What is the economic feasibility of the Renaissance Dam and its repercussions on the Ethiopian economy? What will he offer the country in light of the political and economic cost to him? The answers are in this report.
The Renaissance Dam that Ethiopia is building on the Blue Nile – or “Abay” according to the name in the Ethiopian Amharic language – for more than a decade has been causing great concern in 3 countries: Ethiopia, Egypt and Sudan. Read also The Libya file and water security concerns… Economic risks that may reduce money flows to Egypt On the International Day, in numbers, you know about the water situation in the Arab world A strong decline in the Egyptian Stock Exchange amid foreign sales What makes the agricultural sector in Egypt less competitive locally and internationally?
Ethiopia considers the Renaissance Dam the cornerstone of its Vision 2030 to reduce poverty among its citizens, which exceeds 70%, according to United Nations statistics, by providing electric power to the population, in light of the fact that more than 70% of them do not have access to electricity services, in a country with a population of 115 million people, in addition to that it aspires by the end of the vision to produce 30,000 megawatts of electricity from waterfalls.
As for the downstream countries (Sudan and Egypt), Khartoum has fears that the dam will affect its dams, which it relies on to irrigate its agricultural projects and generate electric power, in return for several benefits that will accrue to it when the dam is completed and started operating.
In Egypt, which depends on the Nile’s water for 97% for the irrigation of its projects and the drinking of its citizens, it has fears that the lives of its residents will be affected by the dam in the event that Ethiopia controls the resources of the Nile River, of which the Blue Nile comes with 65% of its water imports.
The cost of this project was estimated at 4.9 billion dollars, but the cost will rise to 8 billion by adding the cost of the electricity transmission networks and their transformers, and this represents about 18% of the Ethiopian GDP in 2012 – which amounted to about 42 billion dollars – according to the World Bank.
Ethiopia also involved citizens in financing the project by planning to raise $3 billion through bonds purchased by Ethiopians, whether from inside or outside the country.
In April 2018, Ethiopia signed a loan agreement with Chinese banks worth $1.8 billion to finance power stations. Therefore, there is a debate about the economic feasibility and what will come back to the country in light of this political and economic cost. https://imasdk.googleapis.com/js/core/bridge3.467.0_en.html#goog_1718131130
Ethiopia’s revenues from the Renaissance Dam
The Renaissance Dam is expected to produce 6,000 megawatts of electricity through 13 turbines. The Renaissance Dam could significantly reduce the electricity shortage of nearly three-quarters of Ethiopians.
With Ethiopia’s plan to increase the electricity coverage of its population and raise the level of energy consumption, it aims to be a center for producing clean energy for seven countries from Central and East Africa, namely Egypt, Sudan, Ethiopia, Kenya, Rwanda, Burundi and Congo. Currently, Ethiopia exports electricity to Sudan (300 megawatts) and Djibouti (100 megawatts).
Revenues from electricity exports, in 2019, to Sudan and Djibouti, amounted to 66.4 million dollars, according to data from the Central Bank of Ethiopia. It plans to export 400 megawatts to Kenya and Rwanda, and 900 megawatts to Yemen via the Red Sea.
Ethiopia is preparing to produce energy that exceeds its needs by more than 50% after the completion of the Renaissance Dam.
A number of observers consider Addis Ababa’s planning to export electricity one of the arenas of competition between it and Cairo. https://imasdk.googleapis.com/js/core/bridge3.467.0_en.html#goog_1627258021
And other than the generation of electricity, the dam will have an impact on the environment by reducing reliance on trees as a source of energy, although 5,000 hectares of forests have been removed, because its lands will be flooded by the dam’s lake. The dam’s capacity will reduce deforestation, by providing an alternative fuel.
Hydroelectric power produces less carbon emissions than other energy sources, including fossil fuels and biofuels, and the dam will reduce flooding.
The dam employs 9,000 workers, of whom only 400 are foreigners, in a country where, in 2020, unemployment is 19.1% of a population of 115 million people.
But on the other hand, the dam can be harmful, as it will reduce the percentage of cultivation due to the receding of the floods in the river valley downstream, and thus will deprive the fields of water.
In addition, about 20 thousand people were displaced from their villages to places about 5 kilometers at least from the dam lake. There are also fears that the project will lead to an increase in the external debt, which amounted to about $35 billion.