The $570-million MFF1 to assist the government in developing the energy infrastructure, improving operational efficiency and increase electrification rate, was approved in 2008. MFF1 is nearing completion with all projects under implementation. While MFF1 faced start-up challenges, progress has improved with all contracts under tranches 1, 2 and 3 either awarded or to be awarded by Q4 2013. Contracts under tranche 4 are expected to be awarded in Q1 2014. President's approval for the final tranche 5 will be requested in October 2013. Compliance with grant covenants and undertakings is satisfactory.
The impact is that Afghanistan will be a energy secured while delivering quality electricity supply to the majority of the population. The outcome will be a reliable year-round electricity supply available to a majority of the population. The physical outputs will be (i) a 500- kilovolt (kV) connection with Turkmenistan; (ii) a 220-kV connection of North East Power System and South East Power System, and priority distribution expansions; (iii) rehabilitation of Sheberghan gas wells; and (iv) renewable energy supply to off-grid customers. A tentative output is a thermal power plant. The non-physical outputs will be DABS' improved capacity building in planning, organizational strengthening, and utility commercialization; and improved capacity building of MEW and MOMP in regulatory functions and preparation of feasibility studies for the Baghdara and Sarobi hydropower plants.
|Project Rationale and Linkage to Country/Regional Strategy
The proposed Afghanistan energy sector multitranche financing facility (MFF) will finance an investment program in the power and gas subsectors. In the power subsector, generation (conventional and renewable), transmission (domestic and regional), and distribution (on and off grid) projects are proposed; while well rehabilitations are proposed in the gas subsector. A project preparatory technical assistance (TA) will conduct due diligence for the MFF and tranche 1. The investment program will increase electricity supply and access to electricity and increase gas supply for electricity production and industrial uses.
Strategic Context. Afghanistan is a net energy and electricity importer. While renewable energy and fossil fuel resources exist, these are still to be developed. Electricity is a growing portion of total energy consumption with connection rates having increased from 7% in 2003 to 28% in 2011 when demand was 670 megawatts (MW) and electric consumption was 3,400 gigawatt-hours (GWh). Domestic generation capacity is 470 MW 250 MW hydropower and 220-MW thermal power with energy production (mainly hydropower) in the range 800 1,000 GWh per year since 2000. Growing demand has been met by electricity imports which represented 73% of total supply in 2011. By 2032, demand is forecast to reach 3,500 MW and electric consumption at 18,400 GWh. Meeting this demand requires all viable import and domestic sources to be developed.
Today, Afghanistan imports electricity from Iran, Tajikistan, Turkmenistan, and Uzbekistan. Afghanistan electricity system is not synchronized with any neighboring system which, apart from Iran and Turkmenistan, are themselves not synchronized with each other. This poses operational challenges for Afghanistan who is required to split its system into 10 electric islands thereby increasing costs and reducing reliability of supply. Development of a unified Afghanistan grid is planned with asynchronous interconnection with neighboring countries to be achieved through high-voltage direct-current back-to-back convertor stations. A unified grid will allow Afghanistan to benefit from being an electricity transit country between energy-rich Central Asia and energy-poor South Asia, and be an anchor country of the regional Turkmenistan-Uzbekistan-Tajikistan-Afghanistan-Pakistan (TUTAP) interconnection concept.
Investment Program. Afghanistan Power Sector Master Plan (the Master Plan) identifies the need to construct new gas, coal and hydro power plants and sets out a program of investments. Gas and coal power plants are being developed by the private sector and development partners are assisting in rehabilitating existing and constructing new hydro plants. While domestic projects will eventually reduce dependency on imports, in the medium term, they will not meet forecasted demand meaning high reliance on imports will continue. Afghanistan's strategy is to prioritize imports while supporting development of domestic generation.
500-kV connection with Turkmenistan and associated 270-kV expansion
220-kV connection of NEPS and SEPS, and associated distribution expansion
Rehabilitation of Sheberghan gas wells and renewable energy supply to off-grid customers
New thermal power plant (tentative)
Improved capacity of DABS in planning, organizational strengthening, and utility commercialization; and of MEW and MOMP in regulatory functions.
Hydropower plant feasibility studies