The state-owned Ethiopian Electric Power (EEP) has reported losses of 10 billion birr for its operations in 2024 and although the figure is staggering, it is less than half of the losses registered on the firm’s books the year prior.
“Total comprehensive loss, or net loss, for 2024 stood at 10 billion birr, halved from the 24.8 billion birr in July 2023,” reads a report from the Audit Services Corporation, signed by EEP board chair Abraham Belay (PhD).
Abraham, Current Minister of Irrigation and Lowlands and former head of the defense ministry, chairs a board of eight that includes the likes of girma Birru, Ayisha Mohamed, Eyob Teklign, and Melaku Albel.
The firm’s financial statements reveal that its paid-up capital has skyrocketed following the government’s decision to write off its debts. The audit report indicates that 217 billion birr in arrears was written off.
“The total paid-up capital nearly doubled from 319 billion birr at the beginning of 2024 to 589 billion at the end of 2024,” it reads.
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The firm’s stock of government bonds has also dropped to zero from 237 billion birr at the end of 2023. However, EEP still holds two billion birr’s worth of other bonds, such as those linked to GERD and denominated in foreign currency.
The report reveals that EEP’s total financial liability (including borrowing, lease liability, trade payables and contract liabilities) has dropped from 355 billion birr at the end of 2023 to 128 billion birr at the end of 2024. In particular, total borrowing, or net debt, dropped from 334 billion birr in 2023 to 104 billion in 2024.
Revenue from client contracts jumped by five billion birr to 27 billion birr over the reporting period, while earnings before interest, taxes, depreciation, and amortization (EBITDA) surged from seven billion birr to 23 billion birr, according to the report.
EEP now holds assets valued at 709 billion birr, auditors found.
The report warns that a 10 percent drop in the value of local currency would result in a 13 billion birr loss for EEP. Although the currency has lost more than 100 percent of its value since the forex market was liberalized in July 2024, the report does not include the impact the development has had on EEP’s accounts.
The report also indicates that EEP generates income from optic fiber installation and leasing arrangements with Ethio telecom, Safaricom Ethiopia, and Websprix IT Solutions. The firm leases fiber links to Ethio telecom at a rate of 1,035 birr per kilometer per year, while Safaricom and Websprix pay USD 337 for the same service.
Auditors report that EEP’s cash deposits at banks have dropped by more than half to three billion birr, while noting the company is at risk of paying out more than two billion birr in compensations and settlements for a number of ongoing lawsuits.
The report indicates more than 1.2 billion birr in receivables accumulated over the last two years from Djibouti and other clients. It also highlighted excess payments totaling nearly 12 million birr for greenery and shrub-mat projects tied to the GERD project.
Auditors stated they were unable to find documentation for EEP’s power sales in northern Ethiopia as a result of the northern war.
Most of EEP’s outstanding debt is owed to the state-owned Commercial Bank of Ethiopia (CBE). In 2021, the federal government formed the Liability Asset Management Corporation (LAMC) to soak up the debts of SOEs, with EEP accounting for the largest portion of the liabilities.
LAMC soaked up 450 billion birr in SOE debt over the last few years, only for the Ministry of Finance to recently step in and soak up the debt in turn in light of LAMC’s failure to settle accounts with CBE.
In December, lawmakers ratified a bill that will see the sale of 900 billion birr in government bonds, with the vast majority (845 billion birr) to be used to settle non-performing loans owed to CBE by various state-owned enterprises. The remaining 55 billion birr will be used to recapitalize the banking giant.
EEP accounts for 192 billion birr of the total owed to CBE. The Ethiopian Railway Corporation and Ethiopian Sugar Corporation owe 192 billion birr and 80 billion birr, respectively.
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