Afghanistan : Energy Supply Improvement Investment Program (Formerly Multitranche Financing Facility II: Energy Development 2014-2023)

Sovereign Project | 47282-001

The MFF will reinforce ongoing projects and finance new investments to boost energy trade and regional cooperation, strengthen the country's energy infrastructure, increase energy supply to accelerate electrification rate, and improve operational efficiency in the sector. In power, generation (renewable energy), transmission (regional and domestic lines), and distribution (on- and off-grid networks) projects are proposed; while wells rehabilitation is planned in gas subsector. The MFF's impact will be improved access to sustainable energy supplies across Afghanistan. The outcome will be increased supply of imported and indigenous power. The MFF will be implemented across Afghanistan with a focus on regional cooperation and energy trade. It will address energy deficit problems and meet the increasing demand of four Afghanistan's largest cities.

Project Name
Energy Supply Improvement Investment Program (Formerly Multitranche Financing Facility II: Energy Development 2014-2023)
Project Number
47282-001
Country / Economy
  • Afghanistan
Project Status
Active
Project Type / Modality of Assistance
  • Grant
  • Loan
Source of Funding / Amount
MFF Facility Concept 0090-AFG: Energy Supply Improvement Investment Program (FormerlyMultitranche Financing Facility II: Energy Development 2014-2023)
Source Amount
Asian Development Fund US$ 750.00 million
Afghanistan Infrastructure Trust Fund US$ 450.00 million
MFF Facility Concept: Energy Supply Improvement Investment Program (Formerly Multitranche Financing Facility II: Energy Development 2014-2023)
Source Amount
People's Republic of China Poverty Reduction and Regional Cooperation Fund US$ 1.00 million
Strategic Agendas
  • Inclusive economic growth
  • Regional integration
Drivers of Change
  • Partnerships
Sector / Subsector
  • Energy / Electricity transmission and distribution

Gender
No gender elements
Description
The MFF will reinforce ongoing projects and finance new investments to boost energy trade and regional cooperation, strengthen the country's energy infrastructure, increase energy supply to accelerate electrification rate, and improve operational efficiency in the sector. In power, generation (renewable energy), transmission (regional and domestic lines), and distribution (on- and off-grid networks) projects are proposed; while wells rehabilitation is planned in gas subsector. The MFF's impact will be improved access to sustainable energy supplies across Afghanistan. The outcome will be increased supply of imported and indigenous power. The MFF will be implemented across Afghanistan with a focus on regional cooperation and energy trade. It will address energy deficit problems and meet the increasing demand of four Afghanistan's largest cities. Aside from energy infrastructure improvements, operations, and maintenance, it will also support feasibility studies and design, and human resource development and institutional reform. The investment program will have five outputs: (i) new 500-kilovolt (kV) and 220 kV power transmission lines, power distribution networks, and high-voltage direct-current back-to-back convertor commissioned, (ii) renewable energy projects constructed, (iii) domestic gas production and imported volume of natural gas from TAPI gas pipeline increased, (iv) project preparation and management capacity of energy ministries and agencies improved, and (v) business plan and tariff model and framework development for Da Afghanistan Breshna Sherkat (DABS).
Project Rationale and Linkage to Country/Regional Strategy
After security, access to energy is the highest priority of households and businesses in Afghanistan. Energy demand has grown by almost twice the economic growth rate during 2005-2012. Afghanistan is among the lowest 5% in per capita energy consumption globally and is a net energy importer. In 2014, more than 80% (1,000 megawatts [MW]) of its total power supply (1,247 MW) came from Iran (16.2%), Tajikistan (25%), Turkmenistan (12%), and Uzbekistan (27%), with the rest generated through indigenous hydropower and thermal sources. Lack of domestic generation remains the key challenge for energy security in Afghanistan. Lack of energy supplies and the demand-supply imbalance constrain growth and income opportunities; create disparities in economic development; and fuel ethnic and regional tensions, insecurity, and discontent. Despite significant potential for renewable energy and fossil fuel reserves, these have not been developed because of financing constraints.
Impact

improved access to sustainable energy supplies across Afghanistan, aligned with the targets of the National Energy Supply Program of the Government of Afghanistan.

Project Outcome

Description of Outcome

increased supply of imported and indigenous power.

Progress Toward Outcome
The bidding process for 20MW Naghlu Solar Power Plant (Tranche 3) was canceled as per the governments request and the grant whole grant was also canceled by ADB in July 2019.

Implementation Progress

Description of Project Outputs

New 500 kV and 220 kV power transmission lines, power distribution networks, and high-voltage, direct-current, back-to-back convertor commissioned

renewable energy projects constructed

domestic gas production and imported volume of natural gas from TAPI gas pipeline increased

project preparation and management capacity of energy ministries and agencies improved

DABS business plan, and tariff model and framework developed.

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

Achievable by the completion of all projects by 30 June 2025.

Achievable by completion of all project by 30 June 2025.

Achievable after completion of project by 30 June 2025.

Achievable by completion of all project by 30 June 2025.

All packages of 500kv transmission lines connecting Turkmenistan power to the Afghan grid have been awarded and the physical in under process with expected completion by Q2 2021.

