The African Development Bank (AfDB) will support the Ethiopian government’s rural electrification project with a loan of 87.20mn units of account (UA), equivalent to US$131.47mn.

The objective of the Rural Electrification Project II is to extend the national electricity grid to supply electricity to 335 rural towns and villages and improve national electricity access rate from 17% in 2006 to 20% in 2011 in order to promote socioeconomic development in rural areas.

The overall goal is to develop the country’s energy resources in order to enhance economic growth and reduce poverty in the country by providing reliable and adequate electricity services to households and commercial consumers at reasonable cost and in a sustainable manner.

The components of the project are:

  • Construction of 280km 132kV high voltage transmission lines;
  • Construction of two 20/25 MVA 132/33kV high voltage substations;
  • Development of medium and low voltage network by construction of 4200 of 33kV distribution lines; erection of 1,700 of 33/0.4kV pole mounted distribution transformer, and construction of 1,500km of 0.4/0.22kV distribution lines, as well as the supply and installation of connection services and energy meters;
  • Project supervision and management;
  • Compensation.

On completion, the project will connect about 176,000 new residential customers and 7,200 non-residential customers, including schools, health centres and small-and-medium enterprises. These towns and villages have population sizes ranging from about 1,000 people to 14,000, and are potential growth centres where economic activity will expand through the provision of adequate infrastructure services.

The project is estimated to cost UA114.31mn. The ADF loan will cover 76% of costs. The government of Ethiopia will provide UA14.24mn (which is 13% of the costs) while the Ethiopian Electricity Power Corporation will finance the remaining local costs amounting to UA12.87mn or 11% of total costs.

The AfDB Group began operations in Ethiopia in 1975. The bank’s cumulative commitments in the country currently stand at US$2.181bn in 102 operations.