Security for tenure of geothermal licenses needed in Ethiopia

Security for tenure of geothermal licenses needed in Ethiopia KenGen drilling rig on site, Tulu Moye, Ethiopia (source: EEP)
Alexander Richter 23 Sep 2021

For developers interested in investment into geothermal development and mining in Ethiopia, the tenure security of licenses granted remains a key challenge, so a seasoned mining investor.

In an interesting interview in Ethiopian Business Review, Ethiopian-born Canadian entrepreneur Nejib Ababiya provides some interesting insights into some of the challenges on investments into mining in Ethiopia, which references also geothermal.

Describing his investments and interest in mining projects in the country, he also describes some of the challenges on the push for geothermal development projects at Corbetti and Tulu Moye in Ethiopia.

With previously lacking support for geothermal, the change in government in 2017/ 2018 made a difference in finally agreeing to much needed power tariffs set for the projects. With the Prime Minister’s support the final electricity tariffs were signed in 2o20.

There remains though the challenge of tenure security. Describing this in the context of mining, he points to the legal system of the country being the major problem. The tenure security, or the actual lack thereof, “is not attractive for big foreign investors because the government can revoke [a] miner’s license if the investor does not meet initial understandings.” With a lack in infrastructure, risk remains high for mining projects and the government can revoke licenses way too easy. Other countries address this with license rent dues, fees and penalties and after a certain period, investors can renew the license.

He describes that the same challenges are faced for geothermal projects in the country.

In a statement connected to the signing of the PPA for Tulu Moye and Corbetti in late 2017, executives of both Corbetti Geothermal and Tulu Moye Gothermal commended Nejib Ababiya, who first initiated the Corbetti Geothermal project with his exploration company Rift Valley Geothermal in 2009. “Nejib is a visionary mining entrepreneur who first secured an exploration license from the Ministry of Mines and started work on the geothermal project,” they said.

Source: Ethiopian Business Review