09 Sept. 2014 Development News (UPDATED)


Ethiopian, Chinese joint venture sign deal to build 391MW hydropower plant



Addis Ababa, 9 September 2014 (WIC) – SUR Construction PLC teamed up with two giant Chinese companies to build a new hydroelectric dam in Illu Aba Bora and Jimma zones of Oromia region.

Representatives of the contractors on Monday signed a 583 million USD agreement with Ethiopian Electric Power (EEP) to build the Geba Dam, which will have 391 MW installed power generating capacity.

In the past, SUR teamed up with the same Chinese companies – Sinohydro Corporation and China Gezhouba Group Company (CGGC) – to build the Tekeze dam, a 300 MW hydroelectric dam in Tigray region.

CGGC was also the contractor for Fincha Amerti Neshe (97 MW) and is currently building the Genale Dawa III hydropower project, a 254 MW hydroelectric dam on the border of Oromia and Somali regional states.

Based on the contractual arrangement, SUR will have 25 percent share of the project while Sinohydro and CGGC take a 40 and 35 percent share, respectively.
“Depending upon our performance, our share in the project could rise up to 40 percent, making us the lead partner,” Tadesse Yemane, general manager of SUR, told WIC.

The local company is expected to undertake the construction of two rock-fill dams, spillways and roads with its experts also participating in tunneling and foundation treatment.

“The project will, undoubtedly, contribute for knowledge and technology transfer to our local companies,” Alemayehu Tegenue, minister of Water, Irrigation and Energy, said.

‘Low cost’

Pending a loan approval process, 80 percent of the Geba Dam project will be financed by the EXIM bank of China with preferential credit modality.

“Compared to other similar hydropower projects, Geba is found to be reasonably low cost power plant,” Azeb Asnake, CEO of EEP, said during the signing ceremony.

Located some 540 km south west of Addis Ababa, the Geba Dam is a priority project planned for completion during the second phase of the Growth and Transformation Plan (GTP II).

The hydropower plant, which constitutes Geba I (226 MW) and Geba II (165 MW), is expected to be completed in four and a half years.

“The [joint venture] will pre-finance the project construction works and commence immediately without waiting for the approval of the loan,” Azeb expressed her hope.

The dam is also expected to create a possibility for the irrigation development of some 480,000 hectares in the lower Geba plane.

The launch of the project takes the number of hydroelectric dams under construction to four including Genale III, Gibe III (1,870 MW) and the Grand Ethiopian Renaissance Dam (6,000 MW).



Ethiopia to Join COMESA’s Free Trade Area


The government of Ethiopia is on the move of joining the Common Market for Eastern and Southern Africa (COMESA) Free Trade Area (FTA) which enables the country to have preferential trade interaction between member countries.

The FTA covers core issues of tariff liberalization, rules of origin, customs procedures and simplification of customs documentation, transit procedures among other issues.

This decision came from following findings and recommendations of a research titled “Ethiopian Industrial Competitiveness” conducted by the COMESA and the Ministry of Finance & Economic Development (MoFED). The research recommended that the country is ready to join the free trade area because the county’s competitiveness in terms of quality and price improved from the previous times, according to Geremew Ayalew director general of trade relations & negotiations at the Ministry of Trade (MoT).

Two researches conducted 10 years ago had identified two main negative outcomes of joining the FTA at that time – that Ethiopia industries would be no match for cheaper imported products from the regional economic community and would be closed, and that 72,000 individuals would lose their jobs as a result of the closure of the industries.

The COMESA was established in the mid 1960s with the idea of regional economic cooperation. COMESA’s FTA was launched on October 2000 with nine Member States with the aim of trading on a full duty free and quota free basis, with the remaining countries at various stages of joining the FTA, which now has 13 members. The FTA has boosted intra COMESA trade, increasing it by nearly six-fold from 3.1 billion dollar in 2000 to 18 billion dollar in 2013.

Ethiopia was not able to join the membership because of incompetency in both the quality and quantity of its industrial products, according to Germew.

To be beneficiary of the preferential treatment goods should be in conformity with the rules of origin of COMESA’s FTA. The criteria generally require the goods should be wholly obtained or have undergone sufficient transformation in the production processes in the FTA..

The Ethiopian Industrial Competitiveness research was conducted by the support of the COMESA and the MoFED. The research was started a year ago and handed over to the MoFED recently after finalization. As a stakeholder the MoT was invited to give comments on the results and recommendations.

“The country will not join the FTA once but in five phases gradually to liberalize and cope up with the trade competition expected from industries of member states,” says to a source who wants to be anonymous.

