Prime Minister Meles Zenawi said last week that the country has embarked on energy
development projects even against the advice of donors.
faced two major obstacles in our attempt to build hydro-electric dams. One is a
shortage of money, the secondly, many economists said it would be a waste of
resources," Meles said.
prime minster told journalists that international financial institutions like
the IMF and World Bank did not want to provide grants or loans to energy
projects saying the money could better be spent in building schools and
decided to go ahead with our projects and look for alternate funding options
elsewhere. We also put our own money on the table and combined this with
non-conventional sources of funding," the prime minister said.
to government sources Ethiopia's demand for energy has grown by 24 percent this
year. This has led to a massive power shortage, one that has not been seen in
decades. Now major cities and towns including the capital, Addis Ababa, are in
a black-out. Power shedding has put the country's industries at a standstill.
Minister of Energy and Mines Alemayehu Tegenu
told VOA the country is generating less than half of the total electricity
demand. He said investments in this sector are steps in the right direction.
is not an easy investment. We are spending about 40 percent of the country's
budget in these investments," Alemahehu said. "They will cost us 50 billion
birr in the coming five years."
projects that require huge financial expenditure are putting a strain in the
country's economy. It is hemorrhaging the country's already low foreign
currency reserve, according to the prime minister.
say inflated budgetary spending by the Ethiopian government has exceeded the
nations GDP. This has sparked widespread inflation that accounts for the
soaring price of commodities. Ethiopia's government says the investments are
intended to accelerate the country's development and are being carried out at
the right time. But some experts say the social and macroeconomic effects of
these projects will be felt in the years to come.