Tapping Ethiopia’s GERD Power could Spark an Economic Prosperity in Somaliland

The construction of the Ethiopia Renaissance Dam has been a topic of controversy in the Horn of Africa region, with concerns raised about its potential impact on downstream countries such as Egypt and Sudan. However, there are also opportunities for neighboring countries such as Somalia and Somaliland to benefit from the dam’s electricity generation capacity. There are potential economic and social benefits of accessing the cheap electricity of Ethiopia for Somaliland, as well as the challenges that must be overcome in order to realize these benefits.

Somalia and Somaliland are both countries with limited access to electricity. According to the World Bank, only 15% of Somalia’s population has access to grid electricity, while in Somaliland the figure is around 30%. The lack of reliable electricity hinders economic development and limits access to essential services such as healthcare, education, and their countries potential for industrialization.

The cost of electricity in Somaliland is currently very high, with some estimates putting it at $1 per kilowatt hour. In contrast, the cost of electricity in Ethiopia is much lower, at around $0.06 per kilowatt hour. This is due in part to the country’s investment in hydroelectric power generation, including the Ethiopia Renaissance Dam. Access to cheap electricity from Ethiopia could bring significant economic benefits to Somaliland, including increased industrialization and job creation.

There are several challenges that must be overcome in order to realize such benefits of accessing cheap electricity in Ethiopia. One of the main challenges is the lack of infrastructure in Somaliland, including transmission lines and distribution networks. Investment will be needed in these areas in order to connect the countries to the Ethiopian grid. Another challenge is the political instability and insecurity in Somaliland, which could deter investors.

Furthermore, many private companies have invested in electric power provision in Somaliland. They should be included in all discussions, giving priority to the advantage in using cheaper costs, reducing dependency on diesel powered services, and attracting investors to benefit from the cheap labor and strategies of the locations to export their products beyond Somaliland. A public partnership discussed below might be an ideal solution to consider in the effort to realize their partnership.

To overcome these challenges, there will need to be a coordinated effort between the governments of Somaliland and Ethiopia, as well as private investors and international organizations. The construction of transmission lines and distribution networks will require significant investment, but the potential economic benefits make it a worthwhile endeavor.

Access to cheap electricity from the Ethiopia Renaissance Dam could bring significant benefits to Somaliland:

• The Renaissance Dam has the potential to be a catalyst for regional stability and cooperation. By providing access to electricity for multiple countries, the dam could promote economic growth and reduce tensions in the region.
• Access to cheap, renewable energy from Ethiopia could increase energy security for Somalia and Somaliland. Dependence on imported, fossil-fuel-based energy sources carries the risk of price volatility and supply disruptions, which could be mitigated by access to hydropower from Ethiopia.
• As climate change continues to accelerate, access to renewable energy sources such as hydropower will become increasingly important. Supporting the Renaissance Dam project aligns with the global push towards decarbonization and mitigating the effects of climate change.
• As mentioned earlier, increased electricity access could lead to increased industrialization and job creation in Somalia and Somaliland. This would be a welcome development for economies that have struggled with unemployment and low growth rates.
• The Renaissance Dam project could open up opportunities for economic integration between Ethiopia, Somalia, and Somaliland. As businesses benefit from cheap electricity and transportation links improve, trade and investment could accelerate between the countries.

Public-private partnerships (PPPs) offer a unique opportunity to leverage the strengths of both the public and private sectors in the developing electricity infrastructure and provision of abundant cheap supply of it.

One example of a successful PPP in electric supply in the Horn of African region is the partnership between Kenya Power and Lighting Company (KPLC) and the Gulf Energy Corporation (GEC). KPLC – the state-owned electricity utility in Kenya – partnered with GEC to construct and operate an 80 MW power plant in Nairobi. The power plant helped to expand electricity access in the country and improve reliability of supply, while also creating jobs and generating economic growth.

Source link: Addis Standard