Ethiopian Review

When the hydropower stations at Tekezze and Gilgel Gibe II finally start generating electricity, hopefully later this year, it will be a momentous occasion for Ethiopia.
Not only should the near doubling of capacity solve the country’s power problems with the flick of a couple of switches, but also the overall economic outlook, and particularly the foreign exchange shortage, will be enhanced by the sale of excess power to neighbouring countries.
However, given the current problems, which recently forced the Ethiopian Electric Power Corporation (EEPCo) to increase the blackouts to three days per week, such sentiments must be of little interest to long suffering business owners.
Most large companies will have long ago invested in a generator, but then there are the fuel costs of running the machines. In addition to this, there was the recent EEPCo edict that manufacturers will have to shut for 15 days because of the shortages. For a large employer, this creates a huge problem with what to do with your workers during this period: paying a full salary is going to be a big financial blow, but paying them only a proportion of their wage could lead to disgruntled employees and possible social problems for the under-paid workers.
For small and medium size firms the situation is equally critical. As reported in Capital this week, with small profit margins and modest salaries, the very existence of such enterprises is put in jeopardy by the power cuts. For many, especially now given the rampant price inflation, generators are unaffordable, so they have no option but to close their businesses for three, sometimes four, days per week. For these people whose very livelihoods are under threat, the thought of the country selling megawatts of electricity to Sudan a few months down the line is precious little comfort.
Although there is criticism of the EEPCo management, most people understand that given Ethiopia’s relative poverty, and the lack of water in the hydro reservoirs, situations like this are inevitable. But while the state-owned corporation’s investment in the power stations and importation of gigantic generators at huge expense to try and keep up with demand is admirable, there has been a lack of concern shown for the short term plight of the nation. Also mitigating this has been the common sense exemption of exporters from the power shedding, as reiterated by Minister of Trade and Industry, Girma Birru, this week. Given the lack of foreign exchange, and the already plunging export revenues, to not have done so would have exacerbated an already critical problem.
But these measures aside, more innovative action could have been taken to alleviate the suffering.
One suggestion from a leading company was for the interest rates of loans held by affected businesses to be lowered temporarily, or for an agreement to be struck with the banks that allows the deferral of payments. Similarly, negotiations with the Revenue and Customs Authority could have resulted in an agreement that allowed businesses leeway paying their dues while they suffer the unexpected costs resulting from the lack of electricity.
A further suggestion to aid the public could have been a rota system for the 15 day periods of EEPCo ordered non-production, ensuring that companies from the same industry do not cease production simultaneously, a move that could curb the ensuing rapid inflation of scarce goods.
In a week of celebration for the Revolutionary Democrats, the energy issue encapsulates the party’s record: its positive role in managing the developmental state is evident in the vital investment that has been made in energy infrastructure, but its failure to address the short term deficiencies in partnership with the public could be construed as an uncaring approach.

(Capital)