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$1.2b ADB grant to support Afghanistan’s energy security

$1.2b ADB grant to support Afghanistan’s energy security

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On
Dec 07, 2015 - 19:22

KABULinfo-icon (Pajhwok): The Asian Development Bank (ADB) on Monday approved $1.2 billion grants to reinforce ongoing energy projects in Afghanistaninfo-icon, provide new funds to boost supply and promote cross-border trade in energy. 

The grants include $750 million from ADB’s Special Funds resources, and up to $450 million from the Afghanistan Infrastructure Trust Fund, which will be administered by the Manila-based bank.

In a statement, ADB said the funds would be disbursed in multiple tranches, with the first amounting to $275 million earmarked for release this year. The remaining tranches will follow through to 2025.

Afghanistan’s energy demand has grown by almost twice its economic growth rate from 2005 to 2012, and it taps around 80% of its total supplies from neighbouring 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.

In its first tranche, ADB will fund the last missing links for an expanded Turkmenistan-Afghanistan power interconnection, allowing the country to increase electricity imports for year-round supplies.  

This will include constructing over 300 km of a 500 kilovolt transmission line connecting Shiberghan to Dasht-i-Alwan, and over 60 km of a 220kV line from Andkhoy to Shiberghan.

ADB will also provide support for developing a business plan and tariff framework for the state power utility, Da Afghanistan Breshna Sherkat.

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-Pakistaninfo-icon-India gas pipeline.  

Senior Energy Specialist in ADB’s Central and West Asia Department Asad Aleem said: “Insufficient energy supplies and a demand–supply imbalance constrain growth and income opportunities and create economic disparities that can fuel ethnic and regional tensions.

“This assistance will support the government’s national energy supply programme of more than $10 billion, which aims to expand power supply to boost economic growth and cut poverty,” he added.

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 of nearly $2.2 billion, all of which is on budget with the government.

The programme is supporting targets of the government’s energy supply programme, which include increasing the country’s electrification rate from 30% to 83%, and lifting the share of domestic generation from 20% to 67% by 2030. 

pr/mud

 

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