Ethiopia has signed an agreement to build two geothermal power plants at a combined cost of $4-billion, to be run by the country's first privately-owned utility.

The Corbetti and Tulu Moye plants will produce a combined 1 000 MW of power upon completion in eight years time in the volcanically-active Rift Valley south of the capital Addis Ababa.

Ethiopia is eager to meet rising energy demand from its industries as well as becoming the continent's biggest exporter of energy.

"No doubt the success of this effort will have a significant impact in the country's future economic well-being," said State-run Ethiopian Electric Power (EEP) CEO State-run Ethiopian Electric Power (EEP)Azeb Asnake.

The project's equity investors include the Paris-based asset manager Meridiam, as well as the Africa Renewable Energy Fund and InfraCo Africa - funds that focus on infrastructure.

As Ethiopia's first privately-owned utility, the project will be operated by the developers for a period of 25 years.

In an economy traditionally dominated by state spending, the government has suggested that the nascent sector could be a model for increased private investment.

"Going forward, the government recognises the added value to be gained by working in partnership with the private sector, specifically in sharing with it the burden of investment for large-scale power generation," said Water, Irrigation and Electricity Minister Seleshi Bekele.

Under a new 2015 to 2020 development plan, Addis Ababa wants to raise power generation to 17 346 MW from a current capacity of just over 4 300 MW from hydropower, wind and geothermal sources.

It has an array of projects under construction, including the $4.1-billion Grand Renaissance Dam along its share of the Nile river that will churn out 6 000 MW at full capacity upon completion within the next ten years.

But the country's power ambitions have also caused disputes. Egypt – solely dependent on the Nile – is concerned that the Renaissance Dam will reduce the river's flow. Both countries are currently at odds over the project's technical details.