunnel, hopefully in early June, the two tunnels to the powerhouse [penstocks] will join the 25.85Km tunnel.



This is one of the biggest tunnel projects. Cleaning the tunnel; removing the railing and ventilation system, along with qualitative consolidating of electromechanical system and civil works are expected to be completed at the end of July. Immediately after that, we will start filling the tunnel and generate power according to the schedule.


Q: Still on Gilgel Gibe II, which you expect to be the solution to the current situation, now the remaining part of the actual physical works are the about 200m of construction of the tunnel and other tunnel related works. When these are finalized, there is cleaning. Then, there are three stages of testing: dry test, wet test and commercial test, how long will all this take in total?


I think first of all, there is something we should not forget; the highest voltage (400Kv) and the longest transmission line (230Km) is also going to be commissioned. This is the first of its type in Ethiopia. The transmission is completed. It also includes opticfiber communication wire for telecom purposes and two of the biggest substations in the country - Sebeta II and Gibe End - are completed.


Now dry test is going on simultaneously at the power plant and the substation along with the remaining works because we want to save time. The wet test starts when the water is full in the tunnel and the good thing about it is even if it is somehow disrupted, we test it by loading [power] and supplying to the system; that is the advantage. The wet test and the commissioning test, even if in terms of time we stop and start, we can do that by synchronizing to the system. That means by supplying power to the system.


Q: So you are planning to undertake wet test and commercial test at the same time?


We do it simultaneously. We test it by actually feeding the power to the system and that is also what we mean by loading. Even we want the big industries to be on because we have to test it with the highest load in the system.


Q: How long does the cleaning take?


We are trying to make it shorter and expect this to be finalized in about two months. Let us not forget it is a more than 25Km long tunnel which is so unpleasant for human beings. You can’t survive 200m in the tunnel without air and people, in fact, have died because of humidity and high temperature. For that reason, we have been using ventilation with safety standards and very standard technological facilities that we have to take out now.


Q: What elements does cleaning include?


Cleaning the more than 25Km long tunnel includes removing the railing, a very complicated ventilation system, and equipment that helps the Tunnel Bowering Machine for lighting the tunnel. It is after the tunnel that we see consolidated grouting and the tunnel should be solidified by the civil work. This is also called curing time, once you do the concrete wall, you need civil work of cement and concrete, so it is a drying and curing standard engineering time. And there are some works at the intake part before opening the tunnel.


Q: The dry test does not need water because you simply load power (voltage) to the generators from another sources to check its capacity, proper operation and sustainability. So I expect you have started this test alongside other works long before. How long have you been doing that test and what elements do the dry system include?



It is an every day job. In the past months, we were doing it on the turbines system, the control system, the protection system and the SCADA system. It includes the turbine (turbo machine) system and its functionality, generator, other hydraulic and electromechanical systems which have measurement, control, protection and safety systems. And the SCADA system, where you can control the whole plant using a computer, and where you can see the plant synchronized with the national grid, is also part of this test. This is a high-tech system that we stimulate by installing and feeding some false data to test the whole system. It is a matter of high evaluation on how stable the plant is with a very high standard quality that requires professional work.


Q: Once the dry test and cleaning are finalized, you go on to the wet test along with the commercial test, which is actually commissioning the power, is that right?


Yes, we clean and test the tunnel first. This includes testing the pressure, the water flow, the intake structure, the penstocks (the two 1.2Km each long steel pipes) and the turbo machine system with water. After these works are completed, we will make sure the whole system is ready, by feeding and supplying power from zero to the maximum capacity, then after that the commercial test goes on.


Q: I am aware that what you referred to as an internationally accepted standard and procedure of testing power generation plants demands the three levels of tests to be undertaken one after the other. It is only after these tests that the contractor will handover the project to you for actual commissioning. And of course, you test the plant for sometime before you release the performance guarantee bond. In total, it takes about six months. Now you are telling me that you are going to finalize the tests in about two months or so, while undergoing wet and commercial tests at the same time. I can understand the immense pressure you have been under due to the power crisis and how quick you want this project to be commissioned. But won’t that be risky? Will the project contractor be willing to hand you over the project without going through the normal practice?


