Energy & Infrastructure Development

Energy is the mother of all other infrastructure and growth.  Just 18 years ago, only 6 percent of the population had intermittent access to electricity. Today, 37 percent has regular to access to electricity and we have built our own national grid.
Afghanistan has launched a long-term program for electricity generation, transmission, and transit. Projects such as CASA-1000 and the Turkmenistan, Afghanistan, Pakistan (TAP) 500 KV power line could eventually carry up to 4000 MW of power from Turkmenistan to Pakistan. The TAPI natural gas pipeline reaching Afghanistan border was inaugurated and is making progress toward delivering gas from Turkmenistan to South Asia. The inauguration of the Salma multipurpose dam is a major achievement and could provide commercial and private electricity in western Afghanistan. Domestic power generation is on the rise, with a masterplan to produce 2,300 MW from internal sources within five years, including four large hydroelectric projects developed as public-private partnerships (PPPs) and 600MW from solar, wind, and natural gas, also through PPPs. The Afghanistan Infrastructure Trust Fund (AITF), supported by the governments of Belgium, Canada, Germany, the Netherlands, and the United States, along with private sector investment, is spurring the development of this sector. By the end of 2018, Afghanistan will be generating more electricity from new domestic sources than has been produced domestically during the previous 40 years.

Achieved (3/10): 30.0 Achieved (3/10): 30.0 %Partially achievedand ongoing (4/10):40.0 %Partially achievedand ongoing (4/10):40.0 %In process (2/10): 20.0 %In process (2/10): 20.0 %No Information(1/10): 10.0 %No Information(1/10): 10.0 %Partially achieved and ongoing (4/10)Percentage: 40.0

– Reduce transport costs to expand rural-urban trade
 PROGRESS: – Partially achieved and on-going.
  • Just 18 years ago, only 6 percent of the population had intermittent access to electricity. Today, 37 percent has regular to access to electricity and Afghanistan has built its own national grid.
  • The National Infrastructure Plan (2017-2021), a five-year blueprint for infrastructure development, was developed in 2016 and includes plans for developing roads for rural-urban connection.
  • The Ministry of Rural Rehabilitation and Development implemented nearly 8,000 rural transportation projects costing nearly $300 million, which increased the access of about 2.7 million rural residents to the city, health centers, social services, and the speed of transporting their agricultural products to their final destinations.
  • New airports have been opened in Nimruz, Bamiyan, and Farah, and several airport expansion projects were completed in Kunduz, Daykundi, Zabul, Kabul, Ghazni, Khost, and Faryab and Kandahar.
  • 63 road and railway construction projects have been completed and are now functioning.
  • The north-to-south corridor, east-to-west corridor and the Dushi-Bamiyan road were inaugurated.
  • A $74 million loan from the Islamic Development Bank to support phase 1 of the construction of the Kabul’s ring road started in Maidan Shahar (Maidan Wardak province) to end in Logar province. Kabul’s four lane ring road will extend 95km and all of Kabul’s neighboring provinces will be connected to this highway. Costs to fully complete the Ring Road were included in the 2017 budget. The Ring Road completion project has been rebid in smaller packages, which have enabled local firms to bid and be awarded contracts. An additional potential benefit is that it reduces the risk of implementation delays that had occurred with single large contracts. Various sections of the Ring Road have been completed and work continues. The last phase of the ring road, Machalgho Dam in Paktia province, will be completed this year in 2018.
  • Refurbishment of the Salang Tunnel, connecting Kabul to the northern provinces, is being implemented and is expected to be completed in 2018.
  • Road maintenance funds support were increased in the 2017 and 2018 budgets, and asset management systems were established.

