Ethiopia is negotiating with three Italian banks for €400 million in financing to complete the 1,800-megawatt Koysha Hydroelectric Power Project, one of the country’s largest ongoing infrastructure projects.

The government is also seeking to raise an additional €100 million domestically to support the project, according to Ashebir Balcha, chief executive officer of Ethiopian Electric Power.

“We expect the loan agreement to be signed in October,” Balcha said.

Construction of the Koysha dam began in 2016, but the project is now about three years behind its original schedule. Financing efforts have been complicated by Ethiopia’s ongoing external debt restructuring.

The country is restructuring about $4.5 billion in external debt after defaulting on a Eurobond interest payment in 2023.

The Koysha project has an estimated total cost of about €3 billion. Once completed, it is expected to generate around 6,460 gigawatt-hours of electricity annually and add 1,800MW of installed generating capacity to Ethiopia’s power system.

The project will also create an artificial reservoir covering approximately 200 square kilometres. The government expects the reservoir and surrounding area to support tourism and economic activity in nearby communities.

The financing push comes as Ethiopia seeks to expand its electricity-generation capacity following the commissioning of the 5,150MW Grand Ethiopian Renaissance Dam (GERD) last year.

GERD, which cost about $4.8 billion and was financed largely through domestic resources, nearly doubled Ethiopia’s electricity-generation capacity.

Source: Bloomberg