04 May 2014 News Round-Up



Chinese premier visit to Ethiopia aims boosting relationship


To boost its relation with Africa and Ethiopia Prime Minister of China, Li Keqiang, and Chinese business delegates are expected to arrive Addis Ababa, Ethiopia, over the weekend to meet with African Union Chairperson and prime minster of Ethiopia. 

From Sunday (May 4-6, 2014) the premier with Chinese investors will sign 17 agreements with Ethiopian government, according to Chinese Ambassador to Ethiopia, Mr. Xie Xiaoyan who briefed journalists this morning (May 1, 2014) in Addis Ababa.

“There will be quite a number of agreements to be signed between the two countries in areas such as political, economic, trade, investment, culture and education,” the Ambassador said. 


“Ethiopia is a very important country to China. The relationship between the two countries reflects the closeness of our nations. China is a major partner in the infrastructure development in Ethiopia such as road, railway, bridges and airports that have mutual benefit for both countries. China and Ethiopia’s cooperation on infrastructure has set a good example for the rest of Africa,” he said.

During his stay in Ethiopia, the premier is expected to visit some of the infrastructure projects supported by china’s government and implemented by Chinese companies such as the 80 kilometers express highway linking Addis Ababa with Adama city that scheduled to be inaugurated on Monday (May 5, 2014).

Indicating that the Premier’s visit of Africa includes Nigeria, Angola and Kenya, Ambassador Xiaoyan said,”…China also wants to be partner in connecting the horn of Africa by engaging in infrastructure developments such as roads and railways”.

In addition to infrastructure, China has also been engaged in manufacturing and resources development areas such as energy. During his meeting with African Union Chairperson, Dr. Nkosazana Dlamini Zuma, the Premier is also expected to talk about how China can help agriculture development of Africa.

China – Africa total trade year reached $210 billion for the first time.  With around 30% annual growth over the last few years China’s overseas investment in Africa has also mounted to $25 billion last year.



Ethiopia’s first toll road to be inaugurated on Monday


Ethiopia's first toll road to be inaugurated on Monday


The Addis Ababa-Adama Expressway, the country’s first toll, built at a cost of 680 million dollars will be inaugurated on Monday.

The 80 km concrete asphalt road is built by a Chinese construction firm, China Communication Construction Company (CCCC). The new six lane 12 meter wide road can accommodate 15000 vehicles per day. Work on the project commenced in April 2010. The loan was secured from the Export Import (EXIM) Bank of China. The new road will be inaugurated by Prime Minister Hailemaraim Desalegn and the Chinese premier, Li Kegiang.



African farmers call for access to land, seeds, credit


African farmers call for access to land, seeds and credit facilities a consultation forum with farmers’ organisations in Addis Ababa, Ethiopia, on the side-lines of an African Agriculture Ministers meeting.

The voice of farmers need to be heard to leapfrog agricultural transformation in Africa,” says Director of Programme at the New Partnership for Africa’s Development, (NEPAD) Agency Mrs Estherine Lisinge-Fotabong. 





Speaking at the forum Mrs. Fotabong said that NEPAD values the relationship and engagement with farmers and wants to ensure that there is space for them to contribute to policy making.

The meeting brought together, representatives from Civil Society Organisations as well as the Pan African and Regional Farmers Organisation (PAFO and RFOs) to ensure that farmers drive and are at the centre of Africa’s transformation agenda.

President of PAFO, Mr Bagna Djibo, said that despite the progress made in agricultural development in the next 10 years, there was need for inclusive and coherent governance so that stakeholders can participate in the formulation of policies.

NEPAD’s engagement with farmers and other stakeholders is through CAADP, the Comprehensive African Agriculture Development Programme. It is an African-led plan to stimulate agricultural development by raising agricultural productivity. The Programme has in the last decade promoted policymakers to engage with an array of stakeholders such as farmers and producers to optimise growth, triggering wider impact stemming from sound agricultural policies.

Mary Afan, representative of the Smallholder Women Farmers Organisation of Nigeria (SWOFON) lamented the absence of base facilities. “I want to own land and improved seedling; I want access to credit facilities. But no support is forthcoming from government. What are the support systems available to me?” she asked.

Martin Bwalya, Head of CAADP at NEPAD said that the Programme is just as valid today as it was in 2003 when it was established, and that smallholder farmers are an engine for economic transformation ought to be supported to enable them become a source of wealth.

The Forum agreed that policy makers should take into account the challenges faced by small scale farmers, when making important decision on agriculture. Issues raised by farmers was included in the final document of the Agriculture Ministers meeting on May 1.




Ethiopia Secured US$ 1.3 Billion Loan for the Aysha Wind Farm Project


Ethiopia has secured a US$ 1.3 Billion loan for the Aysha Wind Farm project, according to the Ethiopian News Agency.

It was the project implementers, who had a meeting with President Mulatu Teshome on Wednesday,that announced the loan agreement.

Commenting on the project, Mulatu said, it is ideal for the rest of the world because it is a clean power generating scheme. He also added Ethiopia will do anything to bring the project to success.

The loan was secured from different banks and financial institutions. This was revealed by the delegates which came from German, Britain and United States of America (USA).

