Ethiopian Business Review

Be Patient, the Darkest Hour is Just Before the Dawn!

The former Ethiopian Electric Power Corporation (EEPCo) was responsible for generating power, transmitting, distributing and selling electricity. In December 2013 it was split into Ethiopian Electric Power (EEP) and Ethiopian Electric Utility (EEU). Azeb Asnake, Gilgel Ghibe III project manager, was given a new assignment as CEO for EEP which is responsible for power generation and transmission. 

The idea behind the restructuring is to make services more efficient and reliable. Although it has only been three months since Azeb became CEO and, in fact, her responsibility mainly deals with power generation and transmission, she asks the public to ‘tolerate the erratic power interruption’. In this exclusive interview with EBR’s Amanyehun R. Sisay, she talked about the new company, ongoing projects and what is in store for EEP. Excerpts: 

EBR: Could you tell us a little about yourself? 

Azeb: I earned my Bachelor’s Degree in Civil Engineering from Addis Ababa University and my Master’s Degree in Water Resource Engineering from Tamper University of Technology, in Finland. I have been working for Addis Ababa Water and Sewerage Authority (AAWSA) since I graduated from AAU in 1986 as a junior civil engineer first and later in different positions including as head of the Authority’s engineering department for more than 15 years. In 2006, I was transferred to the former Ethiopian Electric Power Corporation (EEPCo). At that time, the Gilgel Gibe III Hydroelectric Dam was in the negotiating stage between the contractor and the Corporation. So initially I was working on that endeavor and later was assigned as a civil works coordinator for the project .

Was the transfer a personal decision? And how did you find the experience at EEPCo?

Basically, I wanted to work at the power company because I spent many years working in the water Authority. EEPCo was like a school to me. I had basic knowledge about   providing electrical power but when it came to the real world it was totally different. I gained a lot of experience in AAWSA and now I am learning on this stage and building my profession.

You were new to power yet you landed on Gilgel Gibe III, the biggest hydropower project the country ever had at the time; that must have been very challenging.  

At AAWSA I managed dams like Legedadi, Gefersa and Dire, which were built to supply water to Addis Ababa. The Gilgel Gibe dam was a challenge for me. It was also a great opportunity, so I grabbed it.    To be frank, I was a scared when the assignment was given to me at the beginning. I consulted with my family and my husband before accepting it. When I was at AAWSA I was only working in Addis Ababa. The farthest I had to go was Legedadi or Gefersa, which were both close to the city. I was a little bit nervous about going out to remote places and managing a huge project because my kids were very young at the time. So it was a real test. But my family and I agreed to take the job because as a civil engineer and as an Ethiopian, I have to contribute to this country.

The construction of Gilgel Gibe III has been extended. What went wrong?

Nothing went wrong. By any standard Gilgel Gibe III is a very big project. The original plan was for it to be a Rockfill Dam but those plans were scrapped in favor of a Roller Compacted Concrete (RCC) dam. RCC is a new and complex technology because of technical and contractual reasons. So when we changed the dam to RCC we needed additional time because this dam is a very high dam at 246 meters, the tallest dam in Africa, even taller than the Grand Renaissance Dam, which is 145 meters high. Gibe III is constructed in the Gibe Omo basin and the gorge is very deep. That is why the dam is so high and what contributed to the delay. 

At the moment, 83Pct of the work is completed. However, we won’t wait until the project is 100Pct completed to start generating power. Although usually dams are supposed to be at maximum level to start generation, according to standards, we will produce power unit by unit, the first will begin in 2015 with 187MW.  

When you revised the design of the project; what was the effect on cost?

An additional 70 million Euros were needed.  You have to look beyond the costs and see the averted risks because you will lose much more if there is natural disaster like a flood.

There was also an additional 100 Giga watts per year too. Previously it was designed with a maximum capacity of generating 6,400 Giga watts per hour per year but after the change it became 6,500 Giga watts per hour per year. So it was a win - win situation. 

Now that EEPCo has split into two companies; Ethiopian Electric Power and Ethiopian Electric Utility. As a CEO of the former what are your main responsibilities. 

Ethiopian Electric Power is responsible for constructing projects- generation, transmission and substations. It will also oversee hydro and other types of energy like wind, geothermal and solar. 

Do you think you can meet the government’s and the public’s expectations? 

