Cablegate: Water Shortage Leads to Power Cuts

DE RUEHDS #1229/01 1291104
R 081104Z MAY 08




E.O. 12958: N/A


1. SUMMARY: Due to lower-than-normal spring (Belg) rains, the
Ethiopian Electric Power Company (EEPCO) has instituted a program of
rolling power cuts throughout the country. Heavily dependent on
hydropower, without improved rains the cuts are expected to expand
from two days per week to four in May. Additional effects of the
power shortage include telecommunications disruptions and cuts in
municipal water supply. END SUMMARY.

2. Ethiopia is dependent upon hydropower to generate electricity,
with over 663 megawatts (MW) (85%) of the country's total installed
generating capacity of approximately 780 megawatts (MW) coming from
hydropower. Due to aging plants, only about 700 MW can be reliably
generated according the EEPCO's Deputy General Manager (DGM)Melaku
Mamo. The DGM also stated that under current operations, 90% of
current generation is from hydropower, 9% is from diesel and 1% is
from geothermal. In addition to installed capacity, EEPCO is in
the process of a massive expansion in hydro-electric power capacity.
In the next ten years, ten additional hydropower plants costing
over $13 billion will raise the country's generating capacity to
6,588 MW. Ethiopia's demand for electricity remains quite low,
about 390 MW. Only 22% of the country geographically is covered by
electric service.

3. Ethiopia has two rainy seasons - a short season typically lasting
from February to April (Belg) and a longer Meher season lasting from
May through September. This year's Belg rains were delayed and did
not begin until April. Since they began, they have been spotty and
erratic, leading to drought conditions in much of the country and a
shortage of water to power hydropower plants, which has caused
production to decline to approximately 311 MW, an 80 MW power
deficit. Currently, EEPCO is running an additional 32 MW of diesel
generators to attempt to make up the gap at a reported cost of 100
million birr per month (about $10 million). This is not sufficient
to meet demand, and in April EEPCO instituted two day per week, 12
hour per day cuts on a rolling basis throughout the country. These
cuts were expanded in early May to five days every two weeks.
EEPCO's DGM told EconOff on a recent site visit to the country's
only (and currently non-functioning) geothermal power plant that if
the Meher rains do not begin in May and produce well then the
company will be forced to go to four day per week rolling power
cuts. He further stated that, barring rain soon, only one
hydropower plant - Finchaa at 134 MW installed capacity, would be
able to operate at full capacity. If this scenario comes to bear,
then EEPCO will be forced to move to four day per week power cuts.

4. In addition to causing power outages, the rolling blackouts have
other side effects. The optical fiber network distributor boxes
used by the Ethiopian Telecommunications Company (ETC) require power
from the grid to run outside of their short two-hour battery life.
During the extensive power cuts now experienced, the boxes go out,
essentially cutting off fixed-line telecommunications in the
surrounding area. ETC is deploying mobile generators to keep some
boxes charged, but do not have enough resources to locate generators

5. While a shortage of water is a natural consequence of drought,
the power shortages are causing pumping stations to shut down.
Thus, even if municipal water is available in Addis Ababa, it cannot
reach homes or central faucets. A sight now common on power-cut
days is urban dwellers traveling relatively far distances to obtain
water. Also, with the intermittent pumping, contamination of
drinking water with sewage is more likely.

6. No entity is exempt from the power cuts, including industry.
While growth in high-energy consuming industries such as
manufacturing has grown, accounting for some of the power deficit,
the GoE is counting on these industries to help maintain economic
growth. With extensive power cuts, those industries without large
generators will be unable to meet production goals.

7. Help may be on the way soon, even if rains do not come. Two of
the power plants in the GoE's ambitious hydropower expansion scheme
were due to be on-line by now. Tekeze, which is located near the
Eritrean border, has been delayed until next year due to an
unexpected geological phenomena that was not detected in the
feasibility study stage. When completed, Tekeze will have 225 MW of
installed capacity. Gilgil Ghibe II was scheduled to be in service
by now. However, this 184 MW plant has been delayed due to the
difficulty of transporting large parts and equipment to its remote
location southwest of Addis Ababa. In addition to upcoming
hydropower projects, EEPCO is undertaking repairs on its 7 MW
geothermal power plant at Aluto Langano and hopes to have it back on
line in the next few months.

8. Comment: Ethiopia is sometimes known as the water tower of
Africa, and for good reason. The potential for expansion of
hydropower is significant. However, the current drought reveals the
necessity (well acknowledged by EEPCO) for diversity of generation
sources. Post will continue to monitor the impact of this year's
drought on power generation and the economy as a whole. End

ADDIS ABAB 00001229 002 OF 002



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