Mr. Robin Murray, the delegation leader, has said the project will be finalized in 18 months time and the wind farm will start generating 300 megawatt of electric power.

The wind farm is expected to enhance the electric power supply in the eastern part of the country when it is finalized.



Ethiopia Soon to Have New Transformer Factory


Ethiopia will soon have a transformer factory with a production capacity of over 10,000 transformers per annum, Ethiopian News Agency reported.

The factory is expected to start production by the end of the current Ethiopian year, Major Ebuy Gebremedhin, Deputy General Manager and Operation Head with Ethiopia Power Engineering Industry, said.

Ethiopia’s first transformer factory was launched three years ago and its capacity was 96 transformers a year.

Now there is only one factory that produces transformers and it has a capacity of producing 5,000 transformers per annum. When the new factory starts production, it will push the nation’s capacity to over 15,000 transformers a year.

Major Ebuy further noted the new factory will double its production capacity if there is an increment in demand.

Lieutenant Abrhaley Gebrekidan, Head of the factory, said the new factory’s installation will be finalized in two months time. He added 90 percent of the work is already done.

Commenting on the use of the factory, Abrhaley said the power generating dams including the Grand Ethiopian Renaissance Dam, will need quality transformers as well a great quantity.

The factory will entirely use local raw materials. It will engage in the export sector once it has satisfied the local demand.



Awash Melkasa to Launch Hydrogen Peroxide Production in July


awashmelkassaEthiopia will have a Hydrogen Peroxide Chemical factory by July 2014, Ethiopian News Agency reported. The factory is being built by Awash Melkasa Aluminum Sulfate and Sulfuric Acid Share Company at a cost of 200 Million Birr.

Ethiopia currently meets its demand for hydrogen peroxide from import. And according to Admasu Kabeto, CEO of the company, the factory will enable the nation to substitute this import.

When the factory starts operation, it will produce 5,500 tons of hydrogen peroxide in a year, Admasu added.

Hydrogen peroxide is used for leather and leather products, textiles and paper and pulp bleaching.



Indian firm to plant Africa’s largest cotton mill here


– Development Bank provides USD 23 mln for phase one

The Mumbai-based ShriVallabh Pittie (SVP) group has launched a USD 550 million investment in Ethiopia to set up a cotton mill that will produce cotton yarn fully for export.

The company has kick-started official operations and construction of the plant in Ethiopia. 

Vinod Kumar Pittie, chairman of the SVP, told The Reporter that his will be the largest spin producing plant in Ethiopia and the continent and will consume half a billion dollars for construction. Pittie said that the financing scheme is arranged in a way that the Development Bank of Ethiopia (DBE) agreed to provide a 52 percent term loan of the total investment required. The remaining 48 percent will be secured through equity financing. Hence, for the first phase, DBE will avail USD 23 million and SVP will bring USD 22 million, making a total of USD 45 million. According to Pittie, the project commenced construction yesterday.

At a press conference held on Thursday at Hilton, Tadesse Haile, Minister of State for Industry spoke of the urgency that the company has to realize the project as soon as possible. Sileshi Lemma, Director General of the Ethiopian Textile Industry Development Institute, echoed the Minister of State’s call that SVP has to come in play immediately. He told reporters that the timing at which SVP is present in Ethiopia is a good opportunity for the underperforming textile and garment industry. Currently, some 15 foreign companies are awaiting the completion of the construction of Bole Lemi Industry Zone, which is progressing in the suburbs of the capital.

When operational, SVP is said to be able to provide direct employment opportunity for three thousand people and indirectly for some 10 thousand individuals. Later after the third year of operation, SVP is planned to generate close to USD 400 million from exports. The 150-year-old SVP group has managed to obtain 50 hectares of land in Kombolcha town, 365km north-east of the capital. According to Abere Abera, mayor of Kombolcha, the total land area SVP was looking for was 100 hectares. Hence, for the first phase project, the Amhara Regional State, with the consent of the federal authority, has approved and agreed to provide the remaining 50 hectares in the second phase of operations.

SVP Textiles Private Limited Company, the registered name of SVP group in Ethiopia, will set a cotton mill plant that will produce 280 tonnes of yarn and spin per day.

The government of Ethiopia had planned to amass USD 1.2 billion from the manufacturing industry. However, the nine-month performance shows that the export earnings fall way below USD 300 million. Out of that amount, the share of the textile and garment subsectors was USD 85 million. The export of yarn totaled USD 25 million, proving the textile and garment manufacturing subsector feeds itself, though not always, Sileshi noted.



Ethiopia: EARI Developed New High Yielding Rice Variety


eiarEthiopian Agricultural Research Institute (EARI) has developed a new variety of rice that can yield 104 quintals per hectare, The Ethiopian Herald reported.

Dr. Endale Gebre, Institute Crop Research Deputy Director, told Ethiopian News Agency varieties found in the country can only yield up to 50 quintals per hectare in a normal rainy season. However, he added, the new variety of rice grants a high yield which means the finding will pave the way to meet the growing demand of rice.

