African Development Fund approves grants for $83.6 million to boost Ethiopia-Djibouti electricity trade

African Development Bank

The Board of Directors of the African Development Bank Group has approved two grants worth $83.6 million to boost cross-border trade in electricity between Ethiopia and Djibouti and to deepen integration in the Horn of Africa sub-region. The funds, which will be disbursed under the Horn of Africa Initiative, comprise grants for $69.65 million to Ethiopia and for $13.93 million to Djibouti sourced from the African Development Fund, the concessional lending arm of the African Development Bank that contributes to the promotion of economic and social development in 38 least developed African countries.

The Ethiopia–Djibouti Second Power Interconnection project is aligned with the AfDB’s East African Regional Integration Strategy Paper (which aims at promoting regional infrastructure for economic transformation) and will entail the construction of nearly 300 km of interconnector line, 170 km of transmission lines, and new construction or renovation of substations in the two countries.

In 2004 the Bank-financed the first power interconnection project between the two countries, with the inauguration in October 2011 of a 283-km Ethiopia-Djibouti transmission line. Such interconnection has now reached its power transfer capacity limit due to the completion of a series of projects in both countries, including the Eastern Industrial Zone in Ethiopia, the Djibouti-Ethiopia electric railway line, and the port expansion in Djibouti. The two countries have thus decided to develop the second power interconnection line to boost Djibouti’s access to reliable and affordable clean electricity, by reducing the use of thermal generation plants from 100% to around 16% and lowering costs to below $0.10 per kWh. Other expected impacts in Djibouti include a more conducive environment for businesses and job creation for youth, as well as lower greenhouse gas emissions.

By: Danilo Desiderio

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