OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA 9th Year No. 35 ADDIS ABABA - 6 February , 2003 CONTENTS Proclamation No. 317/2003 Rural Electrification Fund Establishment Proclamation Page 2098 PROCLAMATION NO . 317/2003 A PROCLAMATION PROVIDED FOR THE ESTABLISHMENT OF THE RURAL ELECTRIFICATION FUND WHEREAS , it is necessary to provide electricity service to improve economic and social development of rural areas ; WHEREAS , it is necessary to promote private and through loan based finance and technical services ; WHEREAS , to achieve this it is important to establish a fund to serve as a source of finance ; NOW , THEREFORE , in accordance with Aricle 55 ( 1 ) of the Constitution of the Federal Republic of Ethiopia , it is hereby proclaimed as follows : PART ONE General Short Title This Proclamation may be cited as the “ Rural Electrification Establishment Proclamation No. 317/2003 . ” 2. Definitions Unless context otherwise requires , in this Proclamation : “ Agency ” means the Ethiopian Electricity Agency ; Unit Price The African Law Archive 2 ) “ Center ” means the Ethiopian Energy Development and . Promotion Center established by Proclamation No. 269/2002 ; 3 ) “ Corporation ” means the Ethiopian Electric Power Corporation ; 4 ) " Director ” means the Director General of the Ethiopian Development and Promotion Center ; 5 ) “ Executive Secretariat ” means the Ethiopian Rural Energy Development and Promotion Center ; 6 ) “ Off - grid ” means any electric supply not covered by the Ethiopian Electric Power Corporation Electric Supply System ; 7 ) “ Rural Area ” means any off - grid area ) 8 ) “ Government ” means the Government of the Federal Democratic Republic of Ethiopia ; 9 ) “ Ministry ” and “ Minister ” means the Ministry and Minister of Rural Development respectively ; 10 ) " Operator ” means a person who generates , dis tributes , and sells electricity in off - grid areas for commercial purpose ; 11 ) “ Operation ” means the activity of generating , distributing and selling in off - grid areas for com mercial purposes ; 12 ) “ Trust Agent ” means any financial institution that keeps the money collected from various sources of the fund as well as renders and collects loan upon the order of the Board ; 13 ) “ Region ” means a region designated by Article 47 ( 1 ) of the Constitution of the Federal Democratic Republic of Ethiopia and , for the purpose of this Proclamation , includes the Addis Ababa and Dire 14 ) “ Renewable Energy Source ” means an energy source of nature such as solar , wind , hydro , biomass and the like , which naturally recycles or recycled by man - induced processes useful to man . 15 ) “ Rural Electrification ” means all activities of generation , transmission , distribution and other related activities of electricity in off - grid areas ; 16 ) “ Rural Electrification Program ” means an activity direction approved by the Board that promotes electricity supply in rural areas with the support by the Fund and in respect to the objectives of the Fund ; 17 ) “ Rural Electrification Project ” means a single activity of designing , constructing , generating , transmitting , and performing other related ac tiveties to achieve the distribution of electricity in rural off - grid areas ; 18 ) “ Person " means a natural or juridical person ; 19 ) “ Uniformity Directive ” means a directive issued to maintain co - herence and co - ordination in the ac tivities of various units of the Fund and regional implementing offices . 3. Establishment The Rural Electrification Fund ( hereinafter “ the Fund ' ) is hereby established by this Proclamation as a permanent financial source to be deposited under Special Bank Account to be opened by the Ministry of Finance and Economic Development . The African Law Archive 4. Objectives of the Fund The Fund has the followig objectives : 1 ) To provide loan and technical services for Rural Electrification Projects carried out by private operators , cooperatives and local communities and more specifically for those projects operating on renewable energy sources ; 2 ) To encourage the utilization of electricity for production and social welfare purposes in rural areas . Sources of Fund The sources of the Fund shall be : 1 ) Budget allocated by the Government ; 2 ) Loans and grants from other Governments ; 3 ) Loans and grants from International Financial Ins titutions ; 4 ) . Grants from non - Governmental Organizations ; 5 ) Income from other different sources . PART TWO Federal Organs of the Fund 6. Organs of the Fund 1 ) At the Federal level , the Fund shall have : ( a ) Rural Electrification Board ( hereinafter “ the Board ” ) ( b ) an Executive Secretariat . 2 ) The Board shall be accountable to the Minister . 3 ) Regional Governments may establish their own Rural Electrification implementing Secretariats . 4 ) Regional Rural Electrification implementing Secretariats shall follow up and confirm whether the projects in their respective Regions are implemented in conformity with this Proclamation , and program mes and the directives issued by the Board . Members of the Board 1 ) The Board shall have members to be designated by the Government . 