These funds, to be disbursed by the International Development Association (IDA), will help the authorities in Addis Ababa to reform their regulatory framework and gear it up for private investment and ownership.
The program will also foster structural transformation for growth by enhancing the private sector financing of infrastructure projects; build resilience and inclusiveness by increasing supply of electricity sustainably and help to manage the impact of climate change through diversification of energy sources.
The program could draw in $1.5 billion of funds from Independent Power Producers (IPP) who would look to build and potentially operate new generators.
Ethiopia, which generates most of its energy from hydropower, has other untapped renewable resources such as solar, wind and geothermal energy. This guarantee program will accelerate the diversification of its energy mix.
According to Rahul Kitchlu, senior energy specialist at the World Bank, REGREP signals the Government’s commitment to comprehensive power sector reforms and a private sector-led renewable energy development program that has the potential to be one of the largest in Sub-Saharan Africa.