The art of making Hydrodollar

Last week was the Golden Jubilee (50th anniversary) of the Ethiopian Electric Power Corporation otherwise known as EEPCo. There were lots of celebrations and discussions about the corporation that enjoys monopoly control of generation, transmission and distribution of power in the country. The leaderships were outlining the challenges and success of the corporation and defined their ambition to become the power (not political) house of the Horn of Africa by exporting electric power to Sudan, Somaliland, Djibouti and maybe Somalia. Well, it is good to see EEPCo start from humble beginning in the mid 1950s through the 1997 restructuring process to its current status with all its success and ambitions.

If the corporation manages to accomplish half its ambition that would be a great leap forward to the nation, in particular and the region as a whole. Ethiopia will benefit from the realization of this ambition by way of accumulating huge “hydro-dollars” which can in due course of time lead the country out of the quagmire of poverty like what petrodollars for the Middle east and other underdeveloped countries. The Horn as a region would benefit from the materialization of such ambitious project because of the probable spill-over effect of the hydrodollar surge into the Ethiopian economy. Countries in the region can also get power for a cheaper price.
Beyond the economic benefit, the political bondage it may create would also facilitate the peaceful coexistence of the Horn countries and may mark a departure from the politics of mutual destruction that has long characterized the region. Besides, it should be noted that this project is less disastrous to the environment compared to other forms of power generation in the region.
The purpose of this article is not just to complement the Ethiopian government and EEPCo on their ambitious plan but to pinpoint some of the obstacles that may come on the way to EEPCo go-getting march. I think there are serious internal and external impediments on the way forward.

To start with the internal ones, the corporation is one of the most inefficient and corrupt state enterprises in the country. It is only because of iron-coated and aggressive public relations department and PR officers that the people do not know this fact. Unlike the Ethiopian Telecommunication Corporation, EEPCo is well protected from the scrutiny of the private press thanks to the “manipulative and often aggressive” public relation officers, rather vanguards of positive image.

Its inefficiency relates to the total ignorance of the market principles and the heavy hands of politics in artificially determining demand and supply patterns of power distribution across the country. Political motives can often been detected when one sees which villages are benefiting from the Universal Electric Access Program (UEAP) and which are not. If one sees a hamlet with only dozens of houses electrified by expensive costs and at the same time when one sees a village with thousands of residents and with a potential to be electrified with cheaper cost but not electrified, then it is natural to suspect political drives or drivers behind.

Corruption is also a big problem in EEPCo. It is a widely spread practice there that budget of projects are over estimated, sometimes more than the quadruple of the actual maximum cost. To electrify a single village, a budget enough to electrify four towns is proposed and authorities in charge of showing the green light authorize the commencement of projects
Moreover, abuse and neglect of resources imported and produced at the cost of hundreds of millions of dollars are common phenomenon in the corporation. Poles, cables, transformers and other electric utilities can be seen dispersed on fields across towns as if they were grown and the country does not need them.

The external factor that possibly hinders the achievement of the corporation’s ambition is the domestic political environment. Many say, “you don’t get politics right, you don’t get anything right.” The presence of armed political forces in the geographic peripheries of the country would seriously impede the materialization of the plan to export power to the neighboring countries. I think the recent attack on Abule Oil Project is a clear example of how “unright” politics may cause damage to the country’s ambition, at least on a “temporary” basis. So, the bottom line is that it is “mission difficult if not mission impossible” to become the [electric] power house of the Horn without and before making peace with the armed political forces in the geographical peripheries.

The art of making hydrodollar is understanding the internal and external environment of the nation’s only power flag carrier and working towards making sure that there is conducive environment, within and outside.

May 18, 2007

Kassahun Addis is an independent analyst of politics in the Horn of Africa. He can be reached at kassax@gmail.com