According to Endale, the finding makes a major contribution to the nation’s struggle of attaining food self sufficiency. He added it is possible to get a higher yield by using irrigation.

Endale further noted the new variety will yield more rice than the rice producing countries.

Rice is cultivated in different parts of Ethiopia. It is produced in some parts of Tigray State, Benshangul-Gumuz State, Oromia State, Somalia State and Southern Nations Nationalities and Peoples State.

Endale has insisted for research scholars to speed up the familiarization of new variety to farmers.



Ethiopia’s big plans to boost tourist numbers




James Jeffrey and a group of gelada monkeys in the Simien Mountains

A group of gelada monkeys keep a close eye on reporter James Jeffrey in Ethiopia’s Simien Mountains


Perched at 3,260m (10,696 ft) above sea level, the Simien Lodge is the highest hotel in Africa.


It was built in 2007 by a British entrepreneur who had an eye for a dramatic view and was not put off by the challenge of building in Ethiopia’s rugged and isolated Simien Mountains.

The man in question, Nick Crane, first came to Ethiopia to help during its 1974 drought.

Now the 62-year-old is at the forefront of promoting a positive side to this unique and still misunderstood country.

When not in Ethiopia, Mr Crane spends much of his time visiting travel companies across Europe to highlight the nation’s scenery and wildlife, and rich cultural and historic sites.

“Previously some tour operators would not touch Ethiopia with a barge pole,” he says. “But now that is changing.”


Untapped potential


Ethiopia’s tourism industry has long lagged behind other African nations.


Simien Lodge

The Simien Lodge hotel is modelled on traditional Ethiopian huts


Recent comparable data showed that Africa’s most popular destinations – Morocco and South Africa – got 9.3 million and 8.3 million overseas visitors respectively in 2011.

Ethiopia by contrast received just 523,000, putting it in 17th place across the continent.

But visitor numbers to Ethiopia are now growing by 10% each year, according to the Ethiopian Ministry of Culture and Tourism.

It adds the income the country’s tourism sector receives is growing by 20% per annum, as the tourists who do visit are spending more.

Greg Dorey, the UK’s ambassador to Ethiopia, says the nation’s tourism potential “is certainly huge” and the Ethiopian government has expressed its intention to make the country one of the best visitor destinations in Africa.

There is even talk in Ethiopia of how tourism’s contribution to the nation’s foreign currency earnings could eventually overtake coffee, which has long been number one.

Yet to boost tourism numbers, Mr Dorey says Ethiopia has to increase investment.


Church of St George, Lalibela, Ethiopia
Ethiopia has nine world heritage sites

Continuing to build infrastructure that meets the expectations of foreigners is key to maintaining this trend “as there is a limit to how much people are willing to rough it”, Mr Dorey says.

At Mr Crane’s Simien Lodge, while the exterior of the building was designed to look like a group of traditional Ethiopian huts, the interior is clean and modern.

This helps attract wealthier tourists, and he wants other hoteliers to follow his example.

Across the whole of the Simien Mountains National Park Mr Crane says that the number of annual tourists has increased from 5,000 in 2007 to 24,000 last year.

He adds that a high proportion of the newer visitors are Americans and Europeans aged over 50, people who have – and are happy to spend – money.

These members of the so-called baby boomer generation typically spend about $2,500 (£1,600) per person while on holiday in Ethiopia, significantly more than the young backpackers the country has traditionally attracted.


Transformative role


Yet other than Simien Lodge there are currently only two other hotels inside Ethiopia’s 15 national parks.

One of these two facilities, in the Bale Mountains National Park, was opened this year by another British entrepreneur.


Nick Crane
Nick Crane works hard to promote tourism in Ethiopia

This might lead one to ask whether the Ethiopian government should be taking the lead here rather than enterprising British expats.

Yet Mr Dorey says: “[Ethiopia’s] Prime Minister Hailemariam Desalegn is gripping the situation by chairing a high-level committee to tackle the country’s tourism [shortfall].”

At the same time, however, the ambassador notes that many in government who lack international exposure still don’t appreciate the potentially transformative economic role of tourism, and the contribution it could make to alleviating poverty.


Finding a balance


Ethiopia, like many other developing nations, is also not immune to the temptation of charging overseas visitors more for the same service.

Even dishevelled, fiscally-minded backpackers have had to endure basic local hotels charging one rate for Ethiopians and a higher rate for faranj – foreigners.


Hotel room at the Simien Lodge
The Simien Lodge has been designed to appeal to Western tourists

And a current serious gripe among foreigners coming to Ethiopia for short-term work is how Ethiopian Airlines, at the end of 2013, raised the cost of internal flights for non-resident foreigners.

Others have noted entrance fees soaring at historical sites such as the rock-hewn churches of Lalibela.

There is also the question, some note, of what exactly is being done with the increasing flow of tourist dollars entering the country.

In the Simien Mountains National Park, for example, one must endure a taxingly bumpy ride to the lodge along the only crude road that threads through the park.

At the same time, the park’s rudimentary facilities and camp sites have not changed for years.


