Ethiopia, UK Deepen Strategic Partnership with New Investment and Energy Agreements

Addis Ababa, February 1, 2026 (ENA)— Ethiopia and the United Kingdom have reaffirmed their long-standing partnership, signing new cooperation agreements aimed at supporting economic reforms, strengthening public investment systems, and expanding green energy and power transmission infrastructure.

Prime Minister Abiy Ahmed yesterday welcomed Rt. Hon. Yvette Cooper, the United Kingdom’s Secretary of State for Foreign, Commonwealth and Development Affairs, for high-level talks in Addis Ababa. The discussions focused on strengthening bilateral cooperation and advancing shared development priorities that benefit both nations and their peoples.

New Agreements Signed

The meeting culminated in the signing of three major cooperation documents spanning economic reform, public investment management, and energy infrastructure.

UK Keens to Support Ethiopia’s Public Investment Reforms

A Memorandum of Understanding was signed to launch Phase II of the Ethiopia Investment Advisory Facility (EIAF), with a particular focus on establishing a Public Investment and Asset Management (PIAM) Facility for the period 2025/26 to 2028/29.

Under the agreement, the UK Government will provide up to £17.5 million in technical assistance to strengthen Ethiopia’s public investment and asset management systems. The programme supports the implementation of Ethiopia’s Homegrown Economic Reform Agenda and aims to improve conditions for export-oriented, private-sector-led, and inclusive economic growth to ensure sustainable economic transformation.

Landmark Agreement on Power Transmission Projects

The two governments also advanced cooperation in the energy sector through a Joint Development Agreement (JDA) signed with Gridworks, the UK government-owned investor in Africa’s electricity networks. The agreement covers Ethiopia’s first two privately financed electricity transmission projects, with a combined estimated value of around 400 million US dollars.

The joint development agreement was signed by Ahmed Shide, Ethiopia’s Minister of Finance, and Chris Flavin, CEO of Gridworks, and witnessed by Prime Minister Abiy Ahmed and UK Foreign Secretary Yvette Cooper during her official visit. Gridworks is a subsidiary of British International Investment (BII), the UK’s development finance institution.

The agreement applies to the development of two major transmission lines:

• A 206-kilometre, 132 kV Degehabur–Kebridehar line, connecting Ethiopia’s Somali Region with the central and northeastern grids; and
• A 198-kilometre, 400 kV Hurso–Ayisha line, designed to unlock wind and solar energy potential in northeastern Ethiopia and strengthen interconnection with Djibouti.

The projects are expected to increase power supply to meet growing industrial demand, support renewable energy integration, strengthen Ethiopia’s national grid, and enhance regional interconnectivity. In the long term, they will also contribute to rural electrification across Africa’s second-most populous country.

Addressing Power Access Gaps

Ethiopia faces an urgent need to expand electricity access, with roughly half of the population currently without power and industries experiencing frequent outages. The new transmission investments are expected to play a critical role in supporting economic growth and improving reliability.

Minister of Finance Ahmed Shide said the projects align with Ethiopia’s long-term development ambitions.

“The Government of Ethiopia has set a target to connect 96 percent of citizens to the grid and increase power availability to nearly 20 gigawatts by 2030 under the Ethiopia 2030: Ten-Year Development Plan,” he said. “These projects will bolster industrial growth, improve power reliability, and accelerate electrification for millions of households.”

Regional and Continental Impact

Transmission investment is widely recognised as essential across Africa, where around 650 million people still lack access to electricity. Businesses on the continent face an average of one week of power outages per month, underscoring the importance of reliable grid infrastructure. The projects also mark a significant step in mobilising private financing for transmission, following the successful model of independent power producers.

Gridworks CEO Chris Flavin welcomed the partnership, noting that the projects support Ethiopia’s national development goals and its ambition to deliver affordable, reliable power to industry and households alike.

UK Ambassador to Ethiopia and Permanent Representative to the African Union H.E. Darren Welch said the agreement demonstrates the UK’s commitment to being a strong investment partner. “Transmission infrastructure is fundamental to growth, job creation, and improving lives, and these projects will help unlock Ethiopia’s vast renewable energy potential,” he said.

Ashebir Balacha, CEO of Ethiopia Electric Power, highlighted the importance of international partnerships in strengthening the national grid and delivering critical infrastructure. Meanwhile, Abebe Gebrehiwot Yihdego, Head of the PPP Unit at the Ministry of Finance, described the projects as Ethiopia’s first public-private partnerships in power transmission, paving the way for further private investment in the sector.

BII’s Managing Director and Head of Africa Chris Chijiutomi noted that expanding access to affordable, clean energy remains a core development priority, adding that the projects will significantly improve livelihoods once completed.

The transmission projects form part of a broader portfolio of electricity network investments being developed by Ethiopia Electric Power to help meet the country’s Mission 300 energy access targets.