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Downloads/Gtz060810.Pdf the World Bank (World Bank 2012) U4 Expert Answer Corruption and anti-corruption in Ethiopia’s energy sector Query Please can you provide an overview of corruption and anti-corruption in Ethiopia’s energy sector, with a focus on international aid? Purpose Summary Inform dialogue with the Ethiopian government Ethiopia’s energy sector is a growing concern and regarding developing policy for the energy sector. a priority for the Ethiopian government as the government attempts to increase electricity capacity for the country. Recent investments have Content focussed on the creation of wind power farms and 1. Overview of corruption risks in Ethiopia’s large hydropower dams in an attempt to harness the country’s enormous potential of renewable energy sector energy resources. 2. Anti-corruption frameworks for Ethiopia’s energy sector There are a number of corruption risks that 3. References threaten the development of Ethiopia’s energy sector. Threats specific to the energy sector include petty corruption and corrupt procurement processes, while risks arising from Ethiopia’s specific context include weak oversight and governance systems. Of particular importance in this regard are the differing stances and approaches of the various international aid donors in the country as international aid is crucial for funding the government’s ambitious plans. Author(s): Ben Wheatland, Transparency International, [email protected] Reviewed by: Marie Chêne, Finn Heinrich, PhD, Transparency International, [email protected] Date: 15/10/2015 Number: 2015:20 U4 is a resource centre for development practitioners who wish to effectively address corruption challenges in their work. Expert Answers are produced by the U4 Helpdesk – operated by Transparency International – as quick responses to operational and policy questions from U4 Partner Agency staff. Corruption and anti-corruption in Ethiopia’s energy sector sector, with a focus on renewable energy sources. 1. Overview of corruption risks in This includes increasing Ethiopia’s power capacity Ethiopia’s energy sector by 8,000 MW by 2015, doubling the electrical customer base, and raising the general rate of access to electricity to 75% (Federal Democratic Ethiopia’s energy sector Republic of Ethiopia, Ministry of Water and Energy 2012a). Ethiopia’s energy sector is primarily focussed on an aggressive expansion of electricity capacity. It Ethiopia enjoys a vast amount of renewable and involves investments from state-owned non-renewable energy resources, ranging from enterprises, such as the Ethiopian Electricity hydro- and solar-power to biomass and natural Company, and international donors, represented gas. The country has the potential to generate by private companies. The sector is overseen by over 45,000 MW of electricity from hydropower both the Ministry of Water and Energy and the alone, yet currently faces an energy shortfall. Ethiopian Electricity Agency, which provide (African Development Bank, no date). However, licences for companies working in the sector, existing infrastructure is unable to operate at full oversee and inspect the work, infrastructure and capacity (KPMG 2014). To counter this, Ethiopia conduct within the sector. has made efforts to improve its use of natural resources with a planned increase in the use of In 2011, 85.2% of the urban population have hydro and wind power (Federal Democratic access to electricity, compared to only 4.8% of the Republic of Ethiopia, Ministry of Water, Irrigation rural population, who have to rely on firewood and and Energy, no date; Wolde-Giorgis 2015). other non-renewable resources for energy. In the Indeed, since 2004, eleven new dams have been past, only 70% of the total electricity demand had planned and are currently under construction. This been met, and Ethiopia needed a 38-fold increase includes the construction of the Grand Ethiopian in electricity supply by 2013 just to maintain Renaissance Dam (GERD), at a cost of US$5 economic growth (Berlin 2010). Currently, 85% of billion2, and the creation of a large-scale wind Ethiopia’s electricity is generated at eight farm aim to increase Ethiopia’s wind power output hydroelectric dams (Hathaway 2008). to 800 MW (Maasho 2013; International Rivers 2014). It is estimated that biomass fuels1 currently meet between 88% and 94% of total energy Private sector investors can generate electricity consumption in the country (Federal Democratic from any source and without any capacity limit, Republic of Ethiopia, Ministry of Water and and indeed an investment guide issued by the Energy 2012b; Federal Democratic Republic of Ethiopian government encourages private sector Ethiopia, Ministry of Water, Irrigation and Energy, interests to generate electricity in bulk (Ethiopia no date). However, there