The frequent power outage occurring all over Ethiopia has become a perennial fixture that never seems to go away.
As a problem which is exacting a heavy toll on the country and its citizens, it needs to be dealt with decisively by the concerned government agency, the Ethiopian Electric Service, and the administration of Prime Minister Hailemariam Desalegn as a whole.
Ethiopia is concluding the first Growth and Transformation Plan (GTP) and about to start the second phase. Meanwhile, the government is exhorting the private sector to join the manufacturing sector in droves instead of the service sector while courting foreign direct investment. However, the recurrent power outage is impeding the exploitation of the country’s potential to the fullest.
Nowadays, practically all local and foreign investors engaged in the manufacturing sector are complaining that the persistent power outage, coupled with the inability of the national electricity supplier to meet the ever growing demand, is detrimentally affecting their operation by inducing a fall in output and an upsurge in wastage. They say that though they have resorted to using generators to maintain production levels, the extra cost they are incurring has led to a spike in production costs and thereby rendered them uncompetitive.
It’s not only industrialists alone who are suffering at the hand of power outage, though. Small- and medium-scale enterprises, hospitals, schools, households, etc. that cannot afford to buy a generator are as well facing the brunt of the problem. And as if power shortage and outage is not enough, sudden power surges damage electrical appliances for which the utility company rarely pays compensation.
Following the breakup of the former power monopoly, the Ethiopian Electric Power Corporation, into two entities, the management of the power supply sector was awarded to an Indian firm. The firm was sent home packing last week after its two-year contract came to an end. Was the expected outcome achieved in consideration of which the contract was awarded or was it all in vain? Given that no official explanation was provided regarding this matter, it’s befitting that the relevant authority comes up with one. Be that as it may, the public is both frustrated and disgruntled.
The government has time and again acknowledged that the problem indeed exists and is working hard towards alleviating it. Accordingly, it recently announced that it has allocated a substantial sum of money to modernize the power distribution network of Addis Ababa. There is no denying that several electricity generation projects are being currently executed throughout the country. This said, will these be able to meet the soaring demand? Why can’t power generation be ramped up fast given that a large number of manufacturing industries and industrial zones are planned to become operational during GTPII? How can the plan be accomplished if the power supply continues to be unreliable?
The government is wooing foreign direct investment in a bid to increase the contribution of the manufacturing sector to GDP. It is naïve to expect a new crop of foreign investors to eye Ethiopia as an investment destination and face the same ordeal that those who have already invested here are undergoing without first improving the pitiful state of power supply. Unless the government to come up with a holistic solution, the nation’s hitherto impressive growth is bound to lose steam.
Ethiopia’s foreign exchange supply is plummeting due to erratic export revenues. If manufacturers are unable to produce at full capacity quality products, they simply cannot become competitive in the notoriously capricious global market causing the supply of foreign exchange reserve to dwindle further. A nation which does not have the reserve necessary to withstand the effects of the global economic downturn that is on the specter faces the prospect of a collapse.
The solution, hence, is to tackle the power outage that is escalating the cost of production of manufacturing industries, which in turn makes it extremely difficult for them to emerge competitive on the tough global market. Particular attention should to be paid to such export commodities as textiles, hides and skins, and flowers which the country hopes to bring in desperately needed foreign exchange.
The government must accelerate the generation of electricity courtesy of the mega projects it is undertaking from renewable sources. At the same time, though, it has to encourage companies engaged in small-scale power production, which complement its effort to ensure energy security. Aside from these, it should also take measures such as promoting the smart usage and eliminating wastage of power, bringing about accountability and transparency in the operations of the sole service provider, among others.
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