Iran sanctions scupper Ethiopia's power exports
United Nations sanctions imposed on Iran will impact negatively on Ethiopia's ability to commence power exports to neighbouring countries, it has been learnt.
By The Africa Report
Tuesday, 03 April 2012
Ethiopian utility company, Ethiopian Electric Power Corporation (EEPCo) awarded a construction tender to an Iranian company, but the sanctions mean it will be difficult to carry out financial transactions, thereby stalling the power export project.
Iran Power & Water Export of Equipment & Services Company (IPWEESC) was, in 2008, awarded US$9.6 million tender to install substations in Bahir Dar and Gonder in Ahmara Regional State, with the project expected to be completed within 18 months.
EEPCo has also paid close to 60 percent of the contract amount to the Iranian firm, but the sanctions mean it will not be able to pay the rest, further stalling progress.
The UN Security Council resolution calls for the freezing of assets of Iranian companies and urges member countries to monitor the activities of Iranian banks, as these are barred from transferring funds.
- "Due to the sanctions, we could not effect payments for the outstanding balance," an official told Ethiopian media, on condition of anonymity
The Iranian deal is part of an ambitious project by the Horn of Africa country to become a regional power house in exporting power. The project, funded by the World Bank with a loan of US41 million, ideally would have seen power exports beginning in May 2012.
As a solution, the World Bank is reported to have allowed EEPCo to deal directly with the four foreign vendors of the Iranian company, Philips of The Netherlands, Ericsson of Sweden, TBEA of China and Areva of France. This will facilitate the delivery of equipment upon the payment of the outstanding amount.
Negotiations between EPPCo and the foreign companies have since started.
EEPCo has already overseen the completion of a 296 kilometre power transmission line carrying 230 kilovolts. It was expected that Sudan would, by now, be linked to Ethiopia's power grid, had the substations been installed.
Although power exports to Sudan may start with 100 megawatts, the plan is to eventually increase it to 1,200 megawatts within eight years, when a series of dams on the Blue Nile River are completed.
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