Ethiopia and Italy have signed a US$277M soft loan agreement to finance works on the Gilgel Gibe II hydroelectric power project.

Ethiopian Minister of Finance Sufian Ahmed and Italian Ambassador to Ethiopia Guido La Tella signed the agreement as representatives of their respective governments.

The loan will finance a portion of the costs for civil works and part of the electro-mechanical and hydro-mechanical works of the Gilgel Gibe II, which is an extension of the Gilgel Gibe I hydro power station.

The agreement is part of the commitment the Italian government made when Ethiopian Prime Minister Meles Zenawi visited the European country.