2 ) The term of office of any member of the Board shall be five years , provided , however , that he may be re assinged for additional terms of office by the organ , which nominates him . 3 ) The organ , which has assigned a member of the Board , may at any time and for any reason recall and replace him by another . 4 ) In case of reduction in the number of Board members due to death or resignation of a member or due to any other reason , the vacant post shall be filled within three months . 5 ) Any member of the Board shall not engage in any activity that may be directly or indirectly conflicting with his capacity as a Board member . When the member encounters a conflict of interest , he shall disclose such conflict to the Board and withdraw from all meetings of the Board at which such matters are discussed . Powers and Duties of the Board The Board shall have the following powers and duties : 1 ) Advise policy issues to the Ministry ; 2 ) Approve directives , working procedures , stan dards and project implementation guidelines that serve to implement rural electrification programs ; The African Law Archive 3 ) Approve transparent directives , criteria and ap propriate working procedures that enable the is suance of loans ; 4 ) Set - out compensation criteria to be approved by the Ministry , for those operators whose operations are taken over by the Corporation as specified in Article 16 ( 4 ) of this Proclamation ; 5 ) Receive , and examine reports and approve same when appropriate ; 6 ) Administer the Fund ; 7 ) Approve the nomination of a Trust Agent that shall be entrusted with the Fund to be secured from different sources , as presented to it by the Executive Secretariat ; 8 ) Issue detailed directives for the Trust Agent ; 9 ) Delegate , when it deems appropriate , its powers and duties to Regional Rural Electrification Secretariat Office ; 10 ) Engage in other activities that enhance rural elec trification ; 11 ) Maintain transparency to the public regarding its decisions , program and leadership ; 12 ) Ensure timely collection of the fund , by the relevant body , from the different sources specified in Article 5 of this Proclamation . 9. Meetings of the Board 1 ) The Board shall have meetings every three months . Extraordinary meetings may be held at any time when called by the chairperson . 2 ) There shall be a quorum where more than half of the members of the Board are present at a meeting . 3 ) Decisons of the Board shall be made valid if more than half of those present voted in favor . In the event of a tie , the chairperson shall have a casting vote . 4 ) The Board may adopt its own rule of procedures with regard to its meetings . Powers and Duties of the Executive Secretariat The Executive Secretariat shall have the following powers and duties : 1 ) prepare annual , and whenever required , report and submit it for the approval of the Board ; 2 ) review applications from rural electrification project sponsors and based on the criteria approved by the Board decide on the applications ; 3 ) set out criteria for the competitive selection of a Trust Agent and submits same to the Board for approval ; 4 ) prepare and submit to the Board , for approval , transparent directives and selection criteria and procedures to be used in the issuance of loans and identification of appropriate rural electrification project ; 5 ) facilitate and submit the co - ordination of the rural electrification program activities with other rural development activities ; 6 ) promote and support access to and productive use of electricity in the Rural area ; 7 ) cooperate with relevant bodies for capacity buil ding regarding Rural electrification project ins tallation , operation and Management ; The African Law Archive 8 ) prepare , maintain , issue and disseminate equip ment , devices and appliances that meet acceptable safety standards and economy for rural elec trification ; 9 ) study additional ways and sources of finance to be used for the Fund ; 10 ) compile and keep the working papers , reports and minutes of the Board , further it follows up and confirm the appropriate implementation of the direc tives the Board and its decisions ; 11 ) follow up and ensure the timely collection and deposit of the money from the sources specified in this Proclamation in the account of the Fund ; 12 ) perform such other activities related to its powers and duties ; 13 ) make recommendations to the Board regarding the most effective use of the Fund for the rural elec trification program as set out from time to time . 11. Powes and Duties of the Director The Director shall put into practice all the powers and duties of the Executive Secretariat as stated under Article 10 of this Proclamation , and shall be accountable to the Board with regard to the Fund . PART THREE Miscellaneous Provisions 12. Uniformity of Practice 1 ) With a view to ensuring uniformity of practice , the Operational Directive shall govern all operations and activities of the Fund . 2 ) The Board shall issue Operational Directive . 