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Matchmaking, Financiers And Policy Issues Study Report,

By

Wolde-Ghiorgis, W.


EXECUTIVE SUMMARY

The study is part of the Cogen for Africa Project and assesses the potential for developing biomass cogeneration systems in Ethiopia. The study’s main objective is to better understand the links between cogeneration development in Ethiopia with local manufacturers and the financial sector in the country. It also includes an evaluation of the policy environment for sustainable development of cogeneration systems in the country.

The study contains five chapters. The first Chapter introduces the study and provides a brief overview status of cogeneration in the country. Cogeneration in Ethiopia has been largely limited to bagasse based systems and it is still in its embryonic stage even by Sub-Sahara Africa standards. However, the situation is fast changing. Currently, cogeneration systems in the country are mainly found in the sugar industries in the country where cogeneration plants are largely used to meet the electricity requirements of the sugar factories and associated estates.

Chapter two addresses the country cogeneration industry and its potential links to local manufacturers. This includes a brief review of active and potential investors in cogeneration systems in Ethiopia. The chapter further examies the manufacturing sector in Ethiopia as well as assesses, in some detail, selected manufacturing companies in the country and their capabilities for manufacturing cogen spare parts. In summing up the chapter, possible spare parts required for a cogeneration plant are analyzed and the extent to which these parts could be locally manufactured is also undertaken.

The third chapter discusses the financial sector and cogeneration development in Ethiopia. The chapter starts by laying out the overview, historical background as well as the current status of the country's financial sector. It notes that commercial banks and development banks play a major role in financing major investments in the country. The major services offered by the banks related to cogeneration development primarily focus on Debt Financing mechanisms. Most of the cogen expansions and new cogen plant projects in the country are being financed through the Government via state-owned agencies such as the National Bank of Ethiopia, the national treasury and bilateral finance from donor countries.

Chapter 4 discusses policy and regulatory framework for cogeneration development in Ethiopia. The chapter identifies the energy policy of Ethiopia as one of the key instrument that provides cogen related policy direction in the country. The policy’s main agenda is to have reliable supply of energy for the socio economic development of the Ethiopia and places emphasis onrapid developments of indigenous energy resources (e.g. the efficient uses of biomass fuels) and promoting a rapid transition to modern energy services and technologies. This fourth chapter concludes by briefly discussing the barriers faced in developing cogeneration in Ethiopia.

The last chapter ends with a summary of the key findings and recommendations on the way forward. It emphasizes that Ethiopia is an early stage of cogen development. Therefore, different capacity building activities need to be taken on board to create awareness and promote the sustainable development of cogeneration systems in the country as well as support local manufacture of spares parts for the young but potentially promising cogeneration industry in Ethiopia.

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