EFFORT Claims Multi-Billion Dollar Power Deal

The Ethiopian conglomerate EFFORT Group (Tigray Rehabilitation Endowment Fund) has stated that it signed an agreement with an Australian based clean energy cooperative, Lotus Energy for the construction of a 500 MW of solar plant in the Tigray region of Ethiopia at a cost of 4.3 billion dollars.

The said 30-year contract that was signed last week will power the infrastructure of EFFORT Group (Tigray Rehabilitation Endowment Fund) providing power for the group’s active in cement, automotive, and steel production.

Work on the power complex is expected to begin in September 2020 and will combine solar power, battery storage, and waste-to-energy capacity. It will also include energy storage batteries and biomass power plant facilities.

“The need to build a sole source to power EFFORT industries comes as frequent power interruptions have been forcing us to operate at minimum capacity,” Merhawi Desta, business partnership director of EFFORT told Addis Insight.

“We are not ready to disclose the source of the funds however we are in negotiations with various international companies that are willing to fund the projects” added Merhawi.

The claim is backed by the contracting party too and news of the contract has been shared by the Australian power company.

“The output from the power plant will supply power to EFFORT Group’s operations for 30 years,” said Anthony Vippond, CEO of Lotus Energy in a press release posted on the company’s site.

The planned solar aspect of the project, near the city of Mekelle, involves two large-scale solar farms as well as rooftop solar.

The waste-to-energy plant will process 1000 tonnes a day of waste. The grid will cover an area of more than 55 square kilometers. A power grid will also be built to connect the plants to industrial facilities as well as connecting the plant to nearby households.

Officials at Ethiopian Electric Power (EPP), the state-owned electricity producer, told Addis Insight that they aware of the project but point out that there are various holes in the feasibility and practicality of the said plant.

An official from EPP who wanted to remain anonymous noted that under the existing legal framework EFFORT can set up a power plant to power its industries. However, if such a line is to be connected to the grid system it has to be done in agreement with the EEP and will have to be under the Public-Private partnership requirements, the official added.

The official also noted that though the construction of the power plant is privately pursued such big projects will require the involvement of the Federal government in terms of supplying forex as well as providing investment guarantees that usually come as a prerequisite by international companies when investing such large sums.

In addition, he doubted the claimed figure behind the project. The said plant has an almost equivalent price tag as the GERD dam that has the capacity to produce 6450 MW.

Compared to other ongoing solar projects in the country the cost of the EFFORT Solar panels are 10 times higher. Acwa Power, a Saudi Arabia’s Independent Power Producer (IPP), is building two solar plants, Gad and Dicheto solar power plants, in the Somali and Afar regions at a cost of 300 million dollars. The combined capacity of the facilities is the same as the EFFORT plant, 500 MW.

The Saudi producer won the order in 2019, following a tender launched by the Ethiopian government in January 2019.

Under the Scaling Solar power, a project backed by the World Bank, the government of Ethiopia has been awarding private solar power producers a contract to build six solar power plants in different regions of the country. The six projects have a combined total capacity to generate up to 750MW.

However, the agreement claimed to be inked by EFFORT is different from the public-private partnership as both of the contracting parties are private companies and are not subject to the same rules.

Established in August 1995, EFFORT is involved in major industrial activities in Ethiopia also including import and export, media and communication, construction, agribusiness, and mining.

Having started with an initial capital of around 100 million dollars, EFFORT’s worth has now reached more than a staggering 3 billion dollars in paid capital, creating more than 47,000 employment opportunities.