A young Ethiopian man ascends a 15m-high rock face with the aid of a leather rope to reach the cliff top monastery of Debre Damo, dating from the 6th century, in northern Ethiopia
Some of Ethiopia’s tourist attractions, such as the monastery of Debre Damo, require a head for heights

Nevertheless, more tourists are coming to the Simien Mountains, and to Ethiopia in general, including “those with business interests, and who could themselves become investors in Ethiopia if their experiences are positive”, Mr Dorey points out.

Such reactions and word of mouth may have much to do with fanning continued interest and growth, while Ethiopia’s tourism infrastructure and publicity machine catch up.

Roberta Gundlach, an American 57-year-old mother of three, spent two nights at Simien Lodge before travelling on with her two friends to the city of Axum further north.

Since childhood she always wanted to visit Africa, but life and marriage got in the way, says Ms Gundlach. Then last year one of her travelling friends returned from his first trip to Ethiopia.

“He told me I simply had to go to Ethiopia,” Ms Gundlach says.

Many in Ethiopia will be hoping the word continues to spread.



Ministry of Mines reduces size of land allotted to artisanal miners


The Ethiopian Ministry of Mines has reduced the size of gold exploration concessions given to artisanal miners and small-scale gold exploration companies to only five sq. km. 

The ministry has been promoting and assisting artisanal miners engaged in gold, tantalum and gemstone production. Artisanal miners or companies engaged in small-scale placer (alluvial) gold production used to take large exploration areas as big as 100 sq. km. However, now it seems that the Ministry of Mines has started tightening its grip on artisanal miners. 

The newly appointed Minister of State for Mines Tewodros Gebregziabher has issued a directive that restricts the size of an exploration area that a cooperative or a company engaged in small-scale placer gold exploration can acquire to a maximum of five sq. km of land. The ministry has also reduced the time limit during which the artisanal miners and companies engaged in small-scale gold exploration and production can conduct exploration study from three years to only six months. Under the new directive, companies are requested to present employment contracts proving that they have hired professionals required for exploration work.

Representatives of companies engaged in small-scale gold exploration projects told The Reporter that five sq. km of land was too small for a gold exploration project and the time limit allotted for the study (six month) was very short.

Tewodros was not available for comments as he was on a field tour in gold producing regions. A senior official at the Ministry of Mines told The Reporter that the moves were part and parcel of the government’s strategy to tighten control on gold exploration companies. “Some of them acquire the land and keep it idle for a long time. They do not have the required finance and professionals to execute the exploration work. We do not tolerate that anymore,” the official said.

Land rent is the other controversial issue. Most regional states charge mining companies 60 birr per sq. km per year. Benishangul charges 120 birr per sq. km. per year. The Oromia Regional State two years ago increased the rate from 60 to 600 birr. Following the move, the companies operating in the Oromia region have stopped paying land rent due to the inflated prices. Sources told The Reporter that the ministry ceased rendering services to companies that did not pay land rent.

The Ethiopian artisanal mining sector is playing a significant role in mineral exports. Artisanal miners produce alluvial gold in five regional states – Oromia, Southern Nations Nationalities and Peoples Regional State, Tigrai, Gambella and Benishangul regional states. The artisanal miners sell the gold to the National Bank of Ethiopia, the only mandated government body to buy gold from artisanal miners. In addition to Addis Ababa the bank opened out lets in Shire, Mizan, Hawassa and Jimma towns where it collects the gold from cooperatives.

More than one million Ethiopians are engaged in artisanal mining activities. The artisanal miners produce gold, tantalum and gemstones. Between eight and 10 tons of gold is annually produced by artisanal miners. Last year the central bank bought 8.3 tons of gold valued at 420 million dollars. The country annually earns 600 million dollars from mineral exports.

Although many African countries have a process whereby artisanal miners can enter the formal sector, in most of them only a negligible number have left the informal sector. The costs or qualifications required to gain an artisanal mining license are often prohibitive. In Ethiopia the bar to entry into the sector is low: Proclamation No. 678 of 2010 specifies that no financial resources or technical or professional competence is required to acquire an artisanal mining license. License fees are set by the state but are invariably low, and artisanal mining is exempt from taxes: the only universal payment that the artisanal miners make is the mineral royalty (eight percent for gold). Artisanal mining licenses, unlike any other mining license bar those for construction and industrial minerals, can be obtained through state governments rather than through the mining ministry in Addis Ababa. This reduces bureaucracy and opens up the sector to those who cannot afford to travel.

Artisanal miners who gain a license are offered a large degree of security. Although small – and large-scale licenses take precedence over artisanal licenses –   the licensing authority is obliged to give 90 days’ notice and the option of an alternative mining area or financial compensation when revoking an artisanal license. Artisanal miners are also given a guaranteed market: all artisanally mined gold is purchased by the National Bank of Ethiopia (the central bank)—at a market-based value of roughly USD 42.11/g-through official purchasing centers in all major artisanal mining areas. This is important: studies by the World Bank’s Collaborative Group on Artisanal and Small-Scale Mining have shown that, owing to transport difficulties, illegal taxation and long trading chains, in most countries only a small percentage of the extracted wealth ever reaches the miner.



