Assessment of Challenges in the Implementation of Independent Power Producer Projects: The Case of Tulu Moye Geothermal Project in Ethiopia
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Date
2021-03
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Addis Ababa University
Abstract
Ethiopia's power demand has grown with its economic and population growth. The public sector
has carried out mega power projects in the country. The government has increased its interest
in private sector involvement in power generation. Since 2009 the Ethiopian Government has
been engaged with Reykjavik Geothermal Consulting, licensee of Tulu Moye and Corbetti
exploration, but has not materialized to power generation. Existing studies have not addressed
the reasons for the delay of IPP implementation in Ethiopia which has created a knowledge gap.
This research aimed to address the gap by identifying the challenges in Tulu Moye Geothermal
Project implementation, assess the practice of IPP implementation in the Tulu Moye project, and
identify the roles and responsibilities of major stakeholders. Unstructured interviews were
conducted with participants that have direct involvement with the Tulu Moye project. The
participants were employees from Tulu Moye Geothermal Operations Plc. (TMGO), EEP, Power
Africa Consultants, MoFEC, and the Energy Authority. The result showed that the major
challenges of Tulu Moye project implementation were lack of competitive and transparent
procurement, political instability, lack of knowledge in handling IPP negotiation and
agreements, EEP creditworthiness, currency convertibility, absence of IPP supporting policies,
procedures, and guidelines, lack of sector coordination plan, and absence of cost-reflective tariff
that reduces risk mitigation requirement. The result also showed that the Major stakeholders did
not have clearly outlined roles and responsibilities which contributed to project implementation
delay. The implementation practice of Tulu Moye was ineffective and tedious due to the absence
of IPP support policies, procedures, and guidelines. Adoption of one-stop-shop, clear legislation,
policy and procedures with transparent procurement can increase private sector involvement.
Further research must be conducted to identify respective solutions to each identified challenge.
And similar studies should be done in other technologies and projects to confirm or contradict
the findings of this research.
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Keywords
Independent power producers, challenges, power secto, TuluMoye