Contract, set to expire in August, involves power generation, distribution; renewal comes ahead of Oct India-Africa summit

By Utpal Bhaskar |

New Delhi: Ethiopia may renew a key contract awarded to an Indian consortium led by state-owned Power Grid Corp. Ltd (PGCIL) for managing its power sector, a move that will help India affirm its role in Africa in the wake of growing Chinese influence.

The contract involves power generation, transmission and even distribution, and is set to expire in August. The renewal will come in the backdrop of India hosting the heads of states and governments of all 54 African countries for the third India-Africa Forum summit in October.

Some of the efficiencies brought in by the Indian consortium include improvement in transmission system, less blackouts, improving generation and increasing consumer base. Ethiopia has had one of the worst records in terms of access to electricity.

The Indian consortium comprising state-owned NHPC Ltd and BSES Rajdhani Power Ltd won the management contract for Ethiopian Electric Power Service Corp. (EEPCO) in 2013 through a competitive bid.

“Given the work done by the Indian consortium, the Ethiopian government wants to renew the contract,” said a person aware of the development, requesting anonymity.

While a PGCIL spokesperson said, “We are hopeful of getting this contract renewed”, a senior NHPC executive requesting anonymity confirmed the development. “A team from Ethiopia was here this month. The contract is expected to be renewed shortly,” the executive said.

Both India and China have extended line of credits to build infrastructure in energy-rich African countries as they seek access to oil and gas blocks to fuel their growing economies.

At the India-Africa Forum summit held in India in 2008, the government announced credit lines of about $5.4 billion by 2012 to African countries. In 2011, at Addis Ababa, India promised three-year credit line of $5 billion. Experts have welcomed the move.

“Africa is a continent of opportunity and wherever Indian entities do good work, it will have an overall multiplier effect not only for that entity but also for other Indian firms. It will be a confidence building measure for Indian companies to do business in Africa or elsewhere. In a large number of developing countries, providing a service contract is as important as setting up the facilities,” said Anil Razdan, former power secretary.

India had extended soft loans to the tune of $7 billion and had also extended 22,000 scholarships for African students. Bilateral trade has crossed $70 billion, while Indian investment in Africa totaled $32 billion.

“While China is way ahead of India in Africa; the only other contender other than China is India. There is a lot of gradual and silent change happening in Africa with India moving ahead. While initially there was a focus on Anglophone countries, we are now steadily moving across the continent,” said R.G. Harshe, visiting professor in the department of international relations at South Asian University.

For decades, India enjoyed strong ties with Africa, stemming from a shared colonial past and India’s support for independence movements in the continent. But in more recent years, Chinese economic diplomacy and aid put India-African ties in the shade. India found that its economic interests in Africa were dwarfed by China’s. Queries emailed to spokespersons of NHPC, BSES and EEPCO remained unanswered.

Indian firms such as state-owned trading firm MMTC Ltd and the Indian Farmers Fertilizer Cooperative (Iffco) have also been planning to join the growing number of Indian entities engaged in commercial farming in Africa. Cheap land and labor costs in Africa are attracting a number of Indian firms with interest in agriculture.

Source: Live Mint

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