Calvin Klein, Tommy Hilfiger owner to explore investment opportunities


– Labor rights among its concerns

The American PVH corporation’s clothing company is to consult with the government and consultants on investment opportunities in Ethiopia, according to a press conference it gave here on Monday. 

Tadesse Haile, Minister of State for Industry, stated the success and setbacks of Ethiopia’s investment opportunities. Responding to various questions from members of the delegation, he asserted that Ethiopia was ready to host giant global companies. “There are no restrictions at all,” he said. He said Ethiopia offered a hundred percent guarantee on business and no restrictions in the investment law. 

Highlighting the double digit growth, dependable energy supply and low inflation rate, Tadesse clarified the investment policy that had been reviewed to ease bureaucracy and mistreatment. “With prudent management policy and strong economic growth, we have achieved 10 per cent growth during the last two decades and lowered the inflation by 7 percent right now,” he said. The 6,000 MW hydropower from the Grand Ethiopian Renaissance Dam (GERD) project was expected to be finalized in three years’ time. The 1800 MW hydropower from Gilgel Gibe III is due to be operational one year’s time

Bill McRaith, Chief Supply Chain Officer, PVH Corp, told The Reporter that he had seen quite an encouraging situation in Ethiopia similar to what he saw in China in 1990 while operating the company there. “We are incredibly curious,” he said. He, however, pointed out that infra structure should come ahead of need. “China is the only country whose infrastructure goes ahead of need.” Moreover, he took the opportunity to talk about labor rights as he explained some of the fastest investments in some countries had yielded bad human rights consequences. “I continue to ask this question every time I come,” he reiterated.

PHV Corp. is the world’s largest shirt company owning brands such as Tommy Hilfiger and Calvin Klein. Ethiopian business consultants who returned from abroad also briefed the delegation citing various encouraging policies and abundant potential in the country. “We have come through quite a hard situation in facilitating such an event to occur, and here is the fruit,” Guenet Fresenet, Division Manager Southwest Sourcing, said. The delegation also paid a short visit to investment sites in Addis Ababa.



Oil and mining to be the backbone of East Africa’s economic growth


BY | 2 May 2014

The development of oil, gas and mineral discoveries in East Africa will drive economic growth and transformation in the region of more than 300m people over the next two decades.

This is according to Gabriel Negatu, regional director for Eastern Africa at the African Development Bank.

“The extractives in general, including oil and energy, will provide the backbone that will help the transformation in this region in the next 20 to 30 years,” he said. “There has been all sorts of resources gushing out of the ground every [few] months. Every country in this region now has one or several types of resources.”

Addressing delegates at last month’s East Africa Property Investment Summit, Negatu said the region covering Kenya, Uganda, Tanzania, Rwanda, Burundi, Ethiopia and South Sudan, has made remarkable economic progress riding on sectors like agriculture, but in recent years the “energy boom” has become quite apparent.

Major energy player

The industry, he said, could become a game changer for local economies and make the region a primary energy source on the continent.

“Statistics [show] there have been about 500 oil wells drilled in East Africa over the past two to three years as compared to 15,000 wells that have been drilled in West Africa. This region is a latecomer but it is a latecomer that is set to move aggressively to dominate… the African market. I think all the way from Mozambique to the top of the Red Sea coast will be the next Gulf of Guinea kind of primary source of energy in Africa.”

There are eight oil states in West Africa around the Gulf of Guinea, together producing millions of barrels of oil a day and the region has for a long time been regarded as one of the world’s oil and gas hotspots.

The economist noted that extractives will have a direct impact on economic growth, citing the case of Kenya where oil is expected to increase the GDP by as much as 10%. As citizens get more disposable income, investments in other sectors like real estate and consumer goods could increase.

Not losing sleep over the resource curse

He urged countries to approach the development of the mining and oil sectors differently from the way agriculture has been handled over the past decades. Although agriculture is the foundation of many economies in the region, Negatu pointed out that farmers are disengaged from the value chain.

There have been a few initiatives in countries like Rwanda, enabling coffee producers to supply directly to Starbucks, and in Ethiopia where farmers provide cut flowers to supermarket chains in Europe. However, Africa’s producers are predominantly cut-off from consumers and trade via middlemen and agents.

“Traditionally our way of economic growth has not linked us to the global value chain nor with the consumers. This is one of the transformations that need to take place. We need to now do less of the primary scooping and growing and so on and move up the value chain with direct access and contacts to consumers,” said Negatu.

Notably, concerns over the “Dutch disease” and the “resource curse” have been raised in the past few years as more resources have been discovered in the region.

“This is a reality and this is something that all of us need to be concerned about. The only saving grace, if I could call it that, is that East African [nations are actively] beginning to think about these issues. It’s not like 50 years ago when Nigeria discovered oil. [Back then] Nigeria was largely a peasant agrarian society and everyone left agriculture and went to some aspect of oil.”

Negatu added that the resource curse is not “something to lose sleep over” in the case of East Africa because economies in the region are already adequately diversified.

“Today East Africa is a robust mature economy without oil. Therefore these resources if anything are icing on the cake and not the cake itself because the cake is already there. Look at these economies; they have got IT, they have got tourism, they have got services… half a dozen sectors, all of them robust. So oil coming on top of it will only help improve [these economies].”