No! Not that way! You do not have to isolate some part of the system. You can do some separate tests but you synchronize them to the system. I am sure EEPCo’s capacity and experience in the past 60 years in the power system is competitive and the contractor has to rely on our capacity on the particular matter. So I’m sure we know our business and we will do it to the best interest of the public. Since it is team work, we will achieve our timing and keep the one year warranty with the contractor. After that, we can stop the plant and check everything before taking out its liability. But we will not undermine the safety rules because of the pressure.


Q: Let me take you back to the blackout issue. There used to be a line dedicated for businesses engaged in export trades. There are reports that you have stopped that. Along with the current situation of the power shedding arrangement, which is at least every other day’, that indicates the shortage of power supply and the level of water at the dams has reached a critical level. Considering the worst case scenario, for example, if the expected rain turns out to be negative, how long will you be able to supply power with the current amount of water?


With regard to the consumer grouping, it is based on the economic and social impact of the power outage. We have classified consumer groups. In terms of the industrial aspect, we have heavy industry consumers who have a dedicated line or one mixed with the other domestic or commercial consumers. We have export industries which have a dedicated line or one mixed up with the other from domestic or commercial consumers. When it is the social aspect, we have very sensitive consumers, like hospitals, schools, clinics, as well as water supply and telecom facilities.


The significant power demand is from the industry with commercial and domestic sectors. Thus, the saving is also from these sectors. Those heavy industries are warned to plan their maintenance in this time of shortage to mitigate the impact with the possible demand side management.


Most of them are to be appreciated for obeying the notice, and they are doing major inspection and maintenance works. Some of them are preparing their emergency supply for this period. They will be able to survive by doing their critical activities. Export industries are classified under a clearly committed market. They have been given power, whether through a line dedicated to them or in between consumers; since they are the major aspects of the Ethiopian economy they are given priority.


But as citizens of this nation, sometimes they should share the burden by using their own internal capacity. Since they have the financial capacity, they have to be part of the solutions by using their resources.


About the water level, on our part, we are very vigilant not to let the volume go below the lowest acceptable level. Though we have been successful in maintaining that level of water, the peak hour is still challenging us. Nevertheless, our optimistic plan is to keep to the same situation up to July. It also depends on consumers’ behaviour, like in workshops, garages, and bakeries. They have to shift to stay with today’s consumption for tomorrow, and it also requires consumers’ behaviours to live with discipline for short periods and hope for a bright future. This is the fact of life in the whole continent, even in the world.


Q: From the report on your desk, I can see that the red line indicates the lowest acceptable level of water, while the black line indicates the actual water level in the dams. But I also see that for most of the dams, for the most part, these lines are overlapping. Has the current aggregate water level throughout the dams across the country reached the lowest level?


Now we want to keep the aggregate reduction per day to an acceptable centimetre. This [the report I have] is of hourly reductions for every 24 hours. But the net effect, we want to keep where it should be. [For example] if we want to maintain a one centimetre reduction a day in Melka Wakena Dam, we will avoid further reduction by cutting power because we cannot compromise any other way. We have been successful so far and we have to monitor levels 24 hours. Every one at the dams, the transmission lines, sub-stations, the distribution centres and the consumer must be vigilant.


Q: What is the daily acceptable level of reduction?


Well in Melka Wakena, say one centimetre, while in Gilgel Gibe II, it is about two centimetres.



Q: In normal times, how much is the daily average reduction?


It depends on the season, the time, the day, the volume of water in the dams; but it could be 10cm to 20cm.


Q: What about the water supply to Gigel Gibe (GG) II. Obviously there is a problem with the level of water in all the dams, including Gilgel Gibe I, which is the source of water for the former. So, if the volume of water in the source dam (GG I) is low, if it remains at that level in the coming months, how you will you be able to generate power from GG II even if it is commissioned?


In the first operation, hopefully by the end of July, which is also a good season, the dam would get sufficient water. But even with the minimum water level with which GG I can’t operate, there is a possibility of opening the bottom outlet gate and filling the tunnel and getting power from GG II. Its hydrological harmony is taken care of in earlier design steps. So we still have room to play in and July is a still a reasonable time when even in the worst case scenario, we can generate power from GG II.


Q: There are experts who argue that though the plans for the currently under construction hydroelectric power generation projects have long been on the shelves of EEPCo’s offices, they have not been implemented and initiated until recently when you started this aggressive and intensive works on about six hydroelectric power projects. Why have those plans waited for so long while the demand was obviously expected to increase when the country entered into a free market economy?


