GERD Completion: A Watershed Moment for Ethiopia – But What’s Really in Store for Taxpayers?
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Prime Minister Declares Victory, Questions Remain About Benefits
Ethiopian Prime Minister Abiy Ahmed’s announcement on July 4, 2025, that the Grand Ethiopian Renaissance Dam (GERD) is complete marks a historic milestone for the nation. Ethiopia’s prime minister said Thursday that a controversial power dam on the Nile is now complete, a major milestone for his country amid a dispute with Egypt over equitable sharing of the water. Yet as the dust settles on this $4 billion project, funded largely by Ethiopian taxpayers and shareholders, critical questions emerge about what ordinary Ethiopians will actually gain from their investment.
The Numbers Behind the National Dream
The GERD has reached a 98.9 percent completion rate, bringing Ethiopia closer to “Achieving its national dream after 14 years of work,” according to the Director of the Ethiopian Dam Project Coordination Office, Aregawi Berhe. The dam now stands as a 6,450 MW hydropower project nearing completion on the Blue Nile in Ethiopia, located about 30 km upstream of the border with Sudan. It will be the largest hydropower project in Africa.
However, the reality on the ground tells a more complex story. Initial installed capacity: 6,450 MW (16 turbines each turbine producing 400MW) • Revised capacity (under PM Abiy Ahmed): 13 turbines where 11 turbines generate 400MW while two turbines generate 375MW (turbines 9 and 10). Total energy approximately 5150MW
The reduction from 16 to 13 turbines represents a significant capacity cut of approximately 1,300 MW – power that could have served millions of Ethiopian households.
Will Taxpayers See Lower Electricity Bills?
This is perhaps the most pressing question for the millions of Ethiopians who contributed to the dam’s construction through taxes and bond purchases. The answer is complicated and not particularly encouraging for consumers.
Despite GERD’s completion, The Ethiopian Energy Utility’s announcement of a significant electricity tariff hike, effective from July 2024 to 2028, represents a transformative shift in the country’s energy policy. This means that even with GERD coming online, Ethiopians are facing higher, not lower, electricity costs.
The harsh reality is that electricity access remains limited in Ethiopia. While exact current figures vary, a significant portion of Ethiopia’s rural population still lacks access to electricity, meaning many taxpayers who funded GERD may not even benefit from its power generation.
The Export Priority Over Domestic Supply
Ethiopia’s strategy appears focused on electricity exports rather than domestic consumption. Ethiopia needs external consumers for the hydroelectric power it will generate, suggesting that much of GERD’s output will be sold to neighboring countries rather than used to electrify Ethiopian homes and businesses.
While this export strategy could generate foreign currency earnings, it raises questions about priorities when many Ethiopian communities remain without basic electricity access.
Egypt’s Rational Concerns
Egypt’s opposition to GERD isn’t merely political posturing but based on legitimate water security concerns. Egypt has long opposed the dam because of concerns it would deplete its share of Nile River waters. Egypt has referred to the dam, known as the Grand Ethiopian Renaissance Dam, as an existential threat because the Arab world’s most populous country relies almost entirely on the Nile to supply water for agriculture and its more than 100 million people.
The GERD’s reservoir has the capacity to hold 88 percent of the mean annual flow of the Nile River, measured at Egypt’s southern border city, Aswan. It is reasonable for Egypt and Sudan, both peoples and governments, to be concerned by this fact alone.
Egypt’s Cost-Benefit Analysis
From Egypt’s perspective, GERD represents a strategic threat to its water security and agricultural productivity. Egypt’s economy depends heavily on Nile-fed agriculture, and any reduction in water flow could have devastating economic consequences. The Egyptian government has consistently argued that the project violates international water sharing agreements and threatens the livelihoods of over 100 million Egyptians.
Egypt’s diplomatic strategy has focused on international mediation and pressure, including appeals to the UN Security Council and African Union. The economic cost of this diplomatic campaign, while substantial, pales compared to the potential economic losses from reduced water access.
The Corruption Question: A Shadow Over the Project
The GERD project has been marred by allegations of corruption and mismanagement throughout its construction. Several key issues have emerged:
Financial Irregularities
Over the years, the estimated construction cost of the dam has accumulated up to $4 billion. However, detailed accounting of these costs has been limited, with little transparency about how taxpayer money has been spent.
Design Changes and Cost Overruns
The design changed several times between the project’s inception and completion, leading to increased costs and delays. Each design change represented additional expenses that ultimately fell on Ethiopian taxpayers.
Reduced Capacity Controversy
The reduction from 16 to 13 turbines under Prime Minister Abiy Ahmed’s administration has raised questions about the reasoning behind this decision and whether it was related to cost-cutting measures or other factors.
