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The Government of Ethiopia faces the daunting challenge of providing energy to fulfill the needs of its people and support much-needed economic growth. Ethiopia’s electricity master plan wants to increase supply five-fold over the next five years, based almost exclusively on large hydropower dams. A large proportion of the new supply, which cannot be fully absorbed by the domestic market, is earmarked for regional export. Ethiopia’s boom in hydro dam development could lead to major social, environmental and economic harm unless safeguards and safeguard compliance are both drastically improved. The following challenges are prominent:
- Government institutions which are supposed to provide checks and balances to the energy sector lack the ability to enforce compliance with environmental and other safeguards, and report a lack of adequate personnel and financial resources to fulfill their missions. The energy sector also lacks public accountability, and civil society groups fear government repression should they attempt to criticize the energy sector.
- The quantity of financial investments needed to implement the Government’s energy plans, especially in the form of commercial loans, will increase the country’s debt burden; the Government has yet to implement a strategy to manage its public debt. The economic risk of new hydro dams is increased by Ethiopia’s already high level of hydro-dependence in its energy sector and the sector’s vulnerability to drought.
- Communities affected by dams lack any mechanism to effectively address their grievances regarding resettlement, compensation and/or other local impacts, and to legally protect their rights.
- The Gilgel Gibe III Dam does not comply with existing domestic safeguards. The awarding of the project contract was given a questionable exemption from domestic procurement requirements and does not comply with contract procurement guidelines of most of the sector’s major donors. As is, this dam will likely cause significant environmental, social and economic damage.