Since 2010, AFD has been accompanying the public electricity utility, Ethiopian Electric Power (EEP), in reinforcing the domestic power grid. A EUR 50m soft loan was allocated in December 2011 for the construction of four substations and the installation of transmission lines around Addis Ababa. The project will supply the population and companies with reliable and competitive energy.

The public utility Ethiopian Electric Power (EEP) is in tune with the increase in economic growth and has been implementing a major investment program since the early 2000s. The generation capacity has thus grown in a few years from 814 MW in 2005 to around 4,500 MW in 2016. The increase in the power generation capacity has, however, not been followed by a similar level of investment in the transmission grids and transformer substations. Consequently, several dams (Tekeze, Tana Beles) are unable to operate at their full capacity because all the electricity produced cannot be transported to the consumers. Whilst Ethiopia now has a sufficient installed power generation capacity to cover domestic demand, the capital Addis Ababa is still subject to considerable pressure on its power supply, which has until very recently caused rolling blackouts. This poor service quality leads to a double cost for the economy: The need for industries and services to acquire diesel generators; A general dissatisfaction of users, which blocks the acceptability of a tariff reform, although it is necessary for the stability of the sector. To remedy these shortcomings, massive investments are currently being implemented in all the architecture of the high-voltage transmission network. Other reinforcements are necessary in addition to this backbone: Ethiopia’s strong economic growth has led to the emergence of new industries that are poorly served by the high-voltage transmission network; The efforts made to connect new households in urban and rural areas have contributed to increasing electricity demand (+25% a year) and overloading most of the substations. In this context, the Ethiopian public utility, Ethiopian Electric Power (EEP), has requested AFD financing to reinforce the transmission grid which supplies the industrial zones in the south and west of Addis Ababa (Djibouti road, Debre Zeit, Akaki and Modjo municipalities, as well as the Ginchi region).


Several villages are waiting for a connection under the national rural electrification program, particularly in the Ginchi zone where the current distribution station is overloaded and unable to meet demand. Furthermore, in Debre Zeit, over 25,000 domestic users are connected and there are pending connection requests for some 3,000 users. The aim of the program is to improve economic production and the well-being of the population by supplying reliable and competitive energy. This program has three sub-objectives: Develop industries by providing electricity to the industrial zones south of Addis Ababa; Connect new villages to the domestic grid and improve services to connected users; Reinforce EEP’s planning and management capacity for the high-voltage transmission sub-sector. The program has two components: An investment component for the reinforcement of the high-voltage grid. This component comprises the construction of 230 and 400 kV lines, as well as 4 sub-stations; A management support and capacity building component to support EEP in the project implementation, supervise the works contracts and build capacities, mainly for EEP’s planning and construction teams.


This project aims to meet urgent needs for access to electricity by connecting new villages to the domestic grid and improving the service for connected users; The program supports the country’s economic development by improving the transmission and distribution capacity in an important industrial zone located on the road to Djibouti, Ethiopia’s main communication link; Several villages are to be connected as part of the national electrification program, in particular in the Ginchi area where the distribution station is currently overloaded and cannot meet demand. Moreover, in Debre Zeit, more than 25,000 users are already connected and demand is increasing by 3,000 new connections a year. The project will thus have a short-term social impact by connecting new households to the domestic grid.

project start date
Debre Zeit
Ethiopian Electric Power