The arrangement has already been prepared for joining the FTA and submitted to the parliament for parliamentary oversight and reflection before the parliament session was close on July, 2014.

“The parliament has a positive response for the arrangement,” said Germew.

Same like the COMESA’s FTA membership Ethiopia is also in the preparation of joining World Trade Organization (WTO) which was established in 1995 at Marrakech, Morocco, replacing its predecessor, the GATT formed at the end of WWII. Ethiopia is one of 23 countries with observer status to be an additional member to join the current 159 member countries at the WTO.



World Bank Chief to visit Ethiopia



The World Bank Managing Director and Chief Operating Officer is set to visit Ethiopia. DireTube has learnt that the visit by Sri Mulyani Indrawati is part of the World Bank Groups’ effort to further strengthen the partnership with Ethiopia. 

The Director is expected to arrive in Ethiopia on September 14 for a three day visit. Indrawati is scheduled to meet Prime Minister Hailemariam Deslegn and members of his cabinet to discuss opportunities and challenges the country is currently facing. Indrawati will also meet with representatives of the donor community, the private sector, civil society and the media.

According to the schedule, several site visits are planned to assess firsthand how World Bank supported projects are benefiting the poor and are contributing to Ethiopia’s economic transformation.

The Director will also meet implementers and beneficiaries of projects promoting productive safety nets and improving urban local government development.

She will see firsthand how initiatives that increase competitiveness and create jobs play significant roles in reducing poverty.



US $91.10 million for Ethiopia’s One Water, Sanitation and Hygiene National Programme (OWNP)


The Board approved a loan of UA 60 million (US $91.10 million) and a technical support grant of €7.63 million (US $10.06 million) from the Rural Water Supply and Sanitation Initiative (RWSSI) Trust Fund to finance the country’s mega water, sanitation and hygiene program, one of the biggest of such projects in the world.

The One Water, Sanitation and Hygiene National Programme (OWNP) is expected to deliver improved and sustainable water supply facilities in rural and pastoral areas, institutions and urban areas; improved sanitation facilities and better hygiene; improved WASH sector capacity for planning, budgeting, monitoring, reporting and sustaining services at decentralized and federal levels.

The direct beneficiaries are people based in rural and pastoral areas, who will benefit from improved and more inclusive provision of WASH services at household and institutional levels, and who will benefit from the attendant well-being, time-saving, and productivity gains.

The program will lay emphasis on the least served majority of Ethiopians (about 83% of the population who live in rural areas). The youth and women will especially benefit from the establishment of sector-related employment opportunities.

Ultimately, the OWNP is estimated to cost US $2.4 billion. Other institutions funding the project include the UK Department for International Development (DFID), UNICEF the World Bank and the Government of Ethiopia.

The Board meeting followed a flag-raising ceremony formalizing the Bank’s return to its headquarters after more than 11 years in its temporary relocation agency in Tunis.



InterContinental Hotel Group Unveils Ethiopian Branch


InterContinental Shanghai Puxi, one of 131 IHG hotels in China, Guest Room

VENTURES AFRICA – British multinational hotel company, InterContinental Hotels Group (IHG) is expanding its business in Africa with the launch of a 210-key hotel in Addis Ababa, Ethiopia, bringing its African total to 13 countries.

The hotelier said it has signed a management deal with Tsemex Hotels and Business Plc to develop its “Crowne Plaza” brand of hotel in the Ethiopian capital city.

It will be strategically located close to the headquarters of the United Nations Economic Commission for Africa, the African Union headquarters and the United Nations Convention Centre. And will also have seven large meeting rooms, a ballroom, a boardroom and other facilities like the health club and spas.

Pascal Gauvin, IHG CEO for India, Middle East and Africa, said the hotel is currently developed to exploit the growing inflow of tourists and foreigners, particularly with the Bole International Airport now serving almost 20 million passengers yearly.

“Addis Ababa has great potential for tourism but is currently under-supplied in catering to business travellers and meetings and events,” he said.

With presence across 12 African countries, IHG currently has 29 hotels, under five popular brands. These brands include Holiday Inn Express, Crowne Plaza, Holiday Inn, InterContinental, and Staybridge Suites.



Lack of competition affects mobile data markets of ​​Congo and Ethiopia


Mobile users


Mobile communications markets in the Democratic Republic of the Congo (DRC) and Ethiopia face challenges due to lack of competition, poor economic conditions and limited infrastructure availability, says a new report from Frost & Sullivan.

