He is a member of the IUCN LAW COMMISSION and a part time lecturer on Natural Resources Development and Environment Law at the Civil Service College. He is Regional Environment Specialist for East Africa based in Addis Ababa, Ethiopia.

Preface

This study on the Energy Laws of Ethiopia covers all relevant legislations including recent amendments and some drafts affecting the energy sector of the country.

1. Introduction

1.  Ethiopia is a Federal Democratic Republic (FDRE) since 1991 with nine Regional States and two Municipality Administrations. It has a two-tier government structure - Federal and Regional. The Federal Government is mandated with defense, foreign affairs, immigration, currency and criminal matters. The Regional Council on the other hand is mandated with political, economic, and social affairs regarding the particular Regional State. Any trans-Regional issue, which is related to Regional States mandate is handled by the Federal Government, which consists of a House of Federation, House of Peoples' Representatives, executive (a cabinet of ministers) and judiciary.

2.  With an estimated population of 60 million and 113 million hectares of landmass, Ethiopia is one of the Horn of African countries located between 33⁰ and 48⁰East longitudes and between 3⁰ and 18⁰North latitude. It has a diverse climatic condition due to the contrasting altitude, which ranges from the highest point of 4650 meters above sea level at Ras Dashen Mountain to 420 meters below sea level at Dallol Depression.

3.  From the Axumite civilization, Queen of Sheba and Solomonic Line of Judah, which emperors of Ethiopia claim to have descended and ruled for centuries a population with diversified culture, over 80 spoken languages (Amharic is the official working language) and two major religious groups, namely; Christianity and Islam are major cultural and religious features of Ethiopia.

4.  In economic parlance, Ethiopia is one of the poorest countries in the world, with a per capita GDP of only $125, and social conditions that are among the worst in Africa. 85 per cent of its population lives in the rural areas. As a result, the economy is also highly agriculture based with few industrial activities in the 15 percent urban centers.

5.  Although the population is highly agriculture dependent, more than half suffers from chronic food insecurity. Unemployment is widespread and over 30 per cent of the population have incomes below the absolute poverty level. Ethiopia's economic and social woes are deeply rooted in rapid population growth (3.4 percent per annum), shortage of arable land, rapid environmental degradation, inadequate and crumbling infrastructure, and years of under investment in human- resources, especially before 1991.

6.  With a view to bring a sustainable economic development under a Federal Democratic Political system, the Government of Ethiopia since the early 1990's has been engaged in the process of both political and economic reforms.

7.  Therefore, the overriding objective of the Federal Government of Ethiopia is to attain relatively fast, broad-based and more equitable economic growth with macroeconomic stability. A rapid increase in agricultural output-sparked by productivity gains and rural development programs to upgrade infrastructure and social services-is expected to be the cornerstone of economic growth and poverty alleviation. At the same time, agricultural development will provide the springboard for higher export earnings of farm commodities and agro-industrial goods. An additional and equally important objective is relative stability of prices to help protect the poor for the ills of inflation and encourage saving and long –term investment.

8.  To change and increase the low level of energy consumption the government has recently decided to remove restrictions on private sector participation in the energy sector.

Energy

9.  In Ethiopia, like in most developing African countries, the energy sector is dominated by traditional energy. Modern energy, electricity and petroleum and infrastructure for energy supply exist mainly in urban areas. For this reason, majority of the population living in rural areas have little access to modern energy.

10.  Adequate and reliable supply of energy is crucial for social and economic development of any country.  Easy access to affordable energy is often observed to be associated with the stage of economic development.  Industrial countries that have already achieved high living standards have recorded high per capital energy consumption, while least developed countries (LDCs) like Ethiopia are identified as low per capital energy consuming countries. For example, according to the 1997 World Development Report (World Bank, 1997), the per capita commercial energy for Ethiopia in 1994 was 22 Kilograms (Kg), while for low income economies it was on the average 369 Kg and for high income economies it was 5066 Kg.

11.  Energy being the basic element for economic development requires due consideration to serve the purpose. Efficient utilization of available energy and improving the supply in quality and quantity is a key in the development process. The relation between energy and economic growth in Ethiopia has become an emotive issue. If economic activity is to be a measure of welfare and continued growth, the implications of future energy development becomes a central point to the debate about energy polices.

12.  Ethiopia's energy endowment is considerable with abundant hydropower potential, solar, geothermal, wind power as well as fossil fuels especially natural gas and coal. However, only a very small portion of this potential is developed owing to lack of financial resources, skilled manpower and more importantly appropriate policy and planning.

13.  Ethiopia, one of the least developed nations in the world, has proved the close relation that exists between low level of energy consumption and under-development by registering low per capita energy consumption.  The energy sector in Ethiopia is classified in two big blocks: traditional and modern energy.  The largest proportion of the population is heavily dependent on traditional sources of energy and very few people have access to modern energy like electricity.  Wood and biomass account about 93 percent of the total energy consumption of the country (ESMAP-Energy Sector Management Assistance Programme-Ethiopia-Energy Assessment Report No. 179/96.)

14.  Although no fuel wood crisis in the sense of absolute shortage has materialized, traditional biomass fuels have become more difficult and time consuming to gather in rural areas and more expensive to buy in urban centers. The structure of energy consumption and the rapid growth of the population are often sited as the major causes of very fast deforestation process, which is the source of the recurrent drought, famine and general environmental degradation. Consequently, fuel wood and other biomass fuels have already been scarce and unaffordable fuels even for most of the rural population.

15.  The modern energy sector, comprised of petroleum and electricity, is very limited and very few proportion of the population in Ethiopia have access to modern fuels. The per capita modern energy consumption is about 0.02 tones of oil equivalent (toe), which is one of the lowest in the world.  The per capita commercial energy consumption is extremely low even compared with the African standard.  The average for Africa was 0.28 toe. (ESMAP, 1996).

16.  Electricity and petroleum fuels are crucial for enhancing the development of modern agriculture, industry and commerce. Any development endeavor in the country has to be backed with the supply of efficient and affordable energy. Despite the problems mentioned regarding energy development, however, there is a diversity of energy resource potential in Ethiopia that has not yet been exploited.

17.  Hence, devising appropriate mechanism for the development of energy sector in Ethiopia could solve a number of interrelated basic problems of the country such as economic, environment and social problems.