The Power of Power: How Reliable Electricity Is Helping Africa’s 2nd Most Populous Country Recharge Its Economy

Addis Ababa

Brothers Flour & Biscuit Factory, in Addis Ababa, Ethiopia, makes biscuits with evocative names such as Dream Sandwich, Glory Banana and Cocktail Cream. But inside the factory, life is anything but sweet.

The capital’s lack of reliable power is making it hard for the business to operate. Every time the power goes out, its machines grind to a halt. Dough gets ruined. Biscuits are underbaked. These interruptions are costing the company the equivalent of thousands of dollars in wasted ingredients.

“Any investor assumes he gets continuous electricity when he establishes a plant and pays for a transformer and everything,” Getachew Demessie, an adviser to the company, told the Ethiopian Business Review. “But I don’t think this is what the reality is at this time.”

That’s a major problem for all of Ethiopia, which with nearly 100-million people is Africa’s second-most populous country. Locals suffer doubly because foreigners who want to invest there and push the country from its agrarian past into an industrialised future frequently are turned off by the lack of reliable power.

But things are changing. This year, Ethiopia will launch a $49-million project to update and modernise its power grid by building new high-voltage stations and modernising existing facilities in partnership with GE. The infrastructure upgrade for Ethiopian Electric Power will focus on the capital and surrounding towns to establish an industrial zone with sufficient and reliable power.

“People are coming in from all over the world to put money into Ethiopia, but they require a high-quality power supply,” said Yasser Faggal, East Africa area sales director for Grid Solutions, a unit if GE’s Energy Connections business. “You can’t have machines losing power just as they are getting up to speed. It disturbs all the processes, and it’s a waste of time and money.”

The project calls for rebuilding and updating existing power plants in towns near Addis Ababa that are slated for industrial development and constructing three new substations in the cities of Dukem, Modjo and Ginchi, which are hoping to boost their economy.

The existing grid capacity in Ethiopia is 4,200 megawatts and the upgrades will help get electricity to customers as the country’s power production increases. For example, GE will supply transformers — which step up the voltage and allow utilities to transmit power efficiently over long distances — circuit breakers, substation automation and network management solutions for power plants and other technology.

The machines should start to come online by late September 2018. The work is being financed by Agence Française de Développement, the primary vehicle used to provide French aid to developing countries.

The project is the largest sub-Saharan grid package for GE to date. But Faggal, who is based in Kenya, says that GE and its partner, the engineering and finance giant L&T India, are just getting started in the region. Ethiopia’s economy grew 10% annually on average over the last few years. As the country’s power needs grow, the government is looking to expand its renewable energy base — another area in which GE and L&T expect to work together.

Faggal was part of a team that worked four years to get the deal done. “This is going to make a difference in people’s lives,” he says. “It’s going to stimulate investment and development, and that’s going to mean new and better jobs for people. To be a part of that is exciting to me.”