Procurement Concerns
Of the total cost, 1 billion US dollars for turbines and electrical equipment was funded by the Exim Bank of China. The terms of these Chinese loans and the procurement process for major equipment have lacked transparency.
Commercial Plans: The Export Strategy
Ethiopia’s commercial strategy for GERD revolves around regional electricity exports. The country has signed preliminary agreements with several neighboring countries, including:
- Kenya: Through the Eastern Africa Power Pool
- Djibouti: Direct transmission line projects
- Sudan: Despite political tensions, technical discussions continue
However, the implementation of these commercial plans faces significant challenges:
Infrastructure Gaps
Ethiopia needs substantial investment in transmission infrastructure to effectively export power to neighboring countries. Many of these transmission lines are still under construction or in planning phases.
Regional Stability
Political instability in Sudan and tensions with Egypt complicate export arrangements. The ongoing conflict in Sudan has particularly affected transmission line projects.
Pricing Challenges
While Ethiopia hopes to earn foreign currency through electricity exports, regional pricing pressures and competition from other sources may limit profit margins.
The Delayed Completion Cost
Energy losses due to delayed completion (2018 vs. 2025) represent a significant opportunity cost for Ethiopia. The seven-year delay means Ethiopia has foregone substantial revenue that could have been generated from electricity sales.
The project was originally scheduled for completion in 2017, but various factors including technical challenges, financing issues, and political complications led to repeated delays. Each year of delay represented lost revenue that could have benefited the Ethiopian economy and potentially reduced the burden on taxpayers.
The Government’s Position: Balancing Nationalism and Pragmatism
While there are those who believe it should be disrupted before that moment, we reaffirm our commitment: the dam will be inaugurated, Prime Minister Abiy Ahmed declared, emphasizing Ethiopia’s determination to proceed despite regional opposition.
The government’s position reflects several key priorities:
- National Pride: GERD represents Ethiopia’s largest infrastructure project and a symbol of national capability
- Economic Development: The government argues that GERD will drive industrialization and economic growth
- Energy Security: Ethiopia aims to become energy self-sufficient and a regional power exporter
- Regional Leadership: The project positions Ethiopia as a major player in East African energy markets
What This Means for Ordinary Ethiopians
Despite the fanfare surrounding GERD’s completion, ordinary Ethiopians face several harsh realities:
Limited Direct Benefits
- Electricity tariffs are increasing, not decreasing
- Rural electrification remains limited
- Export priorities may limit domestic supply
Opportunity Costs
- $4 billion could have funded extensive rural electrification
- Health and education infrastructure needs remain unmet
- The focus on one mega-project may have diverted resources from other development priorities
Regional Risks
- Diplomatic tensions with Egypt and Sudan could escalate
- Regional instability may affect Ethiopia’s export markets
- Water management disputes could impact long-term sustainability
The Road Ahead: Challenges and Opportunities
As Ethiopia prepares for GERD’s official inauguration in September 2025, several critical challenges remain:
Technical Challenges
- Ensuring optimal turbine performance with reduced capacity
- Managing reservoir operations during drought periods
- Maintaining infrastructure over its expected 50-year lifespan
Diplomatic Challenges
Negotiations between Ethiopia and Egypt over the years have not led to a pact, and questions remain about how much water Ethiopia will release downstream if a drought occurs.
Economic Challenges
- Recovering the $4 billion investment through electricity sales
- Balancing export revenues with domestic energy needs
- Managing debt service on Chinese loans
Conclusion: A Pyrrhic Victory?
The completion of GERD represents a significant engineering achievement and a source of national pride for Ethiopia. However, the question of whether ordinary Ethiopians will benefit from their investment remains unanswered.
With electricity tariffs rising rather than falling, limited rural electrification, and a focus on exports over domestic consumption, many taxpayers who funded this project may find themselves asking: “What’s in it for us?”
The government’s challenge now is to ensure that GERD’s benefits extend beyond national prestige to tangible improvements in the lives of ordinary Ethiopians. This will require transparent management, effective regional diplomacy, and a commitment to using GERD’s power generation to address Ethiopia’s domestic energy needs.
As Prime Minister Abiy Ahmed noted, “We believe in shared progress, shared energy, and shared water. Prosperity for one should mean prosperity for all.” Whether this vision becomes reality for Ethiopian taxpayers will depend on how effectively the government manages GERD’s operations in the coming years.
The completion of GERD marks not an end, but a beginning – the beginning of the real test of whether this massive investment will truly serve the Ethiopian people who made it possible.
This analysis is based on publicly available information and official statements. The Ethiopian Tribune continues to monitor developments around GERD and will report on its actual impact on Ethiopian households and the broader economy.
