Success, Gaps and Challenges of Power Sector Reform in Ethiopia

Abstract

Abstract: Ethiopia faces chronic power problems including insufficient generation capacity, low connectivity and poor reliability of transmission and distribution all of which constrain development. The Ethiopian power sector reform is necessitated by poor technical and financial performance of the power sector. The reform was initiated during 1997 just like any other Africa country due to deregulation of the power sector market in the world which aimed to increase the technical and financial performance of the sector. The government initiative to reform the power sector was backed by world bank by transforming Ethiopia Electric Light and Power Authority (EELPA) into Ethiopia Electric Corporation (EEPCO) in order to give the utility to work in business mind rather than as simple service sector. The main reason for powers sector reform is inability of state own vertically integrated utility to mobilize sufficient capital for the electricity sector development and expansion and waiting of federal government yearly allocated budget to perform its planned tasks. It is found that as most sub Saharan African countries including Ethiopia is in its initial steps of power sector reform even though there are some work done regarding corporatization, electricity amendment, management contract and tariff setting for independent power producers. The reform resulted in significant progress in connectivity and creating independent regulatory agency but failed to bring unbundling, encompassing independent power producers and improving transmission and distribution reliability. This article is based on country study by the author reviewing the status of power sector reform with special emphases on the success, gaps and challenges of the sector. The result of this study shows that power sector reform in Ethiopia has mixed result that gaps and challenges override the success due to weak institutional structure, weak project management and low skill capacity of human resources to implement the reform as intended, government inability to finance the reform process and the country still position itself at level-2 out of level-5 of maturity level of power sector reform.