The Ethiopian government has finalized a study on electricity tariff reform, submitted to the Petroleum and Energy Authority. This initiative aims to recover electricity provision costs due to the declining global purchasing power of the dollar.
Ethiopia’s electricity sector, heavily reliant on foreign exchange for expansion, faces challenges due to the national debt and minimal tariff adjustments since 2006. This has only partially addressed the financial strain.
Officials at Ethiopian Electric Power (EEP) emphasize the financial burden on energy suppliers. The weakening dollar is particularly concerning as essential equipment is mainly imported. While tariff reform could increase consumption, the devaluation suggests a need for additional revenue.
Discussions with stakeholders revealed outdated 2018 tariffs leading to average annual losses of Birr 26 billion. EEP’s annual revenue growth pales in comparison to these losses and a significant debt burden, half its total capital.
The proposed reforms aim to address these financial challenges and stabilize the electricity sector. This is crucial to navigate global economic uncertainties and ensure the long-term sustainability of Ethiopia’s power grid.
Source: Capital Ethiopia
