Energy utility providers in Somaliland and their government form a special purpose vehicle (SPV) as per the Ethiopian Electric Power (EEP) recommendation in order to realize interconnection to access cheap energy from Ethiopia. The SPV Company, Tayo Energy Transmission Company (TETCO) LTD was formed from the Somaliland side to carry out the project that shall connect the country with the Ethiopian line.

According to the information Capital obtained from EEP, recently a private utility operator in Somaliland was in communications with the state owned energy generator, which is also responsible for power export, to connect Somaliland with Ethiopia through high tension lines so as to embark electric export to the self proclaimed country in the horn of Africa. “However, we understood that the there are several utility companies operating in Somaliland. So we have communicated with their government to come up with a single entity that will be conducive for EEP to sell power smoothly,” Moges Mekonnen, Public Relation Head of EEP, told Capital. He said that once their line stretches up to the Ethiopian boarder it will not be difficult to commence the cheap power export to Somaliland. However, the need for a single focal body to get in to a deal was mentioned as vital. “I think the formation of the SPV is part of our recommendation,” he added.

Mohamed Farah, Managing Director of TETCO, told Capital that the company is formed and owned by current energy service providers, government and investors. “We intend to serve all Somaliland energy service providers,” he explained via email. He added that the creation of the company is to handle the project for transmission line and other related parts with an estimated cost around USD 200 million that will be covered by the private sector, Somaliland government and international stakeholders. However, he did not disclose who the international partners will be. “Regarding the commencement of the project, we are planning to start as soon as possible and we expect that it will be three phases. The first phase will be finalized within two years or less,” he said.

In Somaliland about 15 major electricity service providers are currently operational. Moges estimated that once the project is started it may take from one and half to two years, while the workload from the Ethiopian side will be shorter. He reminded that there is ample infrastructure in the area since Somaliland is connected to about three countries. “The Aysah Wind Farm project, which is located at Shenelle Woreda of Sitti Zone of Somali region, is very close to the boarder of Somaliland so we have the line which has a capacity to carry 230 KV there, with a minor investment required from Somaliland to ensure that connection,” Moges said. “We expect the total length of the transmission to be around 500 KM with a capacity of 220 KV or 400 KV. The number of substations is not finalized yet,” the TETCO Head said on his part.

Capital learnt that the Somaliland government through SPV arrangement joined TETCO to realize the demand of the Ethiopian side to connect the two nations. The newly formed company will be responsible to distribute the energy for the utilities in the country. So far the border town of Wajaale of Somaliland that shares Tog Wajaale of the Ethiopian border town is accessing Ethiopian power for cheap. However, big cities like Hargeisa, which is the capital, are using the diesel energy that is provided by multiple companies.

The cost of electricity in Somaliland is one of the highest in the world, while the Ethiopian rate is the vice versa. Moges said that the country has ample capacity to provide energy for the neighboring country, “We are improving the handling of our energy. For instance for the New Year holiday festivity, we did not force factories to halt their operation as we did in the past.” “We have made ready all our units for the holiday season and made available up to 3,200 MW energy capacities and the estimation consumption for this pick season was 2,700 MW, while the actual usage was 2,500MW. I say this to show how we are capable to provide energy for Somaliland at this stage if not in the coming years,” the Public Relation Head explained.

The 40MW energy generation wind mills of Aysah Wind Farm that was erected about 15 km from the border of Somaliland was connected to the national grid this week and the second phase with an additional 40 MW will be connected within three months time. The wind farm has a capacity to generate 120 MW of power, “To commence the installation of additional windmills with the capacity of 40 MW, it is now in the manufacturing stages.” The EPC project is managed by the Chinese Dongfang Electricity and 85 percent of the USD 257.3 million worth project is covered by Exim Bank of China while the remainder is covered from the national coffer. Aysha is located about 700 km east of Addis Ababa and about 173 km from the Dire Dawa, one of the biggest cities in eastern Ethiopia. Ethiopia is exporting energy for Djibouti and Sudan, while export to Kenya will be officially commenced in November.