Ethiopia on track to complete first mega-dams by 2015-minister

Mega dam along Nile River to generate 6,000 MW

- Plans to spend over $12 bln and produce 40,000 MW by 2035\

- Hopes to become Africa's biggest power exporter

By Aaron Maasho

ADDIS ABABA, Nov 12 (Reuters) - Ethiopia's energy minister played down concerns on Monday about how it would finance the first of an array of mega-dams due to revolutionise east African power markets, saying it was on track to have three plants on line by 2015.

The Horn of Africa country has laid out plans to invest more than $12 billion in harnassing the rivers that run through its rugged highlands to generate more than 40,000 MW of hydropower by 2035, making it Africa's leading power exporter.

Energy chief Alemayehu Tegenu said the plan's centerpiece - the $4.1 billion-Grand Renaissance Dam along the Nile River in the western Benishangul-Gumuz region - was on course to be completed on time in 2015.

Two other smaller dams should also come on line by that point, he said, generating a total of more than 8,000 megawatts of power at full capacity.

"Everything is going according to plan. It (the Grand Renaissance) is on good status," Tegenu told Reuters in an interview on the sidelines of an energy conference in Addis Ababa.

"So far we have achieved 13 percent of the total construction."

The dam - Africa's largest - will generate 6,000 MW at full capacity.

It is just the latest of a series of ambitious infrastructure projects launched by Ethiopia following years of solid economic growth. The government says funding will come from both domestic and foreign sources.

Worried about the state's ability to raise the billions needed, however, some experts have called on Addis Ababa to sell off state firms and assets they say could rake in a potential $9.6 billion.

Alemayehu said the country has raised more than 5 billion birr ($277.1 million) for the construction of its Grand Renaissance Dam to date, the vast majority of it from sales of government bonds.

"This dam may not be constructed only by selling bonds, but the (power) utility can finance some part of the financing," he said.

"The option we have designed is financing by the people of Ethiopia, the utility and the government."

The other major near-term project the government hopes to complete is the Gilgel Gibe III dam along its southern Omo river, set to generate 1,870 MW from the end of 2013 at a cost of $1.8 billion.

Alemayehu said over 65 percent of construction on that dam had been completed.

Another 254 MW project is being built in the Oromiya region and is due to be ready in two years. Together the three projects will churn out 8,124 MW, compared to Ethiopia's existing capacity of around 2,167 MW of hydro and wind power.

EXPORT TO NEIGHBOURS

Egypt fears that the Nile dams will reduce the flow of the river's waters further downstream and Addis Ababa has long complained that Cairo was pressuring donor countries and international lenders to withhold funding.

An international panel of experts is set to announce its findings on the impact of Ethiopia's Grand Renaissance Dam on the Nile's flow in May 2013.

Analysts suspect that any shortfall in funding of such projects could draw further Chinese capital to Africa, where Beijing has begun to accumulate natural resources and volumes of trade.

Critics have already slammed China's willingness to lend money for Gilgel Gibe III's turbines over concerns the dam would create serious environmental damage.

Addis Ababa is already providing more than 50 MW to Djibouti, while Kenya's border town of Moyale is importing a small amount.

"We have started exports to Sudan, as well as the border town of Moyale. We will gradually expand to Sololo (in eastern Kenya) and plans for Somaliland are also going well," Alemayehu said.

Newly-independent South Sudan has also signed a memorandum of understanding to construct a transmission interconnector to import power, he added.

Another project - a 3,000 km 500 kV line linking Ethiopia with Sudan and Egypt, is also in the pipeline, while the construction of a 1,300 km 500 kV transmission interconnector with Kenya will start soon.

"We have secured the finances (for the project linking with Kenya) and the design has been complete. For construction the tender has also been floated," Alemayehu told Reuters.

"The project is expected to start in less than two months." (Editing by Yara Bayoumy and Patrick Graham)