Psychologically I am very much ready. I have been at my post since December, so it is obviously a short time. Now it is a transition period. Things were vague for many people because we were focusing on placing human resources. We will have to fill all the positions with capable staff and when that is completed I will work to ensure the company provides whatever it is expected to deliver.  

There have been complaints regarding the allocation of staff. How are you dealing with this issue?

We are at the end of staff placement. We are working in the most transparent way. Everything is open. We put a notice listing clear qualifications and requirements. So anyone who thinks they are fit can compete for the post. There is also a committee that screens applicants. We do that transparently.

Some of the criteria for screening are subjective?

No, there was nothing subjective. This has been done with independent consultants and the requirements have been done before screening the staff. The consultants, not our employees, evaluated the standards. Since the qualifications and requirements were developed, we simply posted the jobs for everyone to compete. Even managerial positions were done in this manner.  However, for the post of the CEO and some high positions, individuals were assigned by the government.

Were you consulted before the assignment? Tell me how you were approached?

Frankly I was not aware. I was taken by surprise! I received a letter before it was publicly announced. 

There was a study conducted recommending splitting EEPCo in to three: power generation, transmission and distribution, and retail. Why was this rejected?

I was not involved in that decision because I came after everything was settled. But maybe it will happen in the future. Based on international practice, there is an energy supplier, distributor and retailer. For our situation, this is thought to be ok for now. 

Initially your experience was technical; now you are a CEO, which is mainly a managerial position. How have you handled the transition into utilizing different sets of skills? 

You don’t need, as such, very specific knowledge for every discipline as a CEO because there are executives in the structure, who are specifically responsible for generation, transmission and substations. But I need the managerial skills and I am developing these.  I have an adviser, an engineer himself, who has been working for many years in the corporation. So I have a capable team and that is the main thing. 

Once you became the CEO of this company, you were not relieved from the project manager position of Gilgel Gibe III. Why?

I feel Gibe III is like my child. I was there from its conception. So I really want to finish it. When I was assigned to the post of CEO I was told that Gibe III would be under my supervision and the dam is almost in its completion stage. 

How often do you go to the project site now?

I used to go more often than now. After the appointment as CEO, I have been there twice. I have to budget my time. I spend a lot of it on placing staff and organizing the company, these responsibilities are very demanding. 

Although Ethiopia is endowed with huge resources that can be used to produce electrical power, it is only recently that the country started to tap this potential. How many electric projects are generating power currently and how many are under construction?

There are many operational dams like: Tekeze, Beles, Gilgel Gibe I, Gilgel Gibe II and the Ashegoda wind farm. At the moment Gilgel Gibe III, the Grand Ethiopian Renaissance Dam, and Genale Dawa III are under construction. We also have geothermal at Aluto, which is under expansion to increase its capacity from generating 7MW to 70MW. Repi solid waste disposal site in Addis Ababa has also now been chosen for construction of a plant with about 50MW capacity. 

Currently, we generate more than 2,200MW. When the new works are completed that number will grow to over 10,000 MW.  

Despite all its resources, Ethiopia still suffers from regular power interruptions. What explains the terrible situation? 

Actually many factors contribute to this problem. The demand is increasing. We can see the investment booming everywhere and the change of living standards and styles. The industries are asking for more energy. But our current capacity is 2,200 MW, which is too small compared to what is required. So the government has included the energy sector in its Growth and Transformation Plan (GTP). Within this plan we are working to increase the capacity. On the operational aspect, the system has been there for quite some time. Some of the electric lines are old, so we need to rehabilitate these lines too. In addition, we have to increase the substations’ capacity and we are doing this in parallel. 

I understand the gap between the demand and the supply but many point out that the distribution channels are very old. What makes it difficult to change them quickly?

Actually we are doing that. Just like big generation projects, we are working on the transmission and distribution. There are many undertakings going on but they are not completed often for financial, contractual and technical reasons. Since the networks are old we cannot transmit what we are generating as we wish. We also have concerns with operations and human resources including, at times, theft and sabotage. 

The construction and procurements at EEP involve a lot of money which brings along the risk of corruption and mismanagement. What measures are you taking to alleviate this? 

In the first place when we procure materials we follow a long screening process. Usually the process depends on the source of finance. Procurements are made based on proposals that include financial and technical details. These offers will be evaluated by technical and procurement committees. At the end their evaluation and recommendation will be presented to the management then the management passes it to the Board of Directors depending on the value of the procurement because the management has an authorization limit. After following all these screening processes, we will sign a contract with the company. 

