The Unenergetic Energy Sector

Jun 1 , 2019
By Eden Sahle

What is unchanging in Ethiopia is the lack of preparedness for disaster, either natural or human made. The current rationing of power is just one example of this, and it is taking its toll on the already fragile economy of Ethiopia.

It is not unheard of for Ethiopia to be hit by a shortage of rainfall – this has been going on for centuries, if not millennia. Yet the nation continues to depend on rainfall not just for the irrigation of crop, but for the generation of power. What is more surprising is how even major investments in the energy sector are on the generation of power through hydroelectric dams.

Lack of a significant strategy shift toward solar and wind capacity and reliance on hydro power generation has left the country to continuously fall back on power rationing. Seasonal climate conditions continue to determine whether or not there is power, frustrating the public and businesses.

There are more than 60 million people without electricity, according to the latest research done by Enel Foundation in March 2019. This should be alarming to authorities tasked with leading electric corporations.

Absence of efficient power supply does not just keep people in the dark, but it has negative economic consequences, keeping the country in a vicious cycle of poverty. Electricity supply is one of the most basic and significant sectors of the national economy. This has direct implications on economic development.

Efficient electricity distribution is a driving force of economic development. The shortage of power supply will seriously affect the development of the economy, causing large economic losses.

Manufacturing industries and businesses consider inadequate infrastructure, particularly power supply, as their most severe constraint. Dealing with the inadequate power supply and other infrastructure gaps absorbs far more of managements’ attention, distracting from opportunities to grow and innovate.

Adequate power supply is the prime mover of infrastructure and social development. There is hardly any business and any aspect of human development that does not require energy in one form or another.

Fortunately, Ethiopia is endowed with various energy sources such as hydro, wind, geothermal, solar and biomass energy and boasts a large potential. Yet the country consistently suffers from energy shortages, one of the major impediments to growth.

Advanced planning for electric power investment to match the economic demand of the country is vital. Clearly, the internally generated revenues from existing utility services is not adequate to finance the large expansions necessary to provide access to the growing Ethiopian population. The increasing demand for power is too large that several private sector providers are needed to meet the demand. To reinforce and equip the state monopoly as well as to upgrade the delivery network there should be investment from the private sector to establish supply reliability.

Strengthening the capacities and reducing the vulnerability should have been the major task of the leadership at the Ministry of Water, Irrigation & Electricity. While there have been reforms to open up the sector for private sector investment, there are still gaps remaining that make it hard for investors to engage.

The authorities should be able to make their national grid plans clear to investors so that they know what the market potentials are. The government should as well facilitate and incentivise small power producers as well as invest in micro grids instead of the national one.

These would be instrumental to ensuring that energy sources are diversified. This is the best means of ensuring preparedness and making use of natural resources such as solar and wind power.

Evidently, preventing natural disasters all together is impossible in the short term. But it is possible to predict and prepare for them before they happen to a certain degree. Being ready for a catastrophe before it happens will reduce the devastation that can follow.

Management efforts should be used not only as a quick fix to address crisis situations but also in a systematic and comprehensive manner to improve energy supply efficiency on a permanent basis. Balancing the system with a mix of hydro and other renewable energy sources should be utilised to keep pace with the growth in demand.

Upgrading the technical and operational capacities will enable improved and dependable services. Industrial development and building infrastructural capacity are interdependent and interrelated. While infrastructure development is a prerequisite for industrial development; the industrial sector is the major driving force for infrastructure development and innovation. However, neither can flourish unless there is an adequate power supply in place.

Infrastructure is an enabling factor required for rapid development of physical variables such as energy, water, transport, communication and the financial sector. In spite of the enormous power generation potential of Ethiopia, standing at 45,000MW, Ethiopia has still not met its national demand. The government should tackle this irony.

PUBLISHED ON Jun 01,2019 [ VOL 20 , NO 996]

Eden Sahle is founder and CEO of Yada Technology Plc. She has studied law with a focus on international economic law. She can be reached at

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