Driving infrastructure development

Negatu said the extractives industry could also boost infrastructure development in the region.

“Where you have extractives, whether it is leading up to the mines and the rigs or leading away from them, there tends to be a major explosion of infrastructure development,” said Negatu.

He cited the case of the Tanzania-Zambia railway that was built to transport Zambia’s copper from the mines to the port of Dar es Salaam.

“Today we are in discussion with half a dozen private companies for [an] US$8bn railway from Dar es Salaam to… Musongati [in Burundi] which I think is [one of] the largest nickel deposits in the world. So that is triggering another railway line.”

Negatu noted that the big challenge for the region is ensuring that the resource “tide lifts all the boats” and that all citizens share in the wealth generated.



Tullow to conduct well-testing in Chew Bahir


– Plans to drill fourth well this year

The British oil company prospecting for oil in East and West Africa, Tullow Oil, is to conduct well-testing in the Shimela exploration well being drilled near Chew Bahir. 

Tullow’s drilling crew started drilling the exploration well located in the Hamer and Bena Tsemay Weredas of the South Omo zone last March. An interim management report released early this week says that the Shimela-1 well is expected to reach a total depth this month. “In Ethiopia, the focus of drilling operations has moved to the Chew Bahir basin where the Shimela-1 exploration well commenced drilling in March with the well expected to reach its total depth in May,” the reports says.

Reliable sources told The Reporter that the drilling crew would conduct well- testing in the coming few weeks that will enable them to determine if there was oil accumulation in the area. Sources said that the seismic data collected from the Chew Bahir basin indicates positive results, adding that there is a high probability of discovering oil in the Shimela well.

“With high-impact well results expected in the coming months from new and existing basins in Kenya, Ethiopia, Gabon and Norway, there is much to look forward to for the remainder of the year and beyond,” Aidan Heavey, chief executive officer at Tullow Oil, said

Tullow is planning to drill another exploration well in the Chew Bahir basin this year. This well, named Gardim-1, will be Tullow’s fourth exploration well in Ethiopia.

A recent report prepared by Tullow indicated that the company and its partners have completed a 1,174 kilometer 2D seismic program in the Chew Bahir basin in the eastern portion of the South Omo Block. According to the report, the survey identified a number of prospects and leads. The report said the Shimela prospect has been identified as the first well in the area and is expected to spud in 2014. A second well location is also being considered for 2014.

The South Omo Block is located in the northern portion of the Tertiary East African Rift trend where Tullow Oil and its partners have made five significant oil discoveries in Northern Kenya. The Company and its partners on the South Omo Block spudded the Sabisa-1 well in January 2013 and the well was drilled to a preliminary total depth of 1,810 meters. Hydrocarbon indications in sands beneath a thick clay stone top seal have been recorded while drilling but hole instability issues required the drilling of a sidetrack to comprehensively log and sample these zones of interest. The sidetrack was drilled to a total depth of 2,082 meters. The well encountered reservoir quality sands, oil shows and heavy gas shows indicating an oil prone source rock and a thick shell section which should provide good seals for the numerous fault bounded traps identified in the basin. Only the lowermost sands appeared to be in trapping configuration at Sabisa-1. Based on the encouragement of the results of this well, the company decided to drill the nearby Tultule prospect, four kilometers to the east of Sabisa-1. The Tultule-1 well was drilled and well testing results showed it was a dry well.

Tullow Oil has a successful exploration history in neighboring Kenya, Uganda and Ghana. Currently, there are 12 international petroleum companies engaged in oil and gas exploration activities in Ethiopia under six licenses. Responding to a question about the results of the ongoing exploration projects in a recent press conference, the Ethiopian Minister of Mines, Tolossa Shagi Moti, said that oil exploration work was intensified in the country. “We expect positive results,” he commented.



EEPCo, Reykjavik start negotiation on first power purchasing agreement


The Icelandic company, Reykjavik Geothermal (RG) that signed an agreement with the Ethiopian government to build a geothermal power plant in Ethiopia and the Ethiopian Electric Services Enterprise, on Thursday, started negotiations on the country’s first power purchasing agreement.

Reliable sources told The Reporter that senior power experts of Reykjavik and the Ethiopian Electric Services started negotiations in Addis Ababa. Sources said the negotiations include power sale, tariff, investment guarantee and foreign currency exchange rates. “Technical issues should be addressed before we commence work on the project,” a company source told The Reporter. The negotiation is expected to take longer as it is highly technical in its nature. If everything goes according to plan, the company will start mobilization to commence with construction by September. 

It is be remembered that Reykjavik Geothermal signed a memorandum of understanding with the government of Ethiopia in September, 2013. And, subsequently, the project and its plan to generate electricity from geothermal energy with an installed generation capacity of 1000 MW was made public. The project will be built in the Oromia Regional State near the town of Shashemene around the Corbeti locality with an outlay of four billion dollars. The investment outlay has made the geothermal project by far the largest FDI in Ethiopia to date.

Reykjavik Geothermal will work with its local partner, Rift Valley Geothermal  (RVG,) established by Nejib Abbabiya, an Ethiopian born Canadian businessman in 2009. The partnership between the two was formed in 2011.

