Ethiopia terminates $300 million solar power project with Saudi firm
Gad & Decheto solar power project no longer valid due to delays
A board formed to oversee Public Private Partnership (PPP) deals terminated a USD 300 million worth solar projects planned to be developed in partnership with Saudi Arabian company, ACWA Power, after the firm failed to show progress.
Launched in 2019, ACWA was supposed to start the construction of the projects, located in Afar and Somali regions, in 2020. Each costing USD 150 million, Gad and Decheto, the two solar projects, were planned to generate 125 MW of power each. They were awarded to the Saudi firm after it won a bid in November 2019 out of 12 pre-qualified bidders, and the deal was later approved by the Board.
It was an award ceremony attended by Primie Minister Abiy Ahmed Ali, Sami bin Jameel Abdullah, Saudi Ambassador to Ethiopia and Ahmed Shide, minister of Finance. During the awarding ceremony back then, Ajmed remarked that the partnership will aid the country tremendously in creating long term sustainable value for our nation and communities, though the deal has now ended with termination.
“The company was supposed to secure financing for its projects within six months and begin to undertake the construction of the plants,” said Tilahun Tadesse, PPP director general at the Ministry of Finance.
The Company has offered 2.5260 US cents/kwh for both sites, a pledge that was never materialized.
According to Tilahun, authorities have extended the deadline for the company for over two years due to the coronavirus pandemic and a rejection of its loan requests to international lenders, though its managers failed to seize the opportunity.
“The company also cited the war in northern Ethiopia as a reason and it was given another extension, but it did not use this as well,” added Tilahun.
The Saudi firm finally requested for a suspension of the project until the situation in Ethiopia is resolved. However, the board of PPP rejected the request and decided to terminate the agreement. A new bid is expected to be floated to award the Gad and Decheto projects to a new developer.
Another three energy projects, being developed through PPP arrangements in Metema, Mekelle and Humera towns, have also been suspended due to the war in northern Ethiopia. Additionally, the UAE firm, Masdar Abu Dhabi Future Energy Company PJSC, signed an agreement with the government last year to implement a solar power generation project in Ethiopia, in partnership with the government under PPP scheme.
Source: The Reporter
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