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Ethiopian Cogen System Parts Manufacturer, Financier And Policy Study Report,

By

Moges Abate


EXECUTIVE SUMMARY

The aim of the study is to review the cogeneration sub-sector in Ethiopia with specific focus on the potential for local manufacture of cogen equipment spare parts in the country. The cogeneration industry creates jobs, promotes energy diversification, and generates additional income from agricultural and industrial sectors in Ethiopia. It provides a decentralized form of electricity, and improves local and general security of power supply.

The first chapter provides a brief overview and progress of the cogen project in Ethiopia, objectives and methodology of the study. The study’s assessment indicates that the Cogen for Africa project has enormous potential for registering tremendous progress in the set up of cogen investments in the country. Further scale up, promotion and development of cogen in Agro industries, Municipalities, Heavy metals and Chemical industries is required to meet the country’s energy needs. The study proposes greater efforts directed towards institutionalized awareness and policy intervention which can be facilitated by Cogen for Africa Project.

The second chapter focuses on the challenges facing Ethiopia's energy sector. The study observes that the country’s energy sector stagnated for several years however, growth has slowly picked up in the last three years even though it is still behind in meeting the fast growing national energy demand. There are plans to install additional power plants from renewables with a total capacity of 16,168 MW by 2018. The study analyses the main energy development players in Ethiopia, they include: Ministry of Energy and Water, Enterprise called Ethiopian Electric Power Corporation (EEPCo) and the Ethiopia Electric Agency.

Chapter 3 provides a brief overview of the manufacturing sector in Ethiopia as well as examines, in some detail, key manufacturing companies in the country. It identifies available producers and local manufacturers of cogeneration spare parts in the country. The survey within Ethiopia manufacturing sector indicated that most of cogeneration parts are imported. A few spare parts in the boiler and handling system are locally manufactured.

Chapter 4 focuses on the existing and potential sources of finance for local manufacture of cogen spare parts in the country as well as the challenges facing cogen investors. Interviews with the financial sector indicated that foreign banks and the Government are the main sources of financing. The country has a restrictive investment policy (which, is, however being rapidly reformed) and tight business environment of banking business hindering the growth of the cogen sector. Further, the study has established that the tariff law is yet to be fully implemented, even though it is officially declared. Once it is fully implemented and attracts the requisite private sector investment, the situation is expected to improve, as it would bring on board the much-needed private sector investment flows into Ethiopia's promising cogen sector.

Chapter 5 discusses policy options that can promote local manufacture of cogen spare parts in Ethiopia and measures that will encourage investment in the local manufacture of cogeneration spare parts in Ethiopia. The study ends with a chapter summarizing key findings and recommendations on the way forward. Key among the recommendations is to have an energy policy that shall address power generation technology transfer.

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