This negotiation is the first of its type for Ethiopia, which kept a state monopoly both in power generation and distribution for many years. The Ethiopian Electric Power Corporation restructured into the Ethiopian Electric Services and the Ethiopian Electric Power Construction is the sole utility company that generated and distributed electric power in the country. With the view of mitigating the power shortage that the country faces frequently, the government last September introduced a new regulation that allows private utility companies to generate electric power from different sources and sell it to the national grid (Ethiopian Electric Services.)

According to the original plan, the first phase of the power plant will start generating 20 MW by 2015 and 1000 MW by 2018. EEPCo has agreed to buy all the electricity under a 25-year contract.  According to experts, the project planned in Ethiopia will be Africa’s largest geothermal power plant.

The project was initiated following US President  Barack    Obama’s announcement of a 7 billion dollar plan to double electricity access in seven African countries: Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania. Hence, Corbeti geothermal project may secure financing from the Obama power fund, according to reports.

Industry experts say the negotiation is not going to be an easy one. Particularly the negotiation on tariff. Some experts are skeptical about the realization of the project. “It is the Ethiopian state utility company that buys the power RG will generate. The government so far charges the public low electric tariff rates. Considering the huge sum of investment required for the geothermal project, the tariff that the Ethiopian Electric Services offers may not be acceptable by RG,” the experts claim. Although they do note that the possibility of finding an agreeable term is on the table given recent activities of the Ethiopian government to export power to neighboring nations, which is expected have much higher tariff rates than the local.

Under the new proclamation it is the Ethiopian Energy Authority that sets electric power tariffs. Ethiopian Electric Services is responsible for power generation and distribution. Private companies that will engage in power generation will generate and supply the power to the national grid. If RG succeeds it will be the first private power company to generate and sell electric power to the state utility company.



Swiss bank approves $865 million loan for Awash-Weldiya railway project


The Ethiopian Railway Corporation (ERC) is going to sign a USD 865 million loan with a Swiss lender for the railway project that stretches from Awash to Weldiya, Capital learnt.
Diplomatic sources at the Turkish Embassy told Capital that the signing ceremony will be a green light for the Turkish company that clinched the contract to commence the construction project that will begin before next month.
Sources at ERC told Capital that the signing event which will take place in Addis Ababa was planned for last Friday April 18, but has been rescheduled for the next few weeks.
The diplomatic sources stated that the balance of an expected USD 1.4 billion loan from   Switzerland’s Credit Suisse group is also expected to be approved in the near future.
According to sources, the additional money needed will be also provided for the project in the near future.
The ground work the Turkish construction firm was supposed to complete has yet to get underway; even thought it signed a contract with ERC in 2012.
Turkish company YapiMerkezi secured the contract for the construction of the 389kms Awash to Weldiya section, estimated to cost USD 1.7 billion, a section of the larger railway network running from Mekele via Weldiya and Semera, to Port Tadjourah in Djibouti.
PM Hailemariam Desalegn during his quarterly briefing on Thursday April 24, at the parliament stated that railway projects that are scheduled to be undertaken during the Growth and Transformation Plan (GTP) have been delayed because financers have been unable to release the expected loan on time. This is the Swiss bank’s first loan to the Ethiopian government.
Sources said that the Awash – Weldiya railway project will commence as soon as the USD 1.7 billion needed is released by the bank. The Turkish company has worked on several overseas construction projects including in Dubai and Russia.
The China Communication and Construction Corporation (CCCC) will build the Mekele to Weldiya part of the rail line. The estimated USD 1.5 billion, is financed by the Chinese EXIM bank and covers some 260kms.
The section that stretches from Mekele to the Port of Tadjourah, Djibouti, covers a total distance of 675kms, and is expected to link the northern part of the country with the center. The Indian EXIM Bank has also pledged USD 300 million for the Asayita-Port of Tadjourah segment of the Mekele-Port of Tadjourah railway line.
The PM said that the loan that is expected from Russia and Brazil for other railway projects has also been delayed because of economic conditions in their country.
Russian Railway and Andrade Gutierrez Participacoes SA of Brazil have signed an EPC contract with ERC to undertake the railway stretching from Mojo to Weyto, and Sebeta to Bedele respectively.
In the Growth and Transformation Plan (GTP), the Ethiopian government plans to construct 2,395km of railway, which will extend to four parts of the country.
The 657km Sebeta-Dire Dawa-Dewale is the only railway project which is currently under construction.
The Chinese contractors, China Railway Engineering Corporation (CREC) and China Civil Engineering Construction Corporation (CCECC) are currently constructing the Sebeta-Mei’so-Dewele railway line. For the 657km project, the Chinese Export Import (EXIM) Bank has provided the majority of the USD 2.3 billion needed.
CREC is also constructing the 34km Addis Ababa LRT, which is also financed by the Chinese EXIM Bank.



