EEU Defends Tariff Increments, Says Power Subsidy Still High Despite Public Complaints

The Ethiopian Electric Utility (EEU) says it continues to supply electricity at one of the lowest tariff rates globally, despite growing public complaints over recent adjustments.

Presenting the utility’s six-month performance report to the media, EEU Chief Executive Officer Getu Geremew said households are charged about USD 0.005 per kilowatt-hour (kWh), a rate he described as the second lowest in the world and the lowest in Africa.

He noted that the utility purchases key infrastructure inputs such as copper and aluminum from the global market using foreign currency, while selling electricity domestically at a heavily subsidized price.

“The service is being delivered at a very low tariff and at a loss,” Getu said, emphasizing that current tariffs do not reflect actual production and operational costs.

Based on the agreement between the Ethiopian government and IMF, state subsidies including fuel, electricity, fertilizer and others will be gradually lifted to meet the reform’s overall plan of shifting all SOEs towards commercialization.

The IMF’s fourth review of Ethiopia’s progress under its extended credit facility states that the government has agreed to raise electricity tariff upwards to 0.4 percent of GDP by the end of the program in 2028.

To do this, the government is raising tariffs each quarter until 2028, with adjustments taking place regularly over the past two years.

“The quarterly electricity price increases that commenced in September 2024 have been implemented according to the four-year electricity tariff adjustment plan. Poor and vulnerable households will continue to be protected through maintaining low tariffs for very low consumption brackets and the VAT exemption introduced with the new VAT regime. The next step is to align the power utilities’ investment planning frameworks with internal financing and debt carrying capacity,” reads the IMF document.

According to the report presented by Getu this week, EEU connected nearly 267,000 new customers to the power grid during the first half of the fiscal year, generating 16.6 billion Birr, which accounts for 31.76 percent of the utility’s total revenue for the period.

However, Getu cited affordability as a major barrier to expanding access, particularly in rural areas, where many households are unable to cover the cost of a new electricity meter, estimated at around 13,000 Birr.

The utility generated a total of 52.26 billion Birr in the first six months of the year, falling short of its target by 3.6 percent.

On expenditures, the CEO reported that EEU utilized close to 32 billion Birr billion Birr for operations during the reporting period, while capital spending rose by 2.2 percent year-on-year to 20.8 billion Birr, driven primarily by large forex expenditures for project-related imports.

Getu highlighted progress in local manufacturing, noting a shift away from import dependence. He said that up to 80 percent of EEU’s transformer demand is now met locally, adding that accessories used on electricity poles are also being produced domestically.

Discussions are underway with Ethiopian Investment Holdings (EIH) and Ethiopian Electric Power (EEP) to expand local capacity in transmission, maintenance, and power generation, according to the CEO.

Addressing questions about customer complaints related to billing accuracy, Getu pointed to outdated postpaid and mechanical meters as a key challenge. He said EEU has begun replacing them with smart and semi-smart meters and plans to fully transition to prepaid meters, which he believes would significantly reduce billing disputes.

Despite ongoing expansion efforts, the report shows that only 5.5 million households currently have access to electricity nationwide, out of an estimated 25 million households, leaving about 19.5 million homes in the dark.