– Complete the 500kv national grid and become energy self-sufficient within 15 years
 PROGRESS: – Partially achieved and on-going.
  • Building energy infrastructure and connecting provinces to the national grid is a main part of the National Infrastructure Program, which was launched in 2016.
  • Over the past four years, more than 1,100 projects worth $38 million have provided 13.1 MW electricity generated from green resources for 345, 000 villagers.
  • The national power utility, Da Afghanistan Breshna Sherkat (DABS) now operates without public subsidies, allowing DABS to build up reserves that are being used to electrify new regions of the country. In no other time in Afghan history have there been more provinces connected to the national grid. In last 15 months alone, 9 further provinces have been connected to the power grid. As a result, electricity costs dropped by a factor of 5 to 6 for these provinces. A total of 300 MW energy has been added to the national grid across the country over the past few years. Based on the current plans every provincial capital will be connected to the 220 kV grid in roughly two more years.
  • Numerous power distribution network projects, substations, cable extension projects have been implemented in Kabul, Kunduz, Baghlan, Kapisa, Badghis, Herat, Kandahar, Maidan Wardak, Nangarhar, and Ghazni.
  • Construction is underway of a new 220 kV substation in Bamyan province, expansion of 220/20 kV Doshi substation, creation of 20,000 new household connections in Bamyan and an 180-kilometer 220-kV transmission line from Doshi to Bamyan, which will help expand the grid to at least 8 additional provinces.
  • Further energy projects which are being implemented in 2018 include:
    • Turkmenistan Afghanistan Pakistan (TAP) 500 KW Transmission Line
    • A 500kV transmission line from Surkhan Darya, Uzbekistan, Puli-Khumri increasing our ability to export more electricity to Pakistan
    • A number of new provincial network expansion projects
    • 6 solar power projects have been approved
    • 4 joint power generation and irrigation projects

– Gain revenue from energy arbitrage between central and south Asia.
 PROGRESS: – In process.
  • Afghanistan will serve as the utility corridor connecting the energy-rich Central Asian nations to energy-poor South Asia. There are three projects that are currently under implementation, which Afghanistan will gain revenue from energy arbitrage between the two regions when complete:
    • The Turkmenistan-Afghanistan-Pakistan (TAP) transmission line, when complete, will initially move 2,000 MW of power from Turkmenistan to Pakistan via western Afghanistan, with the capacity to carry 4,000 MW. TAP’s estimated cost is $500 million.
    • The Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline will transport natural gas from Turkmenistan to Pakistan and India via Afghanistan. TAPI’s cost is $12.5 billion, with $7 billion to be sourced from the private sector. In February 2018, the construction of the pipeline reached Afghanistan at the border in Herat.
    • The Central Asia South Asia (CASA)1000 transmission line project will move over 1000 MW of electricity from Kyrgyzstan and Tajikistan to Pakistan via Afghanistan. CASA 1000 is a $1.17 billion project. The project’s operational phase was officially inaugurated in May 2016 in Tajikistan, and contracts signed in early 2018 in Kabul. Afghanistan will earn $45-50 million in transit fees annually and will attain a share of 300 MW for its domestic use. The World Bank, the United States, the United Kingdom, the European Investment Bank and Islamic Development Bank are funding the project.

– Encourage private sector infrastructure development
 PROGRESS: – Achieved.
  • The new Public Private Partnership (PPPs) Law was approved by Presidential Decree No. 103 in 2017. The National Policy on Public Private Partnerships was published by the Central Partnership Authority in 2017. The PPP Regulation, which is the implementation mechanism and explanation of the Law, is developed. Guidelines and operating manuals are being developed. PPP Units are established in some line Ministries. These laws, policies and regulations were enacted specifically to regulate PPPs and establish an enabling environment to attract PPP investments, particularly in the energy and infrastructure sector.
  • Afghanistan joined the Asian Infrastructure Investment Bank, allowing access to opportunities for financing or co-financing of infrastructure projects, such as energy and power, transport and telecommunication, rural infrastructure and agriculture development, and water and sanitation. Membership also offers opportunities to Afghan companies to take part in tenders for projects approved for financing.
  • The following is a partial list of entry sector PPPs currently at various stages of implementation:
    • 52 MW Mazar gas-to-power project with Ghazanfar Company ($75 million)
    • 40 MW Sheberghan gas-based power project in Jowzjan province with Bayat Energy to generate 192 MWs of electricity using natural gas reserves in Jawzjan province and creating 200 direct job opportunities ($250 million)
    • 30 MW Kandahar solar power with 77 Construction Company and Zularistan ($47.3 million)
    • The Indian company, Dynasty Oil & Gas, is building a 10 MW solar power plant in Kandahar. The $10 million project is the first of its capacity in Afghanistan.
    • The Mumtaz Group was contracted by the Urban Water Supply and Canalization Company to improve Kabul’s water supply. The $11 million project is the first of a three-phase project which will provide 10,000 families with clean water on tap.
    • In March 2018, the investment licensing contract for a $383 million National Fiber Optic Network project was signed.
    • Private investment has been attracted for a number of dam projects, namely Bagh Dara (240MW), Qalay Mami (445MW), Kajaki (151.5MW), Kajaki II (150MW), Bakhshabad (27MW), Surobi II (180MW), as well as 30 renewable energy (100MW), gas-to- power (52+192MW), and solar power (100MW).

