Assessment of Source of Funds, Power System Efficiency, Electricity Tariff and Financial Performance: Case of Ethiopian Electric Power and Ethiopian Electric Utility
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Date
2017-03
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Addis Ababa University
Abstract
Electric power has cascading, everlasting and vicious effect on the economy, social and
political performance of any country, and has great role wherever people live and work be it in
manufacturing, services etc. Source of funds, power system efficiency and electric tariff were
considered as the basic causes for success or failure of GTP_II plan to develop and operate
electric power which is expected to energize the planned economy.
The objective of this paper was to assess source of finance, power system efficiency, electric
tariff and financial performance and to identify the related challenges to each source of
Ethiopian Electric Power and Ethiopian Electric Utility. So as to meet this objective both
qualitative and quantitative approaches were used. For the qualitative study, profound data was
collected from key informants and focus group discussant and analyzed using content analysis
approaches. Descriptive analysis was used to analyze quantitative data collected from different
documents.
The findings of the research show that In GTP_I 32% of total investment covered from foreign
loans, 57% expended from bond sales to CBE and 11% is spent from own sources and none of
GTP_I major plans achieved fully fundamentally because of financial limitations. In GTP_II
38% of the total estimated investment in the sector expected from foreign loans, 44% is
planned to be covered from bond sales to CBE and the remaining 18% is left for own source
financing scheme. Each source has exposed the enterprises for different challenges such as the
foreign loan exposed the enterprises for high foreign currency requirements to purchase goods
and services, to repay matured principal loans and interests. Although bond sales to CBE is less
costly relative to foreign loans and it is one of the biggest instrument or channel for the
government to subsidize the sector, CBE couldn’t provide the required fund on time and as the
amount of this loan is very huge the enterprises are not able to repay the interest from its
revenue. In addition to these, more than 20% of the produced energy is sacrificed for electric
system loss and the existing tariff system doesn’t represent the fact on the ground.
In order to provide sufficient, reliable and sustainable energy for the whole public, the
government and the enterprises are expected to optimize the power system efficiency, update
the electric system tariff and find alternatives of smooth financing such as opening the sector’s
door for private investors.
Key Words: - Source of funds, foreign loans, bond sales to Commercial Bank of Ethiopia,
power system loss, electric tariff.
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Keywords
Source of funds, foreign loans, bond sales to Commercial Bank of Ethiopia, power system loss, electric tariff.