Ethiopia and Djibouti on Friday signed a power interconnection project agreement, enabling Ethiopia to supply electric power to Djibouti.

Under the agreement signed in the Ethiopian capital Addis Ababa, the power interconnection project will cost over 535 million birr (61.64 million U.S. dollars) and is expected to be finalized in 2009.

Four major agreements will be signed in the course of the project, which includes the installation of a 283-km 230kv line from a distribution station in Ethiopia's eastern border town of Dire Dawa to the main distribution station in Djibouti.

The installation work, covering 201 km, would be carried out in the Ethiopian territory, while the remaining 82 km in Djibouti, said the agreement.

The interconnection project will enable remote towns in the two countries get access to hydro electric power services.

Aisha, Dewele, Harewa and Digala towns in Ethiopia as well as the Alisabeh town in Djibouti were included in the interconnection project.

The interconnection project will have a significant contribution in expanding trade relations between the two countries, according to the agreement.

Despite Ethiopia's huge hydroelectric potential, the exploitation rate is only about two percent and its power system is predominantly hydroelectric based and production cost is low.

In the case of Djibouti, the country primarily depends on oil- fired electricity generation. Consequently, the unit cost of power production is significantly higher than in Ethiopia.

Source: Xinhua