– Where possible, provide cleared government-owned land to accelerate strategically important infrastructure
 PROGRESS: – Achieved.
  • Access to public land by national and international investors has improved due to a number of reforms in the land management sector, including the following:
    • The High Council on Land and Water was established and meets regularly to decide on the allocation of state land assets.
    • The Land Development Corporation, approved by the Cabinet on September 4, 2018, allowed the government to form joint ventures with private companies to develop state land.
    • The Land Management Law was revised and approved, which addresses issues such as land acquisition, distribution, maintenance, and management, as well as standardization and transparency processes. Chapters 11 and 12 of the law specifically discuss land encroachment and its penal codes. The new Penal Code (enacted in February 2018) criminalizes land encroachment and addresses the penalty for land encroachment and crimes committed under land encroachment. A new national land and resettlement/land allocation policy has been submitted to the Cabinet for approval.
    • The Afghanistan Land Authority (ARAZI) crafted a five-year land management program to develop a digital land ownership management system and land ownership rights system to protect customary ownership in Afghanistan. Transparent, prompt, and efficient leasing mechanisms are in place to prevent corruption. A full-scale cadastral survey and a comprehensive national land titling and registration program is underway. As of October 2018, a total of 240,000 hectares of state-owned land in 28 provinces of the country had been accounted for, and 60% of that land registered into the Land Information Bank with further registration on-going allowing the government to more effectively account for and utilize state-owned land.
    • Multiple properties have since been awarded to investors via public private partnership agreements.
    • The Ministry of Urban Development is now 9as of 2018) in charge of leasing land to private sector, though this responsibility used to be with the Land Authority (ARAZI). As of 2016, 164,000 jeribs of state land had been leased to the private sector, creating approximately 28,000 jobs.

– Consolidate, design, and adopt innovative procurement to reduce tender and completion times
 PROGRESS: –  Achieved.
  • The National Procurement Authority was established in October 2014 by Presidential decree as part of the Administrative Office of the President to implement the procurement reform process, and review, scrutinize, and approve national procurement contracts over a certain threshold.
  • As of August 2018, the NPA had saved 50 Billion Afghanis from corruption, blacklisted 139 corrupt companies from bidding, and approved 2,918 contracts. Progress can be tracked online here:
  • The 2016 Annual Performance Assessment report of the government’s 5 year Rolling Fiscal Improvement Plan project named the National Procurement Authority the top performer among 19 directorate generals and 63 teams for fiscal improvement.

– Train a cadre of infrastructure engineers and project managers
 PROGRESS: –  No information available.
– Increase domestic generation to 2,300 MW, using natural gas, renewable energy, and hydro-electricity
 PROGRESS: –  Partially achieved and on-going.
  • The Five-Year National Policy for Self-Sufficiency in Energy has been formulated, as well as three other policies on renewable energy, encouraging private investment and energy efficiency.
  • Forty-two water and hydropower projects are underway, and an investment worth $1 billion has been committed in this area. Combined, these dams can reserve over 2 billion cubic meters of water, which can irrigate 360,000 hectares of lands. Some of the larger dams include the Salma dam, in Herat, has a storage capacity of 611 million cubic meters of water, is completed, and generates 42 MW power. Shah-wa-Aroos dam in Kabul, Bakhshabad dam in Farah, and Kamal Khan dam in Nimruz are under construction, along with 29 other dam construction projects. The country’s Water Diplomacy policy has also been finalized.

– Develop domestic energy supplies and transmission, especially through renewables
 PROGRESS: –  In process.
  • As of May 2018, the Asian Development Bank (ADB) has been assessing the construction of major renewable energy projects in Afghanistan. ADB experts have said Afghanistan has a major capacity in terms of production of renewable energy and it will help the country to generate electricity from its domestic resources in the years to come. With the new law on private production of electricity, private power producers can operate and sell electricity to DABS or directly to customers. The law will create a competitive environment for generating power at lower cost while the country will be reducing its carbon footprint and expanding its use of renewable.

– Normalize the pricing and subsidy regime
 PROGRESS: –  Partially achieved and on-going.
  • The national power utility, Da Afghanistan Breshna Sherkat (DABS), now operates without public subsidies, allowing DABS to build up reserves that are being used to electrify new regions of the country.
  • With the new law on private production of electricity, private power producers can operate and sell electricity to DABS or directly to customers. The law creates a competitive environment for generating power at a lower cost.