Djibouti’s economy has performed well in recent years: GDP growth reached 6.5 per cent in 2015/16, and two major infrastructure projects have been completed – the new container port at Doraleh, which opened in 2009, and the railway that connects Djibouti City and its ports to Ethiopia, which opened in 2017.

This progress has coincided with the country’s improved capacity to produce electricity. In 2007, the Government approached the Islamic Development Bank (IsDB) for assistance with a project to replace an old diesel generator at the Boulaos power plant in Djibouti City with a newer model, having recognized that sustaining economic growth would require a larger, more reliable source of power generation.

Since the generator began operating in October 2011, and a 20 kV distribution network to reach homes and businesses across the city was installed, power has been provided across the capital city, to the benefit of thousands of people.

Modern machinery for a fast-developing city

The Boulaos Power Plant project was part of the Government’s National Strategy for Development of the Energy Sector, and was part of its national development plans. The IsDB began supporting this in 2007, in line with its strategic focus on infrastructure development.

The old diesel-fired generator, which had been in operation since 1976, had a capacity of just 4 megawatts (MW); the new machine, the Boulaos II generator, has an operational capacity of 7.2 MW. Together with the generator, the project also supported the construction of a new substation and 18 distribution lines across the city and its suburbs., which have been instrumental in connecting close to 2,000 new customers with electricity each year.

While the project experienced some initial problems, such as a cost overrun of around 75 per cent (from €9.40 million at appraisal in 2006 to €16.50 million) – largely due to the unforeseen increase in the price of the equipment during 2007/08, compared to the estimates at appraisal – this shortfall was met by the OPEC Fund for International Development, which had agreed to support the project.

Since overcoming these early challenges, the new generator has enabled the Djibouti Electricity Company (EDD), which operates the plant, to achieve rapid progress across several indicators.

More customers, more trade

While the days are now longer at Riyad market in Djibouti City, which opened in 2013, this is a welcome change for the stallholders who trade here: the electric lights enable them to stay open much later than they could at the old city market, where they previously worked.

“We can now stay open until around 10 p.m. or 11 p.m.,” says Mme Rabia, who sells shoes and clothes near the market’s entrance. “In the old place, we had to rely on street lights but they weren’t very bright. If we couldn’t work [because it was too dark], I would make no money.”

Home comforts

Omar Youssouf, a retired policeman, has lived in Hayabley, a suburb of Djibouti City, since 1990. He has seen first-hand the positive changes that electricity has brought. “Before, security was low,” he says. “There were stray dogs in the street, holes

in the road; it wasn’t safe for children coming home from school after dark. “Now, street lights make it safer for everyone to move about after dark. Children don’t even need to stay late at school,” says Omar. “With houses having lighting, they can study at home.”

Reliability is everything

The increased electricity supply and extended distribution network mean that businesses all over the city are flourishing. In Hayabley, Mustapha Mohamad’s soldering and welding workshop has become far more profitable since he was connected to the main electricity supply in 2012.

“Before, it was terrible,” he recalls. “We had to use a small generator for electricity, but it needed re-fueling all the time and we had to turn it off when it overheated. People were always having to wait for us to fix their things.”

His new connection is much more reliable, and trade has improved so much that he recently was able to open a second premises nearby. “Ever since we got this connection, we have never once had to use the generator. The electricity is constant, I can rely on it”. It’s also cheaper; Mustapha pays DJF15,000 (US$84) every two months, much less than fuel for the generator would have cost.

Ports need power

Djibouti’s tow commercial ports drive much of the country’s economic activity. Strategically located on the Red Sea, they serve Djibouti, Ethiopia and other countries in North and East Africa.

The two ports consume vast amounts of electricity: the Port of Djibouti alone requires almost 10 MW, making it EDD’s largest customer; the new port that open at Doraleh in 2017 has increased demand even further. This expansion was only feasible because of the reliable supply of electricity: the ability to operate 24 hours a day is crucial in order to compete internationally.

A new role for the Boulaos power plant

The Boulaos project has helped hundreds of small businesses to develop since it was completed, while bringing comfort and security to many others in their homes. In 2016, however, use of the new generator declined for the first time.

“Djibouti also imports power from the Ethiopian Electric Utility, which is at times cheaper than generating it nationally,” explains Mr Abass Moussa, Head of Production Services at the plant. “The government has a responsibility to provide the cheapest source of power for its people.”

This reduction in use allowed the generator to undergo three months of maintenance, helping to extend its life. However, throughout 2016 the generator continued to provide an essential backup resource when the supply from Ethiopia dropped or increased in price – ensuring that Djibouti maintains its energy security and independence.

This is only a short-term measure: Djibouti will soon need additional capacity to meet its ever- growing demand. “While demand continues to rise, the generator will always be required,” says Mr Moussa.

Shifting the focus to rural electrification

The Boulaos Power Plant project has made a huge difference to people in the capital city, but the need for electricity remains high in rural areas, where access to electricity remains low – just 14 per cent in 2013. The next step for EDD will be to connect rural areas, where currently the few people that have electricity rely on small-scale renewable sources.

While extending the distribution network to rural areas will be challenging, given the unwelcoming landscape in much of the country, the generation capacity at the Boulaos power plant means a reliable electricity supply is already in place for this next step.

Success factors

High-quality equipment. The new generator is a high-quality model used across Africa, with a reliable operational performance, resulting in few problems since it was installed

Clear demand. EDD estimates that demand for electricity in Djibouti increases 5% per annum; the steadily rising number of new connections and regular payments from customers mean that costs are recovered

An effective project management unit. EDD is very experienced in realizing electricity projects and proved to be a highly efficient manager.