The bidding process for 20MW Naghlu Solar Power Plant (Tranche 3) was canceled as per the government's request and the grant whole grant was also canceled by ADB in July 2019.

Geographical Location
Nation-wide, Afghanistan

Summary of Environmental and Social Aspects

Environmental Aspects
The project is classified category B for environment. DABS prepares an initial environmental examination (IIE) reports, including an environmental management plan (EMP) in accordance with ADB's Safeguard Policy Statement (2009). The environmental impacts anticipated during the construction are envisaged to be site-specific and temporary and can be mitigated through implementation of the EMP. Potential environmental impacts of the project during operations include fragmentation of the bird habitats and the electrocution or injury of birds through collision and contact with wires. The EMP mitigation measures will be developed after thorough consultations and careful routing of the transmission line to be undertaken during detailed design, specially designed poles, conductors, and insulators; and the provision of bird diverters. The draft initial environmental examination report was disclosed on ADB's website in Q4 2015. The current security situation along the line route has made it difficult to consult effectively with communities. The public consultations will be conducted and the IIE and EMP updated prior to construction. Implementation of the EMP is being reported through environmental monitoring reports, which are submitted to ADB semiannually. EA has assigned a team of Eniromenal Safeguard experts while the the environmental specialists of the implementation consultant provide additional support to the PMO.
Involuntary Resettlement
The project is category B for involuntary resettlement. Based on the preliminary project design, a land acquisition and resettlement plan (LARP) has been prepared in close consultation with affected households and disclosed on ADB website during Q4 2015, in accordance with ADB's Safeguard Policy Statement. A detailed socioeconomic survey for Tranche 1, 2, 3, 4 and 5 has been carried out. Once the contractors complete the detailed design, DABS updates the LARP and submit it to ADB for approval and no civil works start until the LARP is fully implemented by DABS. Sectional approach is applied for the private and government owned lands for all projects including 500-kV and 220-Kv transmission lines, substations and distribution network packages under MFF. EA has submitted due diligence report (DDR) for government owned land and LARPs for private land. The substation sites are mostly owned by the government. The implementation of the LARP are monitored semiannually and a compliance reports are submitted to ADB for review and approval. The reports include the number of affected households that have been paid compensation, the amount paid, and the locations where compensation was completed and structures demolished, if any.
Indigenous Peoples
The project is category C for indigenous peoples. The field social survey found that no ethnic minority, as defined by ADB's Safeguard Policy Statement (2009), will be involved in or affected by the project.

Stakeholder Communication, Participation, and Consultation

During Project Design
The project design, implementation and supervision consultants undertook a comprehensive analysis and stakeholders consultations (in accordance with ADB's Social Safeguard Policy) to factor in all land acquisition, resettlement and environmental considerations into projects design. The engagements was also taken through Inter-ministerial Commission for Energy (ICE) in 2015.
During Project Implementation

Consultation and information sharing with local communities is being made. Necessary social safeguards and environmental analyses will be undertaken and updated once the design work is initiated for sub-projects. Relevant documentation will be approved by ADB experts before contractor could be mobilized to begin construction activities at project sites.

Business Opportunities

Consulting Services
Project implementation consultants (firms) were planned to be recruited to assist the PMO of the DABS and the MEW. The tasks of the consultants included: (i) supervision of project implementation; (ii) training for DABS and MEW. DABS was responsible for the selection and recruitment of consultants. Consultants were expected to be selected and engaged in accordance with the Consultant Guidelines, as amended from time to time. Quality-and Cost-based selection method (QCBS) with 90:10 weightage was generally used to attract more interest of qualified firms, considering volatile security situation in the country. In mid-August 2021, the government changed. All ADB-funded projects were put on hold.
Procurement

The turnkey contracts for Energy Supply Improvement Investment Program include: (i) 500 kV transmission line from Sheberghan to Dashte Alwan in northern Afghanistan, and (ii) 220 kV transmission line from Andkhoy to Sheberghan to Dashte Alwan.

Procurement of works and goods financed under the Investment Program have been implemented in accordance with ADB procurement guidelines (Procurement Guidelines) as amended from time to time. International competitive bidding (ICB) was generally used for supply contracts estimated to cost over $0.5 million and for works over $2 million.

In mid-August 2021, the government changed. All ADB-funded projects were put on hold.

Contact

Responsible ADB Officer
ADB Disclosure
Responsible ADB Department
Sectors Group
Responsible ADB Division
Energy Sector Office (SG-ENE)

Timetable

Concept Clearance
19 Nov 2013
Fact Finding
14 Sep 2015 to 30 Sep 2015
MRM
27 Oct 2015
Approval
04 Dec 2015
Last Review Mission
-
Last PDS Update
30 Sep 2020

Funding

MFF Facility Concept 0090-AFG

Financing Plan
  Total (Amount in US$ million)
Project Cost 1,220.00
ADB 750.00
Counterpart 20.00
Cofinancing 450.00
Grant Utilization
  Date ADB Others Net Percentage
Cumulative Contract Awards - 0.00 0.00 %
Cumulative Disbursements - 0.00 0.00 %

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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