Djibouti government cuts electricity costs to bolster growth

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A recent 10% cut in power prices by Djibouti’s government may enhance growth in the Horn of Africa nation where electricity bills account for nearly a quarter of business expenses.

Most companies in the country cite electricity costs as the most significant constraint to doing business.

Authorities said the lowest price is set at 28 Djibouti francs per kilowatt and the highest at 55 Djibouti francs per kilowatt.

Djibouti currently has the capacity to produce 173 megawatts of power, according to the Energy Ministry.

Costs are high because the grid is reliant on diesel.

More than three quarters of electricity needed by the country is generated by thermal power plants.

The rest is imported from Ethiopia.

Under a programme known as Vision 2035, the $1.67 billion economy is targeting middle-income status within two decades.

The economy is forecast by the International Monetary Fund to expand to 7 percent in 2016, compared with 6.5 percent last year.

The growth plan calls for the expansion of its ports and shipping services to become the largest logistics hub on the continent.

 

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