The Power Conundrum

Power Cuts Proving Bad for Business

The age and capacity of current transformers and substations are being blamed for the unreliable supply of electricity in the country. On top of the annoyance they cause to countless households, power cuts also have a huge impact on business. Costs that come from breaks in production, damage to machinery and the requirement to pay employees overtime is hugely cutting into profits. With two major dam projects currently under construction, such businesses live in hope that one day soon the situation will improve, reports FASIKA TADESSE, FORTUNE STAFF WRITER.

Joy Tech Plc, an Israeli Horticulture company, was established in Ethiopia in 2003, with 86ha of farmland, in Debre Zeit (40km south-east of Addis Abeba) and Legedadi (25km north-east of Addis Abeba). They grow roses and 15 types of vegetables, which are then exported to Germany, France, Holland, Japan and the Middle East.

The company’s 63ha farm in Debre Zeit gets 350KV of power from Ethiopian Electric Power (EEP) and produces 15 million rose flowers and 1000tns of herbs and vegetables annually, employing 1,000 workers. The company has increased its capital from 18 million Br initially to 7.5 million dollars, approximately 150 million Br, says Jagbish Mahajaln, Joy’s farm manger. However, the continuous power fluctuation has forced them to cut production by half, he says.

“Our production is really affected by the electric power interruption and fluctuations which happen three to seven hours every day,” he said.

The company is incurring costs for generator fuel, which, for the month June, amounted to 220,000 Br.

Joy’s complaint is despite the power utility reporting that supply had increased.

When the Growth & Transformation Plan (GTP) was designed in 2009/10, the total electric power capacity of the country was 2000Mw. After four years, it reached 2,268Mw, with the plan to reach 5054Mw by 2013/14.  The overall plan of the GTP is to reach 10,000Mw.

“There is no problem with the electric power supply in the country” argues Misikir Negash, external relations directorate at the EEP. “But there is an electric power interruption.”

He attributed the problem to the age and capacity of the transformers and substations currently in operation.

Ayka Addis Textile, which moved from Turkey to Ethiopia with an investment of 140 million dollars, is operating at 80 to 90pc capacity in five plants in Alem Gena, in the East Shoa Zone, Oromia Regional State (19km from Addis Abeba). The company has the capacity to spin 40tns of cotton, knit 38tns of thread, dye 50tns of cloth and produce 80,000 pieces of garment on a daily bases, with 7,500 permanent and 100 temporary workers. The Company exports its produce mainly to Germany.

Ayka’s plants rely on a 19Mw electric power supply from the EEP – eight megawatts from the Mekanissa substation and 11Mw from the Sebeta substation. The Mekanissa line fails frequently because of old electric lines and poles. As bad as the power failure is, reporting it to the EEP is difficult, Ayka Addis says.

“There is an information gap between the branch office and the head office [of the EEP],” said Amare Teklemariam, CEO of Ayka Addis.

There is a committee drawn from the Textile Industries Development Institute (TIDI), Ministry of Water, Energy & Irrigation (MoWIE) and the Ministry of Industry (MoI), to which large companies such as Ayka make weekly reports. This has helped them to find quicker solutions to their problems and has been particularly useful this summer, when the problems have been more frequent, according to Amare.

Power is essential to the yarn spinning machinery, which cannot be run by the power from the generator, says Amare, adding that a problem during one shift affects the entire production process. He admits that part of the problem has been fixed, although the summer season has been particularly difficult for the company.

“The cost is too high, even with a seconds’ power interruption and fluctuation,” says Amare.

The EEP’s technicians will immediately fix the problems, as soon as they are informed, says Miskir.

Sheba Tannery – a sister company of Guna Trading, under the  Endowment Fund for the Rehabilitation of Tigray (EFFORT) – voices similar complaints as Joy Tech and Ayka Addis. This company says that power fails for one to three hours at least once a week at its plant in Wukro, Tigray, 45km from Mekelle, close to the Ashegoda wind farm.

Sheba processes 6000 pieces of sheep and goat hides and 600 pieces of oxen skins on a daily basis, using the 2.3Mw of hydroelectric power it gets. It manufactures 600 to 800 pairs of footwear a day, both for the local and export markets.

Sheba is suffering damages in three ways because of the power failure, says Rezene Alemayehu, deputy manager of operations. These include damage to machinery, delaying delivery and paying overtime to employees. Some of the machinery it uses has to be sent to the country of manufacture for maintenance, which could take three months, he says.

Its tanning machine, which uses acid, handles 1,000 pieces of skin at a time, which could all be damaged if the machine stops suddenly, Rezene says.

The EEP denies responsibility for machinery breakdowns as a result of power failures.

“The machineries are damaged because of improper electrical system installations at the companies, not because of the power interruption,” Mesikir argues.

The EEP’s technicians not only deliver maintenances services, he says, but also consult the factories on how to adjust their internal electric installation.

The power cuts, however, are also affecting visibility for Joy Tech, which communicates with its buyers online, says Jagbish.

Beyond hoping that the dam, currently under construction, will solve the problem, the EEP has designed three plans to maintain the transformers and power stations, and change the damaged electrical equipments, according to Misker.

The government promises more power with more plants coming into operation. Two dams will soon become operational, according to Mekuriya Lemma, head of strategy and investment at the EEP.

The construction of the Gilgel Gibe III, which has the capacity of producing 1870Mw, is 86.4pc complete, and ‘final works’ have postponed its intended inauguration in 2013/14. The other dam is the Great Ethiopian Renaissance Dam (GERD), which will have a total production capacity of 6,000Mw. It is 35pc complete, with the remaining work expected to be completed within two years, according to the government.

The Assegoda and Adama wind farms contribute 171Mw to the national grid system, but Beles contributes the highest amount of hydroelectric power with 460Mw, followed by the Gilgel Gibe II with 420Mw and Tekeze with 300Mw. From the total power of the national grid system, hydro-power has the major share with 87pc, whereas wind has an eight percent share and the remaining electric power is covered by geothermal.

Ethiopia has the potential to generate 50,000Mw of hydro power, 10,000Mw of geothermal and 1.3 million Mw of wind power where the aggregate demand for electric power reached to 7,589GWh in 2013/14 by rasing from 4,984GWh in 2010/11.

The transmission has currently reached 13,000kms; the plan for 2014/15, according to the GTP, is 17,787Mw. Electrification service coverage reached 55pc in the 2013/14 fiscal year, against a target of 70pc. The GTP’s electrification target is 75pc by the end of 2014/15.



Published on August 3, 2014 [ Vol 15 ,No 744]



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