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According to the Bank’s website, Phase 2 of the MPA provides project based guarantee (Payment guarantees) to enable renewable energy generation through private sector participation (IPPs) in Ethiopia.
The PRIME MPA is designed as the principal vehicle for supporting the Government’s power-sector transformation vision. PRIME-1 supports priority investments in transmission and distribution, network rehabilitation, performance-based reforms for key utilities, and strengthening the electricity regulator, thereby improving system reliability and laying the foundation for private participation in the sector.
PRIME Phase 2 supports the Program Development Objective of enabling private sector participation in renewable energy generation. Phase 2 provides a dedicated IDA project based (payment) guarantee for solar Independent Power Producers (IPPs), structured in close coordination with IFC Transaction Advisory Services and MIGA political risk coverage. PRIME-2 will support mobilizing private investment into renewable generation, diversifying supply and enhancing power system resilience with clearer links to sector and utility reform, network investments and sector financial sustainability. The initial focus on competitively tendered solar IPPs at Gad 2 and Weranso, and potentially on a small set of follow-on projects, allows the Government and the World Bank Group to concentrate resources on a realistic, well-sequenced pipeline that can reach financial close within PRIME MPA’s timeframe, while building a track record for future renewable IPPs.
PRIME-2 is expected to provide up to US$10 million equivalent in IDA guarantee exposure overall, supporting two priority solar IPPs competitively tendered Gad 2 (125 MW) and Weranso (100 MW) solar projects under the Round 2 Competitive Solar Tenders in Ethiopia, and potentially adding follow-on wind IPPs, as they reach readiness. These transactions could mobilize 225 megawatts of new renewable capacity and a multiple of the IDA exposure in private investment and lending.
Environmental and Social Risk: Substantial
According to the Project Information Document (PID), at the concept stage (march 2026), projects were both considered Category B as they were expected to have limited adverse E&S risks that a few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures. The project’s key environmental risks are expected to relate to land disturbance potentially impacting biodiversity, including habitat fragmentation, creation of a barrier effect; construction impacts such as dust, noise, waste, sedimentation and erosion; hazardous and non-hazardous waste including e-waste and end of life disposal of solar panels; soil erosion, sedimentation, and OHS risks. Associated Facilities include the new transmission lines to be constructed by EEP to connect the projects to existing transmission lines. The potential risks associated with the transmission lines include land clearance and bird and bat collision risk. Key social risks relate to potential involuntary displacement due to land acquisition or land use and access restrictions; potential impacts on Indigenous Peoples; labour and working conditions during construction; community health and safety due to project-induced influx of workers during construction, including the risks of gender-based violence (GBV), sexual harassment, and conflict between workers and local communities; and potential impacts on cultural heritage. These risks are expected to be significantly higher during construction when the projects mobilize large workforces and activities involve increased levels of transportation of workers and materials. The procurement of solar panels has risks of forced labor in the supply chain. The supply chain risks will be reviewed as part of due diligence. According to the ESIA ToRs, there is potential for impact on Indigenous Peoples (i.e. Issa Clan (Gad-2) and Afar Communities and Sub-Clan (Weranso)). The extent of impact will be determined during due diligence.
IDA Guarantee: US$ 10.00 million
Total Project Cost: US$ 240.00 million
Ethiopian Electric Power is an Ethiopian electrical power industry and state-owned electric producer. It is engaged in development, investment, construction, operation, and management of power plants, power generation and power transmission. The company is a main key in the Ethiopian energy sector.
| Private Actor 1 | Private Actor 1 Role | Private Actor 1 Sector | Relation | Private Actor 2 | Private Actor 2 Role | Private Actor 2 Sector |
|---|---|---|---|---|---|---|
| - | - | - | - | Ethiopian Electric Power (EEP) | Client | - |
CONTACT POINT - World Bank
Task Team Leader: Janina Franco
Title: Senior Energy Specialist
Email: jfranco@worldbank.org
TTL Contact: Caroline Otonglo
Job Title: Senior Infrastructure Finance Specialist
Email: cotonglo@worldbank.org
ACCESS TO INFORMATION
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ACCOUNTABILITY MECHANISM OF THE WORLD BANK
The World Bank Inspection Panel is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by a World Bank-financed project. If you submit a complaint to the Inspection Panel, they may investigate to assess whether the World Bank is following its own policies and procedures for preventing harm to people or the environment. You can contact the Inspection Panel or submit a complaint by emailing ipanel@worldbank.org. Information on how to file a complaint and a complaint request form are available at: https://www.inspectionpanel.org/how-to-file-complaint
