Ethiopian Review

By Muluken Yewondwossen

Benyam Yirgu owns a small wood workshop in Merkato area.
For weeks the power shortage has severely hampered his business. But by no means is it just Benyam who is suffering: the shortage is affecting many companies, but particularly highly labour intensive small scale industries.
The lack of power has slashed the incomes of small and medium companies. Small industries have taken the heaviest hit, with cafes and shops next in line.
The business community explained the power rationing has exposed them to unexpected costs and, in the worst cases, bankruptcy.
“The power cut has forced me to close my shop at least three days a week,” Ahmed Salah, a movie and entertainment shop owner around CMC said, “customers do not rent movies, or buy any other services, during times of power interruption.”
A barber, who works with his four partners in Hayahulet area, said he and his friends do not have a job when the power is off. He added the power rationing has led his average weekly income to decline from 40 to 50 per cent.
According to him, he is affected in two ways: social and economic. “When I have a job I do not go anywhere or have superfluous expenses.
“But when the power is not on I spend an expensive day chewing chat because I have no other choice,” he explained. According to both young workers, the decline of their income has made it difficult to bear the burden of their shop rent and social activities.
“I take care of my mother and myself with this job and I pay 300 birr monthly for my private college evening education,” the barber said.
Benyam said he used to make 80,000 birr a month from the business that has twenty employees, including fifteen daily labourers. According to the shop owner, the company pays 10,000 birr for rent per month. He realises the power cut is affecting his employees, because he is not employing temporary carpenters and other irregular workers.
Currently, bigger businesses are using a diesel generator to continue with their daily business. Those companies spend between an additional 1,000 to 3, 000 birr per month on fuel and to rent a generator.
“As time goes by the power shedding scheme is increasing and the schedules are also unknown. Last week we did not have power for four days,” Niguse Yishalal, a café manager around Megenagna, told Capital. “That makes it difficult to maintain our business, because our external costs rise along with the increases in power shedding,” he explained.
“We cannot use external power (diesel generator) when the power is cut, because the production costs will increase,” Yohannes Tafese, owner of small candy factory in Merkato explained, “if my company uses a generator and increases the sales price of the product to compensate the external cost, our customers will go to our competitors.”
Recently the Ethiopian Electric Power Corporation (EEPCo) increased the number of blackout days to every other day from eight days a months, meaning it’s lights out three days per week.
Another affected business woman, Meseret Maru, the owner of a women’s beauty salon, said the current power crisis is seriously affecting her business: “I paid wages and rent out of my savings because my profits are down,” says Meseret.
To make matters worse for some businesses, EEPCo recently banned firms from using power. Some of the company owners said the corporation officials ordered them to stop their works until the current critical condition is eased: “The officials told us if we use power EEPCo will penalize us,” a woodwork company owner said.
Footwear producers, metal works, garages, wood work shops and others small companies had to cut their daily activities without an official letter from EEPCo.
EEPCo estimated that the ongoing power cuts would knock one per cent of the gross domestic product (GDP). But some economists say the shortage will have a more severe effect.
Compounding the problem is that the power shortage also leads to rising prices for some goods and services.
The rising number of high power consuming new industries, combined with delays in the completion of the hydropower projects have contributed to the power deficiency the nation is facing. Due to the shortage, EEPCo is now forced to spend close to 150 million birr every month on fuel for generators.
EEPCo’s officials had previously targeted that by 2008 the construction of Tekezze Hydro Power Dam with a capacity of 300MW, Gilgel Gibe II with a capacity of 420MW and Beles Hydro Power Dam with 435MW capacity would be completed, with neighboring Djibouti, Kenya and Sudan being the most likely markets for excess electricity produced. It estimated it could earn tens of millions of dollars a year from the exports. Unfortunately, due to various unforeseen complications, the corporation has failed to satisfy even local energy demands.
Ethiopia has an initial agreement to export 200MW to Djibouti and Sudan, and 500MW to Kenya. Officials believe that the power export in a few years will overtake coffee as the leading foreign currency earner.
The World Bank’s data shows that the Democratic Republic of Congo has a 40GW hydro power resource potential on the Congo River that is yet to be harnessed. Ethiopia is second with a 35GW hydro power potential

(Capital)