Ethiopia Says World Bank to Blame for Power Blackouts

By Jason McLure

June 22 (Bloomberg) — Ethiopian Prime Minister Meles Zenawi said the World Bank and international donors share the blame for nationwide power cuts that led the government to trim its economic growth forecast.

The Horn of Africa country’s economy may grow 10.1 percent in the fiscal year ending in July, compared with an earlier prediction of 11.2 percent, Meles said in an interview on June 19 in the capital, Addis Ababa. The World Bank underestimated electricity demand in previous years and failed to provide funding for new power-generation projects the government had wanted, leading to under-investment in the industry, he said.

“We could have avoided that mistake if we had the money or had we had the support of our donors,” Meles said.

A shortage of electricity in Africa’s second most-populous country led the state-run Ethiopian Electric Power Corp. to institute nationwide blackouts every second day this month. The outages, which began in March, are partly due to “unpredictable” factors such as rainfall shortages that left dams without enough water, and delays in building new hydropower plants, Meles said.

“The notion that because we didn’t finance power they have a problem, that’s bogus,” Kenichi Ohashi, the World Bank’s director for Ethiopia, said by phone today. “If we financed power that would come at the expense of something else”

Generator Dispute

Power cuts might also have been alleviated if the Washington-based multilateral lender had provided funding for a 60-megawatt diesel generator the government requested this year, Meles said.

The World Bank didn’t finance the generator because the government’s contracting process didn’t meet World Bank standards and wasn’t “open and transparent and competitive,” Ohashi said.

This is the second consecutive year Ethiopia has experienced nationwide blackouts in the months before July, when reservoirs begin to refill during the country’s rainy season.

Economic growth in “the last part of the year has not been as good as we thought it would,” Meles said. A reduction in coffee exports from Africa’s biggest producer of the beans also trimmed growth expectations, he said. The International Monetary Fund estimates Ethiopia’s economy will grow 6.5 percent or less this year.

Coffee Sabotage

Ethiopian coffee export revenue has declined by more than 30 percent this year. In March, Ethiopian authorities shut six of the country’s largest exporters’ warehouses after accusing them of hoarding beans bound for export.

“The transition from the traditional marketing network to the commodity exchange was not universally popular amongst the exporters and traders in the coffee market,” Meles said. “We felt that some were trying to sabotage the transition.”

Ethiopia’s coffee earnings have declined this year due to a smaller crop, lower world prices and exporters stockpiling beans in anticipation of a devaluation of Ethiopia’s currency, Eleni Gabre-Madhin, chief executive officer of the Ethiopian Commodity Exchange, said in March.

Shipments declined to 97,846 metric tons in the first 10 months of Ethiopia’s fiscal year that ends next month, compared with 133,423 tons a year earlier, according to data from the Trade Ministry.

Stepping Down

Meles, who is 54 and has been in power since 1991, reiterated an April 2008 pledge that he would like to step down after next year’s elections. He indicated he would stay for part of an additional five-year term if his ruling Ethiopian People’s Revolutionary Democratic Front requests it.

He said he would resign from the ruling party only as a matter of “fundamental principle” and not over a small difference in how long he should remain in office.

“My guess is this is going to boil-down to plus or minus a year or two,” he said. “I’m simply thinking aloud. Now if it were to boil-down to plus or minus a year or two, I would probably say this is not a matter on which I ought to leave the party.”

It’s also possible, “some would say very likely” that he will be succeeded as prime minister by a person from outside the Tigrayan ethnic group, Meles said.

Veterans of Meles’ Tigray People’s Liberation Front, a rebel group from northern Ethiopia that helped defeat Ethiopia’s Communist Derg government in 1991, form the core of the current ruling party. Though Tigrayans make up just six percent of the country’s population, they dominate the upper levels of Ethiopia’s civilian and military leadership.

Zero Chance

Meles said there is “zero” chance that opposition leader Birtukan Mideksa will be released from prison in time to compete in the elections scheduled for next May. He also said Birtukan’s jailing is not a pretext to eliminate political opposition.

Birtukan, a leader of the now-defunct Coalition for Unity and Democracy alliance, was first jailed along with more than 120 other opposition leaders, activists, and journalists after unrest following Ethiopia’s disputed 2005 elections.

Birtukan was freed under a government pardon in 2007, before being put back in jail under a life sentence in December after she denied requesting the earlier amnesty. Her supporters say she was jailed because of the growing popularity of her new party, Unity for Democracy and Justice.

The prime minister also defended local elections last year, in which opposition candidates won just three of 3.6 million seats, saying that “democracy is about process, it’s not about outcome.”

Ethiopia’s largest remaining opposition parties withdrew in advance of the poll, citing government intimidation.

“If the process is clean and you get zero, tough luck,” he said.

To contact the reporter on this story: Jason McLure in Addis Ababa via Johannesburg at pmrichardson@bloomberg.net.

Last Updated: June 22, 2009 13:02 EDT