KABUL: (MEP) The Asian Development Bank (ADB) is providing $275 million to Afghanistan for energy infrastructure.
The grant was signed between the Minister of Finance Eklil Ahmad Hakimi and ADB Country Director for Afghanistan Thomas Panella on Saturday to strengthen Afghanistan-Turkmenistan power interconnection which will improve energy supplies in country.
Earlier on 4 December 2015, ADB’s Board approved a $1.2 billion grant to reinforce ongoing energy projects in Afghanistan and to provide new funds to boost energy supply, improve power sector efficiency, and promote cross border trade in energy. The funds will be disbursed in multiple tranches with the first tranche of $275 million earmarked for release in 2015, comprising financed funds from the governments of Germany, the Netherlands and the United Kingdom. This first tranche includes constructing over 300 km of a 500 kilovolt (kV) transmission line connecting Sheberghan to Dashte Alwan, and over 60 km of a 220kV line from Andkhoy to Sheberghan. Support will also be given to prepare future projects, develop a business plan and tariff framework for the state power utility, Da Afghanistan Breshna Sherkat.
The remaining tranches are expected to follow through to 2025. Subsequent tranche assistance will focus on further transmission network upgrades, as well as support for domestic renewable energy projects and measures to boost both domestic gas production and imports via the Turkmenistan-Afghanistan-Pakistan-India gas pipeline. Assistance for building up the human resource capabilities of relevant agencies, and to introduce regulatory reforms, will also be provided.
“Insufficient energy supplies and a demand–supply imbalance constrain growth and income opportunities and create economic disparities that can fuel insecurity and discontent,” said Thomas Panella. “This assistance will support the government’s national energy supply program of more than $10 billion, which aims to expand power supply to boost economic growth and cut poverty;” confirmed the Finance Minister.
Afghanistan has seen energy demand grow by almost twice its economic growth rate from 2005 to 2012, and it taps around 80% of its total supplies from neighboring countries. The reliance on energy imports, small size of the domestic market, limitations in transmission and distribution networks, and governance and financing weaknesses leave energy security highly vulnerable. The national grid is also not synchronized with the systems of the four countries (Iran, Tajikistan, Turkmenistan, and Uzbekistan) which Afghanistan imports power from, resulting in higher costs and reduced reliability of supply.
ADB is Afghanistan’s largest development partner in the energy sector with cumulative grant assistance in energy sector to date of nearly $2.2 billion, all of which is on budget with the government. ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration.
