Ethiopia Splits State-Owned Power Utility, Contracts India's Power Grid Corporation

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--The Ethiopian government has split the major state-owned utility, the Ethiopian Electric Power Corporation (EEPCO), into two entities to improve overall performance, and has contracted India's Power Grid Corporation (BSE:532898) (PGCI) (Gurgaon, India), to manage one of the entities.

EEPCO was split into the Ethiopian Electric Power Office (EEPO) and the Ethiopian Electric Service (EES). The decision to split EEPCO followed a three-year study and the input of an international consultant.

Dr. Debretsion Gebremichael, the country's deputy prime minister and board chairman of EEPCO, said the utility could not carry out all the various responsibilities and improve performance unless it restructured.

Under the new structure, India's PGCI will manage EES on a 30-month contract. PGCI will carry out power-feasibility studies to determine the highest-needed voltage power capacities of transmission.

PGCI's service will be evaluated each quarter. Key performance indicator measurements, such as finance, customer satisfaction, trouble shooting, automation and human resource development, will be used to evaluate PGCI.

PGCI runs 150 substations in India, with 45% of the country's total power output transmitted through the company's line. To date, EEPCO has generated and transmitted all of Ethiopia's power output.

EEPO will be headed by Azeb Asnake, former project manager of the Gilgel Gibe 111 hydropower project. EEPO is expected to become operational soon.

A number of industry analysts are concerned that the split will encounter human resource management problems. Employees, especially top managers, will lose their jobs, despite the creation of 4,100 vacancies as a result of the split.

EEPCO had 13,372 employees. EEPO needs 5,600 workers, while EES needs 11,728 workers, according to the Addis Standard.

For related information, see August 19, 2013, article - Geothermal, Hydropower to Fuel Ethiopia's 10% Growth Rate.

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