Ethiopia is on the verge of launching its first-ever natural gas production, with Prime Minister Abiy Ahmed announcing a September start date.
The announcement came during the 42nd regular session of the House of Peoples’ Representatives (HPR), where the Prime Minister responded to questions from parliamentarians concerning the government's 2017 budget.
Prime Minister Abiy explained that the move to initiate gas production fulfils a commitment made during the transitional government to establish domestic gas production facilities.
He highlighted previous challenges in the sector, indicating that initially, private companies showed a greater interest in securing licenses rather than actively engaging in production.
This approach, he stated, proved unsustainable, necessitating a change in strategy.
The government subsequently introduced new players into the sector, creating a more conducive environment for actual gas production.
The Prime Minister's statement strongly suggests that these efforts are now bearing fruit, leading to the anticipated September launch date. While specifics regarding the production capacity and market projections remain scarce, the announcement signifies a major step towards Ethiopia's energy independence.
The timing of the announcement: during a parliamentary session focused on budget review; emphasises the significance of domestic gas production for the nation's economic plans. The 2017 budget likely included provisions for supporting the gas sector’s development, illustrating the government's long-term commitment to energy diversification. The success of this initiative could significantly impact energy prices and availability, benefiting both industries and consumers.
The Prime Minister’s comments regarding the previous involvement of private companies suggest that the government may have implemented stricter regulations or incentives to ensure that license acquisition leads to tangible production and investment. This could involve measures such as performance-based contracts, stricter deadlines, or greater financial incentives for companies demonstrably committed to gas extraction and processing, according to the PM.
The shift away from a license-focused approach toward one that prioritises actual production indicates a potentially more effective regulatory framework for the energy sector. This could serve as a model for future investments in other areas of Ethiopia’s economy, encouraging real economic activity rather than solely speculative investments, he indicated.