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Gilgel Gibe II is a continuation of Gilgel Gibe I project which involved the building of a conventional dam with 917 million m3 lake and is able to generate 184 Mega Watts of electric power. The new plant, to be built under Gilgel Gibe II project, does not need a dam to be constructed. Instead, it will use the water discharged by the Gilgel Gibe I plant, channeled through a 26km tunnel under Fofa mountain, to Omo River Valley where it will harness 500 meter drop to generate 420 Mega Watts.
Once Gilgel-Gibe II hydropower plant becomes operational (by 2008):
it will increase the generating capacity of Ethiopia by 30-40% since economic development needs energy, Gilgel Gibe will play a vital role in feeding the country's development needs. it will make an invaluable difference in the lives of many Ethiopian people by giving a large number of households electricity. In places where there was no power before, vital institutions such as hospitals and schools will be fed by this power plant. It will give a boost to Ethiopia's endeavors in exploiting its hydropower potential.
The Gilgel Gibe construction site was officially launched by Ethiopian government officials and representatives from the Italian Development Cooperation on March 19th, 2005. The main contractor for the construction of the power plant is the Italian company Salini Costruttori.
The Ethio-Italian Agreement - The Financing of Gilgel Gibe II
On November 17th, 2004, the Governments of Italy and Ethiopia signed a new cooperation agreement which includes the extension of 220 million euros, in the form of a soft loan, available for the energy sector expansion and specifically to finance the Gilgel Gibe II project. This particular loan of 220 million euros is the biggest development fund released to a single project in the history of the Italian Cooperation.
Also, a grant component of 505 thousand Euros have been approved by the Italian Development Cooperation for assisting the Ethiopian Electric and Power Corporation (EEPCo) in project monitoring activities of Gilgel Gibe II.
Other Financial Breakdowns
The total cost for the Gilgel Gibe II hydro power plant is 373 million euros. As mentioned above, the 220 million euros comes from Italy. The European Investment Bank will also give Ethiopia a loan of 50 million euros for the project. The rest, 103 million euros, is covered by the Ethiopian Government.
In addition, up to 100 million euros is expected to be needed for roads, ancillary works, project consultancies and management, and high voltage electric line connection with the national grid. This expenses are expected to be covered by the Government of Ethiopia and possibly by other international donors.
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