Rural Electrification Projects where DBE is acting as a Trust Agent

1. Background

The Ethiopian government is implementing a rural based development strategy with the expectation of rapid and equitable development of all its peoples. This strategy is multidimensional and integrated where inputs; processes and outputs in the rural socio-economic are treated in totality.

The strategy recognizes that energy is one of the critical inputs for enhancing economic productivity and also building the human capital through the provision of critical social services including potable water, health and education. Expanding modern energy services, particularly electricity, in rural areas will accelerate the economic and social development process.

The government has formulated a national rural electrification strategy where both the public electricity service company (EEPCO) and the private and non-government sector will be involved in extending services to the rural population. Implementation of the public sector rural electrification program is already in progress and hundreds of rural towns will be the beneficiaries of this program in the coming five years.

The second private-led rural electrification strategy focuses on electrification of rural areas not to be covered by EEPCO's system expansion plan for the next ten years. This strategy will be implemented through a newly established Rural Electrification Fund (REF), the resources of which will be made available to viable projects and eligible private and non-government project promoters on a loan basis.

The Rural Electrification Fund is administered under the ministry of water and energy by Alternative Energy Technoogy Dissimination Director (AETD), which serves as the Rural Electrification Fund Administrator. A Rural Electrification Board (REB) directs the activities of the Directorate.

The Directorate will provide loan and technical assistance to eligible rural electrification Project Promoters. The Directorate will disburse, track and collect the loan finance to the Project Promoters through an intermediary finance institution or Trust Agent.

The Development Bank of Ethiopia (Trust Agent) is the financial intermediary between the Rural Electrification Fund and Project Promoters. The Development Bank of Ethiopia disburses funds during project implementation and later recovers loans in line with the loan agreement agreed upon by the Directorate and the Project Promoters.

Scope of Service for the Development Bank of Ethiopia (Trust Agent)

The Development Bank of Ethiopia, as the financial intermediary between the Directorate and the Project Promoters, has been providing the following services.



Evaluate the creditworthiness of Promoters Project


Prepare a disbursement and repayment schedule for each project


Release funds to Project Promoters according to disbursement schedule


Conduct independent supervision to ascertain that projects are implemented as per agreed upon schedule and cost


Recover loans according to the loan agreement


Conduct periodic loan repayment follow-up


Conduct periodic reviews of the financial performance of projects


Communicate regularly with Project Promoters regarding their financial status

 The technologies that are expected to be covered under the program include:


  • ·         Bio Gas Plants
  • ·         Small Scale Wind Energy
  • ·         Solar Home System
  • ·         Solar Lanterns
  • ·         West to energy
  • ·         Improved cook stoves