Tadesse Kiros Law Office Co-hosts Seminar on the Ethiopian Power Sector

On December 6, 2018, Tadesse Kiros Law Office, in partnership with Baker McKenzie, hosted a seminar on the Ethiopian power sector and lessons that could be learned from other markets. Representatives from both the private and the public sectors such as Siemens, General Electric, IFC, ENGIE, the Ethiopian Energy Authority, Ministry of Finance, and Investment Commission were in attendance. In 2017, Tadesse Kiros Law Office and Baker McKenzie had organized a similar panel discussion covering global developments on the trade and commercial landscape, agency and distributorship agreements, tax and transfer pricing. The seminar was opened with introductory remarks by Tadesse Kiros, Principal, Tadesse Kiros Law Office and Jennifer Stolp, Partner at Baker McKenzie. Mr. Tadesse emphasised the importance and timeliness of the seminar in light of the regulatory and policy developments taking place in Ethiopia aimed at enhancing private sector investment in the energy sector. He expressed his gratitude to Baker McKenzie for choosing Ethiopia as one of the first venues for their African Power Roadshow series and to all those who made the event a reality.

The panel discussion was moderated by Dr. Dadimos Haile, Senior Research Advisor at Tadesse Kiros Law Office & Associate Professor of Law at Bahir Dar University. The first speaker, Yetemgeta Fantu, Director of Operations at Herfazy Consult presented on “Ethiopian Energy Policy and Challenges Related to On and Off-Grid Electricity Investment”. He provided insights on Ethiopia‘s renewable energy potential, the policy landscape and the growth in energy demand, as well as market opportunities in the off-grid sector. Mr Yetemgeta also highlighted the challenges faced in the Ethiopian power sector and provided recommendations.

Shimeles Hailu, Associate at Tadesse Kiros Law Office discussed the Ethiopian energy sector legal and regulatory framework. He provided an overview of the laws governing the Ethiopian electricity sector, the private sector’s investment in the electricity market and the role of the government as a regulator and operator in the power sector. Mr Shimeles particularly reflected on the electricity sector regulation under the Energy Proclamation, the Geothermal Resources Proclamation and other subordinate legislation. He also discussed the government support and incentives available for energy projects implemented under public private partnership.

Baker McKenzie’s Partner and head of Energy, Mining and Infrastructure, Kieran Whyte, spoke on “African energy projects: trends and lessons learned”. He reflected on the changing landscape and common themes in the African energy industry. Mr Whyte noted that Africa’s power projects are being impacted by urbanization, digitalization, procurement models, foreign currency and investor protection, and regulation and policy frameworks.

The last speaker, Jen Stolp, Partner at Baker McKenzie, discussed “Funding trends and challenges”.  She elaborated on major issues in project finance such as tenor of debt, cost and availability of funds, regulatory and political environment, technology risk and sponsor risk. Ms Stolp highlighted the major lender considerations in project finance including taxation, licensing requirements, exchange controls, registration and reporting requirements, security interests and market liquidity. She also reflected on key project finance issues for sponsors such as extraction of profit from projects, risk sharing, carrying out project using off balance sheet structure, and limiting equity commitment to projects.

A lively interactive discussion was held at the end of each presentation in responses to questions and comments from participants. Current developments in the legal framework and policy issues were addressed with reference to best practices in other countries, mainly South Africa. Participants representing the Ethiopian Energy Authority also commented about the regulatory framework and current investment opportunities in the sector for domestic and foreign investors.

In his closing remarks, Dr. Dadimos stressed the importance of bringing together the various stakeholders in forums such as this to discuss areas of mutual interest. He concluded by thanking all the participants and reiterating the office’s commitment to organise similar events in the future.