13. Responsibility of the Trust Agent 1 ) The Trust Agent shall be responsible for the adminis tration of income accrued from various sources of Fund provided in Article 5 of this Proclamation . 2 ) It shall disburse loans for rural electrification projects upon the order of the Board ; and shall collect reimbursement of loans . 3 ) It shall follow up periodic reimbursement of loans by borrowers . 4 ) It shall prepare financial document revealing the revenues and expenditure of the Fund ; and shall , upon directives to be issued by the Board , submit to the same . 5 ) It shall carry out other activities pertaining to its responsiblity . 14. Licensing of Rural Electrificaiton Projects The Agency shall apply relevant law to issue , renew terminate and revoke licenses for rural electrification porject . 15. Eligibility for Loan A person who is interested to engage in rural elec trification activities , shall be eligible for loan financing , provided , however , that he is a legal person and fulfils the criteria required for such financing . 16. Protection to Rural Electrification Operators 1 ) The Corporation shall issue or cause to be issued every 10 years and indicative national rural elec trification master plan showing the expansion of the national grid covering the whole country . The African Law Archive 2 ) The rural electrification master plan specified in Sub - Article ( 1 ) of this Article shall be made open to the public and due attention shall be given to it in implementing rural electrification project . 3 ) The Corporation and the Secretariat shall meet each year to delineate their plan in light of the annual indicative national rural electrification plans they shall submit to the Minister and the Agnecy . 4 ) In the event that power supply activity of a rural electrification operation is taken over by expansion of the Corporation's activity , the owner of the rural electrification operation shall be provided with prompt , fair and adequate compensation as set out in the criteria . 17. Protection of Rual Electrification Customers 1 ) The Operator shall not charge in excess of the electricity tariff pursuant to the law that causes the Agency to set out tariffs . 2 ) The Operator shall issue prior notice to the customer by an appropriate means where there shall be serivce interruption . 3 ) The Operator shall issue prior notice of three months to the Agency where there shall be electricity service termination . 4 ) Relevant provisions of laws pertaining to the rights of electricity customers shall be applicable for customers of rural electrification . The Executive Secretariat shall plan and advise that rural electrification be designed in view of future interconnec tion to the national grid . 19. Monitoring and Enforcement of Approved Projects The Executive Secretariat , may supervise the implemen tation of approved rural electrification projects and ensure that the projects are executed in accordance with the approved project proposal and take appropriate legal measure pursuant to the project contract . 20. Right of Way and Land Use Relevant provisions of the Electricity Proclamation No. 86/1997 dealing with Land Use and Right of Way shall apply to rural electrification projects . 21. Environmental Protection Rural Electrification Project plans , construction , operation and maintenance shall respect environmental protection laws . 22. Safety 1 ) Operators shall take the necessary precautions to ensure the safety of persons working in the plant , the public and avoid damage to property . Electricty Proclamation No. 86/1997 and Electricity Operation Regulations No. 49/1999 shall be applicable for rural electrification standards . 23. Books of Account The Executive Secretariat shall keep accurate and com plete books of account with supporting documents . The African Law Archive 24. Audit 1 ) Without prejudice to the powers given by law to the Auditor General , the Books of Acocunt of the Fund shall be audited annually by an external auditor to be appointed by the Board . 2 ) The Books of Account shall be audited in accordance with internationally acceptable principles and procedures , and the Audit report shall be submitted to the Board and the Ministry of Finance for comments . 3 ) Technical inspection shall annually be done on selected activities 25. Duty to Co - operate Any individual , Government organs and private or ganizations shall have the duty to cooperate in the execution of this Proclamation . 26. Power to Issue Regulations and Directives 1 ) The Council of Ministers may issue regulations necessary for the implementation of this Proclamation . 2 ) The Ministry or the Board , as may be determined by Regulations , may issue directives necessary for the implementation of this Proclamation 27. Inapplicable Laws No law shall , in so far as it is inconsistent with this Proclamation , have effect in respect of matters provided for by this Proclamation . 28. Effective Date This Proclamation shall enter into force as of the 6'day of February , 2003 . Done at Addis Ababa , this 6 " day of February , 2003 . PRESIDENT OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The African Law Archive