Auditor General: Over 3 billion birr unaccounted for in government offices



Over 3 billion birr is unaccounted for from 138 federal government offices according to the latest report by the Federal Auditor General.
The General Auditor Gemechu Dubiso in his report to the House of People’s Representatives said that the parliament should take action against state institutions that are found mismanaging the federal government’s funds.
A report by, tabled for MPs on Tuesday April 22, indicated that 40 state enterprises did not audit their accounts for over two years, while 77 other institutions did not collect over 877 million birr on time.
Twenty-five other institutions, the report discloses, made 202.5 million birr payments irregularly.
“The situation is worsening instead of improving when it comes to government institutions that do not undertake and deliver financial and audit reports on time; and it needs great attention and legal measures,” said Gemechu.
The 54-page report detailed how 138 government institutions spent their budgets and managed properties during the last fiscal year that runs from July 8, 2012 to July 7, 2013.
The report also criticized German development cooperation GIZ for the way it implements  government projects, stating that out of the 475 health facilities built through the GIZ,  51 percent of contracts were awarded without proper tendering. Moreover the projects incurred an additional cost of 105.3 million birr and out of 475 health stations constructed by GIZ 104 were found to be below standard.
Further, the report stated, institutions such as the Defence and Foreign ministries, and some state universities, failed to pay their clients 472 million birr on time.
To reduce mismanagement of finances and properties in government institutions, the Auditor General recommended that Parliament empower the office to prosecute the heads of the institutions found culpable.



Nation Benefitting from Growing Foreign Direct Investment


The various incentives the Ethiopian government has been providing to investors are making Ethiopia benefit from direct investment, the Economic and Finance Cluster Coordinator with the rank of Deputy Prime Minister and Information and Technology Minister said.

Deputy Prime Minister and Minister Dr. Debretsion Gebremikael said the favorable investment environment created in the country and the direction it is pursuing has been contributing hugely in attracting foreign investors.

Among the incentives, he cited reduction of taxes on means of productions imported by investors and on exportable goods as attractive to businesspersons.

The expanding infrastructure has also caught the attention of investors, according to him. The conducive situation in supply of electricity, human resource and provision of roads as well as other facilities in particular captivate investors, it was indicated.

Data obtained from the National Bank of Ethiopia states that close to 3.6 billion USD foreign direct investment has been registered during the past three years; and    2,146 foreign investors with over 187 billion USD have received licenses in the same period.

Out of these, 637 projects have become operational and created 26,000 permanent and 35,000 temporary jobs, while 133 projects with 21.5 billion USD have started construction work.



Chinese Companies with Over 5 billion USD Keen to Invest in Ethiopia


Chinese companies with about 5.6 billion USD capital have reportedly expressed interest in investing in Ethiopia.

The 12-businessperson delegation representing 7 Chinese companies conferred on Wednesday with President Mulatu Teshome.

According to the spokesperson of the president who briefed journalists, the companies are interested in engaging in the production of explosives, railway design and construction, hotel and resort construction as well as real estate development.

President Mulatu said during the discussion that Ethiopia needs non-military explosives at this time when it is engaged in undertaking dam and railway building.

He also urged the investors interested in building hotel and resort to quickly implement their plan as the country hosts many guests as a capital of Africa.

According to the spokesperson, President Mulatu has also affirmed the country’s commitment to closely support all investors in their endeavor.



Activities in Industry Sector Indicating Realization of GTP


Activities being undertaken in the industry sector indicate that the target set in the Growth and Transformation Plan Period is achievable, the Ministry of Industry said.

The sector has grown by 17 percent annually in average during the past three years, said the Minister Ahmed Abtew while evaluating the first nine months performance report of the sector. The target was to register an 18 percent growth every year during this period. The sector is expected to grow by 21 percent in this budget year, he noted.

Textiles and garment as well as leather and leather products areas have registered better achievements, even above the target, he explained.

Capacity building activities being carried out to improve production capacity of industries have shown progress, he said, adding, but the limitations are not fully addressed.

These limitations in production capacity and local companies’ engagement in the services sector led to the gap in the foreign trade performance in the manufacturing industry, which was below the target, according to the Minister.

The performance in the manufacturing industry for the first nine months has only 40.6 percent.

Shortage of input supply, capacity limitations, contraband trade and low integration among federal and regional bureaus are the main challenges contributed for the low performance.

Efforts are being exerted to build capacity of the sector through improving skill and knowledge of the sector in collaboration with public universities and Japanese experts, he added.



Ethiopia Contemplating Water Export to Kuwait


The Ethiopian President, Mulatu Teshome, discussed with Rashad Al-Shawa, President of Mai Resources International (Switzerland) AG, on ways of exporting water from Ethiopia to Kuwait.

The Kuwaiti Ambassador, Rashed Al-Hajiri, has told Mulatu its country wants 66 million gallon water from Ethiopia for daily supply. He then added transporting water from Ethiopia to his country is easy as Ethiopia is near to the Middle East and the nation’s huge water resource.

President Mulatu explained the government of Ethiopia is pleased with the hard work of Kuwait to import Ethiopia’s water. He then added that this effort by Kuwait will strengthen the economic cooperation of the two nations.

Mai Resources International (Switzerland) AG is a water transporting company. According to Al-Shawa, the company chose Ethiopia for its abundant water resource.








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