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Cablegate: Af: Uzbek Power Situation Not As Bleak, Other Ppa's On

VZCZCXRO8161
PP RUEHIK RUEHPOD RUEHPW RUEHYG
DE RUEHBUL #1644/01 1841131
ZNR UUUUU ZZH
P 021131Z JUL 08
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 4564
INFO RUCNAFG/AFGHANISTAN COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEKJCS/OSD WASHINGTON DC
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RUEABND/DEA HQS WASHINGTON DC
RHMFIUU/HQ USCENTCOM MACDILL AFB FL
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 KABUL 001644

DEPT FOR SCA/RA, SCA/A, EEB, EEB/ESC/IEC (GRIFFIN)
DEPT PASS AID/ANE FOR WARD
DEPT PASS USTR FOR LILIENFELD AND KLEIN
DEPT PASS OPIC FOR ZAHNISER
DEPT PASS TDA FOR STEIN AND GREENIP
CENTCOM FOR CG CSTC-A, CG CJTF-101, POLAD, JICENT
NSC FOR JWOOD
TREASURY FOR ABAUKOL, BDAHL, AND MNUGENT
MANILA PLEASE PASS ADB/USED
PARIS FOR USOECD/ENERGY ATTACHE
OSD FOR SHIVERS, SHINN
COMMERCE FOR DEES, CHOPPIN, AND FONOVICH

SIPDIS

REF: KABUL 1581

E.O. 12958 N/A
TAGS: ENRG EFIN ETRD KPWR EAID PGOV AF
SUBJECT: AF: Uzbek power situation not as bleak, other PPA's on
track.

1. (SBU) Summary: Minister of Economy Jalil Shams told donors the
Uzbeks have begun manufacturing components needed for the
Afghan-Uzbek power line. He believes the project will be completed
by October 2008. Shams revealed a "backup" plan to import an extra
43 MW of Uzbek power to Kabul along an existing 110 kv line should
the new line not be completed by winter. The GIRoA expects to
conclude a PPA with the Tajiks soon for a price close to Tajik
terms.

-------------------------------------
Tajik and Turkmen PPAs Moving Forward
-------------------------------------

2. (SBU) Afghanistan's Interministerial Committee on Energy (ICE)
held its monthly meeting on June 26, 2008 to review the current
status of the North East Power System (NEPS) project, including the
progress towards the conclusion of commercial power purchase
agreements (PPA's) with its northern neighbors, Turkmenistan,
Tajikistan and Uzbekistan. Despite failed negotiations in Dushanbe
on June 20 (Reftel), Minister of Energy and Water Ismail Khan
assured donor country representatives he expected to conclude a PPA
with the Tajiks in one to two weeks. He has proposed to pay USD .03
(three cents) per kilowatt hour for Tajik power and expects that an
agreement will be reached soon. Minister of Economy Shams stated
that ongoing negotiations with the Turkmen are positive and the
parties hope to come to an agreement by mid-August.

------------------------
Uzbek Transmission Lines
------------------------

3. (SBU) Minister Shams reported he is fairly confident that the 43
kilometers of transmission line being erected in Uzbekistan will be
completed by October. He said the Uzbeks have completed the
fabrication of up to 60 percent of the structures needed for the
transmission towers, (which still need to be erected), and that only
the site erection and construction of cement components remained
before the line could be strung. He did not indicate the source of
this information.

4. (SBU) According to a protocol signed between the Uzbeks and
Afghans in early June during their last negotiating session, the
Afghans were to make an initial payment of USD 2.5 million to
initiate project construction. Deputy Minister of Finance Sharani
assured the ICE that payment could be made within 72 hours. Post
confirmed that payment is expected on or by July 3. This initial
payment represents the first of three to be made to the Uzbeks in
the following order: 20 percent (of the USD 12.5 million total) as
an advance, 70 percent during the construction phase, and 10 percent
upon the energizing of the line. Minister Shams explained that
while all the pricing details have yet to be worked out to the
satisfaction of both parties, by making the initial payment
Afghanistan hoped to spur the Uzbeks into action in an attempt to
ensure power imports to Kabul by the winter of 2008-2009.

5. (SBU) Shams explained that should the Uzbek line construction
take longer than anticipated Kabul can still receive Uzbek power for
the winter. There is currently a ten-year-old agreement in place
with Uzbekistan under which Afghanistan can purchase up to 150
megawatts (MW) of power from that nation. (The only way to move
power between the two nations however is a 110 kV line which can
carry a maximum of 70 MW at any time.) Currently the government is
purchasing 27 MW which flows from Uzbekistan directly to the city of
Mazar-e-Sharif. Shams stated that should the Uzbek 220 kV line not
be completed in time, the Afghan government intended to cite the
current agreement with Uzbekistan in order to maximize the power

KABUL 00001644 002.2 OF 002


flowing into the 110 kV line and move the additional 43 MW to Kabul.
This arrangement would also allow NEPS project managers to energize
the 220 kV NEPS power line all the way to Kabul and perform
necessary tests and maintenance prior to the import of larger
amounts of power.

WOOD

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