ADB Works with Afghan Government to Improve Energy Sector

MANILA, PHILIPPINES- Electricity will become available to a larger population of Afghanistan under a new Energy Sector Development Investment Program approved by the Asian Development Bank (ADB).

The Investment Program, financed through a multitranche finance facility worth $570 million, will develop and rehabilitate power and energy facilities as well as support institutional capacity building of the power utility.

Projects financed through the facility include rehabilitating the distribution systems of Kunduz to Baghlan, constructing a new 220-kV transmission line from Kunduz to Taloqan, constructing small- and mini-hydropower plants in Badakhshan and Bamyan provinces, and rehabilitating gas fields in Sheberghan.

Better system operation and maintenance, efficient management information system, improved planning and project management, and enhanced metering, billing, and collection will also result from the Investment Program. Capacity building and training for effective management and operation of the Afghan North East Power System are also part of the program.

Afghanistan has one of the lowest electrification ratios and energy consumption rates in the world. Although nearly 80% of energy consumption is in the form of electricity, only an estimated 9% of the population has access to intermittent public power supply.

The energy sector in Afghanistan faces tremendous challenges including limited supplies, transmission and distribution system gaps, high technical and commercial losses, poor rural energy coverage, and inadequate exploration of indigenous gas and hydropower resources. There are regulatory and legal shortcomings and gaps in financial and management operations as well.

“Afghanistan needs a more reliable power system,” said Juan Miranda, Director General of ADB’s Central and West Asia Department. “By tackling the infrastructure, regulatory, and institutional issues, larger and more reliable supplies will be available to people in rural and urban areas throughout the country.”

The Afghan Government is working with ADB to reverse the current situation. The improvement of the energy sector in order to reduce and then eliminate this binding constraint on economic growth has become a top priority in the Government’s development strategy.

The impact of the Program will be a larger and more cost-effective power supply to all customers, resulting in sustainable economic development. The outcome of the Program will be reliable generation, transmission, and distribution networks that are financially sustainable. This will be achieved partly through better power sector regulation and institutional effectiveness.

The Japan Fund for Poverty Reduction, through ADB, will co-finance $12 million for this Investment Program.

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