ADB Approves over 83 Mln USD Grant to Boost Ethiopia-Djibouti Electric Trade

July 9/2021(ENA) The African Development Bank (ADB) announced on Thursday that its Board of Directors has approved two grants amounting to 83.6 million USD to boost cross-border electricity trade between Ethiopia and Djibouti to deepen integration in Horn of Africa.

The funds comprise a 69.65 million USD grant to Ethiopia and 13.93 million USD to Djibouti.

African Development Fund, the bank's concessional financing window, extended the grants, it was indicated.

The Ethiopia–Djibouti Second Power Interconnection project will entail the construction of nearly 300 km of interconnector line, 170 km of transmission lines, and new construction or renovation of substations in the two countries.

African Development Bank Group Power Systems Development Director, Batchi Baldeh said the first interconnection line is reaching its power transfer capacity limit due to several developments in both countries.

The industrial development in the eastern part of Ethiopia, the electrified-railway line from Djibouti to Ethiopia, and the port expansion in Djibouti are among the infrastructures exhausting the electricity capacity of the interconnection line between the countries, according to the director.

“The two countries have thus decided to develop the second power interconnection line to maintain energy security and reliability for Djibouti,” Batchi Baldeh said.

Project completion is expected to increase Ethiopia’s power export revenue while also boosting Djibouti’s access to reliable and affordable clean electricity, lowering costs to below 0.10 USD per kWh.

This second project is expected to build on benefits achieved over the last ten years, including a 65 percent increase in customer connections in Djibouti and a sharp reduction in the use of thermal generation plants from 100 percent to around 16 percent.

Ethiopia has earned 275 million USD  in revenue from power exports over the same period.

The project is aligned with the Bank’s East African Regional Integration Strategy Paper, which seeks to promote regional infrastructure for economic transformation.

In 2004 the Bank financed the first power interconnection project between the two countries.