Still there are examples of people stealing money and gaming the system so that a chain of corruption occurs. What other things are you doing to fight this? 

I check when I sign things and try to investigate the background of every contract document and payment. 

A Chinese company signed a USD1.2 billion agreement to install high-voltage electric transmission lines, connecting power from Renaissance Dam to the national grid. China loaned Ethiopia USD1.02 billion to cover most expenses. This occurred on April 16, 2013. The project was supposed to begin a month later but now a year has passed and the money has not been released. Recently, you and Sufian Ahmed, Minister of Finance and Economic Development travelled to China to inquire about the situation. Did China promise to disburse the loan?

Although they promised to provide a loan earlier, because the former EEPCo doesn’t legally exist anymore, they were asking who would pay them the loan back. They asked about the assets of the company, borrowing the money. So we tried to explain that Ethiopian Electric Power is the one that will repay the debt. So we needed to clear all these things up to obtain the loan.

Do you think the Egyptians were behind this? They have been traveling all over the world to stop financial and technical support for the dam?

I don’t think they are working to delay or stop the negotiations between us and our financers for the projects that are undertaken currently. I don’t even know if they know about the Chinese government’s involvement in these projects.

Ethiopia exports power to neighbouring nations but the local demand has not been satisfied. Even then, the tariff is very low compared with the price in the region. Why?

For now we are exporting to Sudan and Djibouti. The tariff is higher than the local cost but much cheaper as compared with the international price. We set the price through negotiations with these countries. Initially we proposed 10 US cents per KW per hour but finally we agreed on 7 US cents.

Tell us the current status of Grand Renaissance Dam? 

At the moment 33Pct of the work is completed. Most of the excavation work, which is a big milestone for the construction, is near completion. Now, placement of RCC has started.

The initial project duration was six years. It is now three years and only 33Pct has been done. Will it be completed on schedule?

The target year to finish the dam is 2017. The design was going parallel with the construction. First its capacity was around 5,200MW but it was upgraded to 6,000MW later. So far there haven’t been any technical problems. The goal is still attainable. Next year we will start producing power, 750MW. 

The Metal and Engineering Corporation (MetEC) is doing the electro mechanical work on the dam. But MetEC doesn’t have any prior experience. At times, the company didn’t even handle supplying transformers to EEPCo effectively. There were companies waiting to access power over a year after paying their contractual duties to EEPCo. But they didn’t get the service as EEPCo didn’t have enough transformers. This happened because MetEC was not supplying enough transformers at that time. And there is also a quality issue. 

When you start something you learn the hard way or the easy way. So maybe this is learning the hard way. This happens. Items that we import may not even be perfect. We don’t have 100Pct assurance. We have to learn like that. 

So far the project has consumed 27 billion birr, of which 11.5 billion is generated from the public. This is a very big project that is financed fully by local sources. However it looks like public funds may dry up soon. Many organizations and individuals are not living up to their promises. Don’t you think the project will face lack of finance?

Workers especially public sector employees have been contributing for three years by buying bonds from their salary. This is a very good source of finance. Individuals and investors who pledged money are also fulfilling their promise. Those people who work at the site of the project are also committed to finishing the job. So there is nothing to fear.

Speaking of building local skills, when do you think the country will build a dam with its own human resources?

There are Ethiopians working as sub-contractors now and MetEC is working with foreign companies. Local contractors and consultants are participating in many projects. This is a milestone to stand by our own the next time.

Do you think the Board has been supportive of your efforts?

The board usually follows projects especially the major ones. When we have financial and contractual problems, we have to report to the board and the Macroeconomic Team at the Prime Minister’s office. They follow every step of the process. So there is a lot of follow up, involvement and commitment. 

Your management philosophy?

I believe in hard work and delivering results.  We should not wait for things to come to us; we have to go for it [be proactive] instead. That is my principle. I don’t like to leave things aside. I want to finish things today unless I need some more information on the issue. Otherwise I really want to finish things on time so I will be free tomorrow if something else comes up.

Can you give a time frame for the Ethiopian people as to when the terrible power interruptions will end?

It is very difficult to give a time frame. But we are working hard. I ask our respected customers to be a little more patient. There is this saying which I like very much. “It will get darker when a new day is about to start.” So many things are beginning. I am sure when we complete all these projects which are intended to improve the nation’s service delivery infrastructure, the problem will be resolved.

2nd Year . April 2014 . No.14

Amanyehun R. Sisay

EBR Staff Writter

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