Additionally, mobile operators in these markets are largely focusing on subscriber acquisition and network expansion for voice services. This causes delay in the rollout of advanced networks such as Long Term Evolution (LTE) compared to other developed market, the report said.

The two markets earned revenues of $1.78 billion in 2013 which is expected to reach $3.27 billion by 2018, says a new report from Frost & Sullivan.

While population densities of both countries are among the highest in Sub-Saharan Africa, their active mobile penetration rates in 2013 were 36.4 percent and 24.1 percent respectively, well below Sub-Saharan Africa’s average of 61 percent, the research said.

The markets will see substantial growth in the next three to five years, mainly driven by the growing infrastructure investment in the region.

Data services and mobile money solutions are the key drivers of the market. Data revenue will be driven by the proliferation of low-cost mobile devices and the growing popularity of social media platforms. Mobile money will gain prominence as the number of Ethiopia and DRC’s unbanked populations have prompted their respective governments to place financial inclusion at the forefront of their socio-economic plans.

“While voice is still by far the dominant contributor to service revenue, data services and mobile money solutions are expected to fuel growth in the long term,” said Frost & Sullivan Information & Communication Technologies Research Analyst Lehlohonolo Mokenela.

Frost & Sullivan also finds that the growth of Ethiopia’s mobile communications market has been mostly been limited by a lack of competition; state-owned Ethio Telecoms is still the only provider in the market owing to tight regulatory protection.

Upon the completion of the country’s Growth and Transformation Plan (GTP), it is expected that the regulator will gradually open the market to competitors, Mokenela added.

In order to grow customer base in rural areas, mobile operators need to consider cost-effective network expansion strategies in the DRC, added Mokenela. “Leveraging infrastructure-sharing models and using hybrid base stations can help operators lower their operational site costs and mitigate the country’s intermittent electricity supply.”



 Ireland Pledges to Consolidate Dev’t Assistance to Ethiopia


Ireland Pledges to Consolidate Dev't Assistance to Ethiopia


Foreign Affairs State Minister Ambassador Birhane Gebrekristos held talks on Tuesday, September 9, 2014 with Niall Burgess, Secretary-General of the Department of Foreign Affairs and Trade of Ireland, on ways of improving the bilateral relations of the two countries.

During the occasion, Ambassador Birhane called on Irish investors to seize the investment opportunities created in Ethiopia and invest in agriculture, health, hotel and tourism as well as industry sectors.

He further urged Ireland to consolidate its development assistance in the spheres of agriculture, food security, potable water and other infrastructural activities.

Stating the importance Ethiopia attaches to the development support it get from Ireland, Ambassador Birhane finally asked the government of Ireland to uphold its contributions to the peace keeping effort underway in East Africa.

Niall Burgess on his part said Ireland would consolidate the development assistance it extends to Ethiopia.

He pointed out that Ireland would continue providing support for Ethiopia in its endeavors to meet the Millennium Development Goals; poverty, maternal and infant mortality reduction, and in development activities in general.

According to the Secretary-General, his country will strengthen its support to the effort underway to bring peace to East Africa and Africa in general.

Ireland has also the desire to jointly work with Ethiopia in climate change, peace and stability as well as African and other international issues, he added.

Ministry of Foreign Affairs Spokesperson, Ambassador Dina Mufti, stated that the relationship between Ireland and Ethiopia has registered tremendous growth within a short period.

The President of Ireland is expected to visit Ethiopia after two months, it was learned.


Globe says Prattas likes Allana Potash’s latest move


2014-09-09 09:14 ET – In the News

The Globe and Mail reports in its Tuesday, Sept. 9, edition that Allana Potash (31 Canadian cents) has hired a German company Ercosplan to complete a preliminary economic assessment on kainitite resources for sulphate of potash (SOP) production at its Danakhil project in Ethiopia.

The Globe’s Darcy Keith and Sonali Verma write that SOP is commonly used on chloride-sensitive crops such as tobacco, fruits, vegetables and vineyards. SOP typically commands a premium price to muriate of potash.

The price differential between the two has averaged approximately $125-$150 (U.S.) per tonne over the past several years and has increased to over $350 (U.S.) per tonne recently.

Allana Potash says the kainitite mineral resources at its Danakhil project are extensive.

Cantor Fitzgerald analyst Peter Prattas says, “In our opinion, this is a prudent move requiring only modest investment toward proving the economic validity of this resource with the potential to create value for shareholders.”

Mr. Prattas has a “buy” rating and $1.15 (Canadian) price target on the company’s shares. Mr. Prattas maintained his “buy” call on Allana in The Globe on Oct. 10, 2013. The shares were then worth 47 Canadian cents.



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