EXECUTIVE SUMMARY

Despite the varied and overall development and modernization strategies that have been pursued since the early 1940s, the rural energy problem in Ethiopia has remained largely unfocused and undeveloped in its essential aspects. While general trends in modernization have been introduced, into the country, and modern productive sectors have also shown significant changes and improvements, the rural economy has however largely remained unchanged, relying on traditional methods of farming employing human and animal power, as well as traditional biomass energy sources. As a consequence, Ethiopia presently stands near the bottom end of the international development ladder, both in terms of very poor socio-economic conditions and low scientific-technological advancements.

Methods Followed in the Study

In line with the Terms of Reference (TOR) for the AFREPREN/FWD Research Programme (2000-2002) on Renewables and Energy for Rural Development in Ethiopia, a serious attempt has therefore been made to address the above questions directly and implicitly by conducting a short-term study built to test a set of hypotheses to test specifically, in line with the rationale and objectives of the study, the following propositions:

Hypothesis I (1a): as to whether rural energy initiatives by the Government/utility have failed/are failing because they were/are (i) not backed by full political commitment and, (ii) not implemented with vigour;
Hypothesis II (1b): as to whether rural energy initiatives have failed/are failing because they were welfare focused, and/or not targeted at income generating activities;
Hypothesis III (1c): as to whether rural energy initiatives by the Government and the utility have failed/are failing, because they are/were uneconomic;
Hypothesis IV (2): as to whether the Government’s and the utility’s institutional framework was/is not appropriate to design and implementation of rural energy initiatives.

The methodology followed in testing each hypothesis was also commonly adopted. Starting from suitable data, the procedure followed in testing Hypothesis II(1b) was to compare successful and unsuccessful rural energy projects (e.g. attempts at rural electrification with diesel generation, etc.,), characterization of rural income generating activities, and qualitative comparison of impacts and initiatives targeted at income generation with those that have targeted households repeatedly in various energy assessments and appraisals. For Hypothesis III(1c), it was thought appropriate to compare energy prices in selected rural and urban localities, again using available data. To test Hypothesis IV(2), the inappropriateness of the existing institutional framework had to be examined qualitatively by comparing the basic institutional structures.

Findings

For Hypothesis I(1a), the major findings are:

Fuel wood is the mainstay of rural energy in Ethiopia.
Existing stock is not being replaced and will decline very fast.
Traders are being allowed to supply fuel wood and charcoal to those rural areas where the wood stock has depleted severely and deforestation is far advanced and urban canters, from regions where there is still some wood stock left).
Despite the creation of the EREDPC little has changed in the rural energy situation.
Although not yet clearly expressed, it seems that the Government’s overall strategy on rural initiatives is now to limit itself to renewable technology development and promotion (mainly hydro power development), and leave investment in energy supply to the private sector through the market.
Traditional cottage industries have been dependent on fuel wood supplies for generations.
The pace of rural electrification in Ethiopia has been very slow, and the major reason put forward is that it would not be viable economically.
Rural electrification has been delayed or postponed for far too long because it was not found by EELPA (EEPCO) to be financially feasible.

For Hypothesis II(1b), the major finding is:

The targeting of rural energy initiatives in Ethiopia at income generating activities will be staying far off until the rural energy problem is given its deserved attention. Except for very few scattered donor-driven initiatives and government-sponsored pilot projects, it is rare to find rural energy initiatives that have been purposely targeted at income generating activities, except those by private commercial concerns.

For Hypothesis III(1c), the findings are as follows:

Diesel generators have been mainly part of an uneconomic rural electrification scheme, and the electrification pace could not be pushed far and fast. In the various stove dissemination projects, which have been mostly government-financed and partly donor-driven projects, local artisans have been trained to build and sell stoves using tested designs and dimensions, but then these projects have been serving mainly urban communities, they are yet to be spread to rural areas. These initiatives, in particular the improved stoves, wind pumps, etc, been essentially welfare focused in that they could serve few selected localities and communities. Otherwise, except for the few commercial initiatives that are taken by private investors, there are yet no rural energy initiatives in Ethiopia that could be regarded as economic ventures. Possibly, with the granting of tax incentives and promotional supports, economic activities such as the local manufacturing/assembling of modern energy devices and systems could become partially viable. At present, cottage and handicraft industries are still dependent on traditional energy sources, as well as human and animal power.

For Hypothesis IV(2), the key findings are:

Being centralized at the Federal level, the Ethiopian Rural Energy Development and Promotion (EREDPC) of the Ministry of Mines and Energy (MME) is remote from the realities of rural energy problems. The Regional Energy Bureaus on the other hand are waiting to be advised and guided by the EREDPC.
There are no coordinated plans and programs to introduce renewable energy technologies, except for medium- and relatively large- scale hydro power plants; nor are there strict or enforceable legal measures to protect existing natural woodlands.
The energy policy of Ethiopia mentions rural energy initiative only once and that in connection with the modernization of the transport system.

Final Recommendations for Draft Policy Options

Incorporate rural energy initiatives as major components in the national development strategy of Agricultural Development Led Industrialization (ADLI) with commitment and vigour. The Ministry of Mines and Energy will need to review the energy policy for this purpose. Rural energy initiatives should be promoted for irrigation, cattle water supply and for rural productive activities, including provision of modern fuels for cottage/small-scale industries and commerce.

Formulate and implement conducive regulations to improve access to modern energy in rural areas. Incentives should be provided to producers, importers, and distributors of modern energy and technologies. Energy prices should reflect cost of production, distribution and reasonable profit margins to suppliers.

Organize, train and mobilize rural communities to get them actively involved in the financing and management of rural energy initiatives. Enable them to exploit resources from the expanding reach of micro finance institutions and commercial banks for rural energy initiatives.

Establish close working relations between the Ethiopian Rural Energy Development and Promotion Center (EREPDC) and Regional Energy Bureaus, as well as with organs of concerned ministries. The EREDPC should also exploit available experience and expertise accumulated by the MOA (on rural development and rural extension), the MOWR (on technical expertise on water resource development), and research institutions (for technology adaptation).

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