Unfortunately, it is not wise to blame the past. We have to learn from our mistakes and weaknesses in the past because it is the best way to benefit from the future. In this aspect, we can look at where we were in the early 90s. There were only 320Mw with only 3,000Km of high voltage and about 7,000Km of medium and low voltage networks and about 320 towns with access to electricity.


But now, including the emergency 270Mw, we have 9,000Km high voltage lines, 75,000Km medium and low voltage lines and 3,200 towns under service. The delay has internal and external factors. While following a very sluggish and conventional way of expansion in the planning, feasibility, designing, implementation and financing phases, what we had achieved in 50 years was about six, seven or a maximum of 10Mw per annum. Hydro plants came into operation at about 10 to 15-year intervals with hundreds of megawatts. But there were no complete and full-fledged feasibility study and bankable document.


Q: There are also arguments that before indications of the possible power crisis started to float - the time the current power generation projects were started - there was less commitment at the highest level of the government about power generation. That means the sector had not been given the emphasis it deserves at the beginning of the free market system. Do you share this view?


It is not always the same. There is no complete homogeneity in such thinking. But as far as I know, there is a far-sighted vision and commitment from top leaders. But there were also those in the top level of the government who thought otherwise. There were, thus, two conflicting ideas.


For example, though our financiers had said that Gibe I would be enough for 10 years, and thus, advised us to invest the money in other sectors, the government continued to work on the other projects. In fact, it was before we consumed Gibe I for only 10 months that the power problem started, let alone being enough for 10 years.


Q: For example, the infrastructure development area the government is known to be successful in is the road sector. This is due to the emphasis the sector has enjoyed from the government. Do you believe that your sector has been given equal attention?


Here there is a mixed approach. Like you said, the road sector gets a lot of attention and is attractive to financiers since it is a main development infrastructure. But in the case of power, the financiers want us to be stable financially and work as a business entity on one hand. On the other hand, they want us to be development-oriented businesses. So in this respect there is a dual approach and definitely this sector faces two challenges in bringing these to one.


Q: When do you expect to reach a level where EEPCo and you, as a senior official of the corporation, enjoy compliments following your successful achievements in developing the energy sector as the road sector doe now?


Handling the power sector is a very tough issue, which, sometimes, is higher than the socio-economic crisis. Unfortunately, power is a very determinant factor in every bit of life. Every single life in every second is dependent on energy. So has the fast development move. Our big challenge is the dependence on foreign resources. When we are out of this dependence, definitely this will mean we can achieve all our national objectives.


Q: When do you expect EEPCo to take Ethiopia out of the current situation?


To be frank, we have a very bright future. If we finish the three projects ahead of us - Beles, Tekeze and GG II - and when we come out of the daily challenges we have to face over GG III, then we are likely to be free from the current problems.


Beyond that, we have another cascade of projects in line; I am not going to mention the details because these will be announced by the government soon. And our strong foreign market will start in January 2010. Then our dependence on foreign financing will end.


Q: EEPCo has been under different structures under the current government. In the first ten years since EPRDF has come to power, it was under the former Ministry of Infrastructure, along with 12 other government agencies. Now it is under the Ministry of Mines and Energy. Do you feel that you should have been under a ministry which deals only with energy issues, as in the case of some other countries like Kenya? Do you believe that such structural issues and instability have hindered you from achieving what you could and should have achieved, perhaps, if you were under a ministry that is directly responsible only for energy or power generation?


As you know, there is a major national level restructuring process going on in the country right now. The national transformation covers all sectors; the energy or power sector is one of them.


If you see the development [over the years] the infrastructure ministry was multi-disciplinary, now it is reduced to a few focused sectors. The structural issue is a top government level, macro-level policy makers’ issue. If you see the natural progress more focused sectoral ministries have been making; after that, the national reform program has been launched.


As a result of the past and current development, as well as the dynamism of the power sector, now we are also entering a new restructuring phase. For my own sector, within my own mandate, I could say it very much demands very basic restructuring. We need a more focused, optimum, customer-oriented and sectoral structure based on the core process. The construction and the operation should be separate businesses; the generation, transmission and distribution should be organized into a bundle under public ownership.


Q: So have you suggested these changes? Does that mean it should have its own ministry?

The natural growth of the sector leads us to the restructuring, and I think the issue is being discussed by higher officials in the government.