are plans for Ethiopia to Investment Commission 2014). harness the great potential of its renewable energy resources, with the intention of becoming a major exporter of power to countries in the Ethiopia’s corruption risks surrounding region. The 1994 National Energy Ethiopia faces major corruption challenges which Policy was an early attempt to improve the influence and underlie the levels of corruption in country’s energy capacity and production, and its energy sector. attempted to encourage private participation in the development of the sector. It identified Extent of corruption in the country hydropower as the backbone of the energy Due to the huge amounts of resources that are sector’s development strategy (International present, it is important that the institutions that Rivers 2014). Linked to this, the Ethiopian oversee the energy sector are free from government laid out its Growth and corruption. However, in Ethiopia there is a high Transformation Plan (GTP) for 2011-2015. level of corruption by public office holders, and (Enterprise Canada Network, no date). The GTP corruption is also present in the top levels of promotes the expansion of Ethiopia’s energy 1 These include firewood, charcoal, dung cakes and 2 Note: Transparency International takes “billion” to agricultural residues. refer to one thousand million (1,000,000,000). www.U4.no U4 EXPERT ANSWER 2 Corruption and anti-corruption in Ethiopia’s energy sector government and its institutions. This has 2008). There is a lack of opportunities for citizens prompted recent anti-corruption drives, but these and civil society organisations to hold the appear to have had a limited impact due to their government to account as the environment in selective targets (Bertelsmann Transformation which they operate is hostile and unstable Index 2014). Moreover, in Transparency (Caballero, no date). Moreover, Ethiopia has no International’s most recent Corruption Perceptions standalone access to information law, which limits Index Ethiopia has relatively low ranking of 110 the amount of information that civil society can out of 175, and a score of 33 out of 100 (0 equals access (CoST 2014). Because of the hostility highly corrupt, 100 equals very clean) towards civil society and the media, there are (Transparency International 2014). currently no groups actively pursuing issues surrounding the construction of or risks to Ethiopia’s bureaucracy is also considered to be Ethiopia’s hydropower dams (International Rivers very complex (Bertelsmann Transformation Index 2014). 2014). This creates the opportunity for officials and staff to attempt to circumvent such rules, and In addition, there is very little chance for local therefore be more open to giving and receiving communities to participate in the creation and bribes to secure contracts. planning of projects that affect their local environment. Public participation in public affairs Foreign investors are also affected by the promotes sustainable decisions and allows for country’s corruption challenges in their operations, local expertise to feed into decision making. It can with 32% reporting that it is common to have to help increase the legitimacy of decisions, and pay a bribe to maintain the day to day running of greatly increases the level of transparency and their businesses (FEACC 2014). accountability surrounding the decision to begin working on a major project (Chêne and Wheatland The Ethiopian government has made some efforts 2015). However in Ethiopia, communities that to fight corruption in the country, including by would be negatively affected by the construction requiring state officials to publish their assets. of dams and other large infrastructure projects are However, corruption remains a significant often not consulted nor are they usually provided problem, and observers have reported that the with compensation or resettlement packages. This anti-corruption policy that the government has was the case with the construction of the Gilgel implemented has not been effective (Bertelsmann Gibe II dam (Hathaway 2008). Transformation Index 2014). Indeed, 43% of Ethiopians believe that corruption increased in the Finally, the media can play a significant oversight country in 2012, and 64% believed that role by accurately reporting energy sector activity government efforts to tackle corruption had either and projects and by using investigative journalism no effect or were ineffective (Transparency to uncover corruption scandals. However, as with International 2013). the public, the media in Ethiopia struggles to play an effective oversight role in holding the Weak public oversight and participation government to account for its energy policy. The government has repeatedly moved to limit the Without effective oversight
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