Afghanistan : Energy Sector Development Investment Program - Tranche 3

Project Name

Energy Sector Development Investment Program - Tranche 3

Project Number

42094-042

Country / Economy

• Afghanistan

Project Status

Active

Project Type / Modality of Assistance

• Grant

Source of Funding / Amount

Grant 0280-AFG: Energy Sector Development Investment Program - Tranche 3

Source	Amount
Asian Development Fund	US$ 43.00 million

Grant 0281-AFG: Energy Sector Development Investment Program - Tranche 3

Source	Amount
Energy Sector Dev. Investment Program	US$ 20.00 million

Grant 0282-AFG: Energy Sector Development Investment Program - Tranche 3

Source	Amount
Energy Sector Dev. Investment Program	US$ 12.40 million

Strategic Agendas

• Inclusive economic growth

Drivers of Change

• Gender Equity and Mainstreaming
• Partnerships

Sector / Subsector

• Energy / Electricity transmission and distribution - Renewable energy generation - small hydro

Gender

Some gender elements

Description

The government requested ADB to finance the Gereshk Electricity Services Improvement Project. Gereshk, with a population of approximately 70,000, is a district economic center in Helmand province in southern Afghanistan, where the insurgency has been significantly active. Gereshk is strategically located on the national highway (Corridor 1) that connects Herat to Kandahar. With the stability being regained, the government would like to restore the licit livelihood of the town residents and functions of the town as the district economic center. However, the rehabilitation and expansion of the existing hydropower plant are needed to make more power available in Gereshk. Upgrading and expansion of electricity distribution infrastructure and end-user connections are likewise necessary to increase access to electricity. In addition, the enhancement of DABS' capacity is required to implement the project and improve the operation and maintenance of the system.

The impact of the project will be a better power supply in areas south of Kabul. The project will increase access to a more reliable power supply in Gereshk. The project outcome will be increased hydropower generation capacity in Gereshk.

The project will rehabilitate and upgrade the Gereshk power supply system. It will increase household connections from 2,500 to 5,000, covering 50,000 people residing within the 6 km radius of the town center. With increased installed generation capacity and an upgraded distribution system, the project will improve access to more stable electricity.

The project will include the following components to improve and expand the Gereshk distribution system and strengthen DABS's operational capacity. The physical component of the project will include (i) rehabilitation and upgrading of the hydropower plant with 4.8 MW installation capacity; (ii) replacement of 10 km of 3.3 kV distribution lines to 20 kV line; and (iii) replacement and new installation of end-user meters. The non-physical component will enhance DABS project implementation and operation and maintenance capacities.

Project Rationale and Linkage to Country/Regional Strategy

Access to a reliable power supply is severely limited in Gereshk. The estimated population of Gereshk District is 70,000, out of which 50,000 people, or 5,000 households, reside within a 6 km radius of the town center. Presently, only about 2,500 households have connections to the local electricity distribution system, while 5,000 households claim to await new connections. Some have their own diesel generators, which are too expensive for the mass and the poor. Even for those connected to the electricity network, chronic load shedding during both the morning and evening peak hours means that most receive only a few hours of power supply a day, and the existing infrastructure does not allow continued access to power. Power shortage is a critical impediment in promoting licit private sector development, ensuring quality public services, and improving living conditions in Gereshk.

The limited access to reliable power is attributed to the power infrastructure deficiency. Gereshk presently relies on an island electrical grid with power generated predominantly by an old and damaged run-of-river type hydropower plant. The hydropower plant has an installed capacity of 3.2 MW but operates sub-optimally with 2 MW from two generating sets, although there is space available for a third unit. The peak demand is estimated at 8 MW. The distribution network consists of a combination of 40 kV and 3.3 kV system, which is not efficient and not capable of distributing any increase in the generated output. Further, the distribution network is in poor repair, with problems with support structures, transformers, substations, and low-voltage customer connections. DABS does not have the capacity or resources to rehabilitate the infrastructure on its own.

Immediate improvement of the electricity services in Gereshk is critical not just for the people in Gereshk but also for the Government and the international community. Gereshk is located in the heart of Helmand where an insurgency has been active. The Government needs the support of the community to bring peace and stability to the region. But people in Gereshk are generally skeptical of the Government, considering it has done little for the community in the past. Winning the hearts and minds of people in Gereshk is one of the key success factors for stability. The improvement of the electricity services will be the largest investment ever to be engaged by the Government for decades. Increasing access to electricity will not by itself achieve it but is expected to contribute to such a cause.

The solution to the Gereshk electricity services challenges needs a combination of investments, capacity building, strategic coordination, and stakeholder consultations. The investment components address the generation capacity by rehabilitating and upgrading the ailing existing hydropower plant. Investment is also required to strengthen, improve, and expand the distribution facilities to increase access to power with improved efficiency. DABS staff will be provided an opportunity to undertake the installation works of the distribution component as a part of capacity building. Coordination and consultations with key stakeholders will be important given that the Project will be implemented in a difficult environment.

