The company that provides electricity in Ethiopia, Ethiopian Electric Power (EEP), has borrowed 300 Billion ETB from the Ethiopian Commercial Bank. They are having a hard time paying back the money because the bank charges interest on the loan.
The House of Representatives Standing Committee of Government Development Organizations recently looked at how Ethiopian Electric Power did over the past 9 months. They found that the company had a huge debt.
The CEO of Ethiopian Electric Power, Engineer Asheber Balcha, said that they owe 300 Billion ETB to the Commercial Bank of Ethiopia. He also said that the interest rate of the bank is making it harder for them to pay back the debt.
According to the National Bank of Ethiopia FSR (Financial Stability Report) April 2024, the top ten borrowers in Ethiopia collectively held about 23.5% of all loans and advances by June 2023. This percentage went up from 18.7% the previous year, showing an increasing concentration among these major borrowers. These borrowers owe 440 Billion ETB to private and government banks.
Seems like Ethiopian Electric Power is one of these top ten borrowers. If these big borrowers face issues repaying their loans, it could seriously affect the overall health of the banking sector.
To help Ethiopian Electric Power pay back its debt, the standing committee is considering changing the rules on how much they charge for electricity and finding ways to make more money internally. They are also considering improving EEP’s ability to sell energy to other countries and increasing internal revenue.
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