The Project, which aims at increasing access to reliable power, is in line with the energy sector strategy under the Afghanistan National Development Strategy (ANDS), the Government's strategic platform for development during 2008-2020. The Project is in line with the ADB's Country Partnership Strategy (2009-2013) for Afghanistan identifies the rehabilitation and upgrading of existing infrastructure as a priority in the energy sector. It is also consistent with ADB's Strategy 2020 and ADB Energy Policy (2009) by promoting inclusive growth and energy security and supporting energy efficiency and renewable energy. It will allow ADB to apply its significant sector expertise as well as lessons learned from previous tranches and elsewhere.

DABS is the key instrument for sector reform to improve the efficiency and governance of the sector. DABS was corporatized in May 2008 as a vertically integrated power utility to succeed the functions of DABM, which was under MEW. Despite some delay, the power sector reform is ongoing. After an agreement was reached between MEW and DABS in September 2009, DABM's assets and personnel were finally transferred to DABS on 20 March 2010. During the next five years of the post-transition period, DABS needs to strengthen its capacity to be fully operational. The momentum for sector reform driven by the creation of DABS as a financially sustainable commercial utility needs continued support from the donor community.

Impact

Better power supply in areas south of Kabul

Project Outcome

Description of Outcome

Increase in hydropower generation capacity in Gereshk

Progress Toward Outcome

The Project closing date was extended from 31 March 2015 to 28 Novembert 2018. The co-financing partners of the Project (DFID and Denmark) did not extend their agreement beyond 31 December 2015. Donor funds were front-loaded for disbursement and ADB fund used for financing all project activities from 1 January 2016.

Implementation Progress

Description of Project Outputs

1. Gereshk power supply system rehabilitated and improved

2. End-user connections increased with improved distribution facilities

3. DABS' operational capacity increased

Status of Implementation Progress (Outputs, Activities, and Issues)

The Gereshk Hydro Power Plant Electro Mechanical Equipment has been reached to Gereshk site on 17 November 2017. Hydro Mechanical Equipment has been reached to the project site in December 2017. The physical progress of the project work is about 80%. In meanwhile the contractor has proposed for the assignment of a new subcontractor to complete the remaining works.

The contract for supply of equipment and materials for Gereshk distribution networks has been award on 28 May 2017 to Syaqa Energy Supply and Construction. The contractor will only supply equipment and materials, while networks extension and installation will be to conducted by DABS.

Under the Project, DABS operational staff have been received on job training from SMEC, Hill International, and contractors working on distribution rehabilitation projects (KEC, FEKA). The activities are ongoing, and it will require 6-8 months time for completion.

Geographical Location

Gereshk

Safeguard Categories

Environment

B

Involuntary Resettlement

B

Indigenous Peoples

C

Summary of Environmental and Social Aspects

Environmental Aspects

An IEE report for the Project has been prepared in November 2009, in accordance with ADB's Safeguard Policy Statement (2009) and the Environmental Assessment and Review Framework of the MFF (EARF). The current security situation makes it difficult to undertake effective community consultation without compromising the safety of staff and consultants. No public consultation has been envisaged at this stage. The project impacts are considered minimal and the security risks to both the local community and undertaker of doing this public consultation far out weigh the benefits. However, should as the Project develops it be identified that there will be particular risks or impacts to the local community then a community relation plan and grievance mechanisms should be developed to enable information and guidance to be disseminated to the local community and to provide them with a mechanism to feedback queries and concerns.

Involuntary Resettlement

The Project may have some involuntary resettlement impacts that are not significant. Updated LARF was disclosed at ADB website on 8 November 2011 and are updated twice every year. LARP impact progress reports are updated and posted on ADB"s website.

Indigenous Peoples

Impacts on indigenous peoples are not envisaged.

Stakeholder Communication, Participation, and Consultation

During Project Design

Consultation with key stakeholders has been ongoing throughout project development. The executing agency will conduct public information dissemination campaign in Gereshk by end of March 2014. However, as the project develops, should it be identified that there wil be particular risks or impacts to the local community, then a community relation plan and grievance mechanisms should be developed to enable information and guidance to be disseminated to the local community, and to provide them with a mechanism to feedback queries and concerns.

During Project Implementation

Consultation and information sharing with local communities. The executing agency conducts public information dissemination campaign in Gereshk.

Business Opportunities

Consulting Services

Project supervision consultants - Quality-Based Selection using Full Technical Proposal

Procurement

Rehabilitation and upgrading of Gereshk Hydropower Plant - ICB turnkey

Distribution network upgrade - ICB goods

End-user metering system - ICB goods

Contact

Responsible ADB Officer

ADB Disclosure

Responsible ADB Department

Sectors Group

Responsible ADB Division

Energy Sector Office (SG-ENE)

Timetable

Concept Clearance

-

Fact Finding

28 Jun 2010 to 03 Jul 2010

MRM

-

Approval

22 Dec 2011

Last Review Mission

-

Last PDS Update

28 Sep 2018

Funding

Grant 0280-AFG

Grant 0281-AFG

Grant 0282-AFG