Search

 

Cablegate: Afghanistan: Update On Usg and Other Energy Projects -

VZCZCXRO4722
PP RUEHIK RUEHPOD RUEHPW RUEHYG
DE RUEHBUL #2546/01 2611150
ZNR UUUUU ZZH
P 171150Z SEP 08
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 5553
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 04 KABUL 002546

DEPT FOR SCA/RA, SCA/A, EEB, EEB/ESC/IEC (GRIFFIN)
DEPT PASS AID/MARK WARD, AID/ANE, OPIC
DEPT PASS USTR FOR LILIENFELD AND KLEIN
DEPT PASS OPIC FOR ZAHNISER
DEPT PASS TDA FOR STEIN AND GREENIP
CENTCOM FOR CG CFC-A, CG CJTF-76, 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, HAMROCK, AND FONOVICH

SENSITIVE

SIPDIS

E.O. 12958 N/A
TAGS: ENRG EFIN ETRD KPWR EAID PGOV AF
SUBJECT: AFGHANISTAN: UPDATE ON USG AND OTHER ENERGY PROJECTS -
POWER PROJECTS EXHIBITING RESULTS

1. (SBU) Summary. Over the past six weeks, long and meandering
negotiations on Power Purchase Agreements (PPA) with Afghanistan's
neighbors have been successfully concluded, and positive
developments with regard to Kajaki, the 100MW GENSET plant, and
related distribution systems have occurred. Current total power
capacity in Afghanistan is estimated at 450MW with 75% of this
capacity operational. Thirty percent of power produced is lost in
distribution. If current plans materialize, by January 2009, an
additional 220MW of power will come online, representing an almost
50% increase. Furthermore, spring 2009 will see another 35MW
online, and by April 2010, another 450MW of imported power will be
delivered, resulting in more than a doubling of total power
availability within 18-20 months. In addition, initiatives
concentrating on electricity distribution efficiency and revenue
collection are in process or being fast-tracked. This progress is
noteworthy and highlights that the significant investment the USG
has made in the energy sector is providing tangible results.
Nevertheless, any enthusiasm should be tempered, as cooperation by
many actors will be required to realize current plans; further focus
and intensity are required to keep the energy train on track. End
Summary.

-------------------------------------
KABUL 100 MW GENERATOR SETS (GENSETS)
-------------------------------------

2. (SBU) - Delivery of the GENSETS is now scheduled in two segments,
mid-September and again 2-4 weeks later, representing a delay of 4
weeks. Delay will not affect the production of 70MW by end of 2008
or an additional 35MW in spring of 2009. Other preparations,
including delivery of smaller parts and construction of camp, fuel
tanks, and related buildings, are on schedule. Emboffs will visit
the plant within the next week to monitor and report on progress
towards completion.

---------------------------------
FUEL FOR GENSETS REMAINS AN ISSUE
---------------------------------

3. (SBU) - The Islamic Republic of Afghanistan (IRoA) maintains its
current budget will not allow for purchase of the required $45
million in fuel (to run 100MW Kabul GENSETS only) through the end of
the IRoA fiscal year (March 31, 2009). In talks with senior Afghan
officials, Embassy Kabul has stressed that the IRoA made a written
commitment to purchase fuel as part of the agreement for USAID to
fund GENSETS and other plants and that it must fulfill this
commitment. We hope to learn more about Afghan intentions following
a budget review slated for late September. Delivery of electricity
to Kabul during the critical winter months is imperative to boost
recognition that the IRoA and Coalition efforts at development are
producing tangible results. IRoA backsliding on funding the fuel
requirements of GENSETS could set a negative precedent for future
cooperative funding agreements. Afghan funding constraints are
related to poor billing of and tariff collection from customers on
existing electricity distribution. The USG will therefore seek a
strong policy commitment by the IRoA to support a USAID initiative
to commercialize the Kabul Electricity Division of DABS, the IRoA's
national electrical utility (see para 7), which aims to strengthen
billing and collection.

--------------------------------------------- -----
NORTH EAST POWER SYSTEM (NEPS) - TURKMEN COMPONENT
--------------------------------------------- -----

4. (SBU) - A recent Joint Working Group (JWG) meeting has laid the
foundation for a $160 million USAID/Afghanistan investment to

KABUL 00002546 002 OF 004


construct transmission lines and substation for import of up to
300MW of power by early 2011. The next working group meeting will
be held in October 2008 (in Ashgabat), with a goal of working toward
finalizing an Afghan-Turkmen PPA by March 2009.

----------------------
NEPS - UZBEK COMPONENT
----------------------

5. (U) - Negotiations on funding for the construction of a 43 Km,
220kV transmission line were concluded in late August. The IRoA
will pay $19 million to the Uzbeks, and if the construction schedule
holds, 150MW of power should begin to flow into the NEPS and Kabul
by the end of January 2009. The transmission line on the Uzbek side
of the border will be owned by the IRoA, but maintained by the
Uzbeks. Under an existing ten-year power PPA between the IRoA and
the Government of Uzbekistan, the IRoA currently pays $0.04/kWh for
28MW of imported power which is supplied to Mazar-e-Sharif via an
existing 110kV line. The energy price under this PPA is
renegotiated annually, in December of every year. We understand
that this PPA will also be utilized to govern the sale of the 150MW
to be supplied starting in January 2009 based on a new price to be
negotiated in December 2008. The IRoA and the Government of
Uzbekistan plan to negotiate a new PPA in May 2009 which will govern
the import of all power from Uzbekistan once an additional 150MW is
added by the end of 2009.

---------------------------
NEPS - TAJIKISTAN COMPONENT
---------------------------

6. (U) - In late August, an IRoA delegation headed by Minister of
Energy and Water (MEW) Khan, concluded a PPA with Tajikistan for the
import of 300MW of power from April through October each year,
effective April 2010, at $0.035/kWh. The initial term of the PPA
will run through 2014 with a 2% price increase per year, at which
point the PPA will be reviewed for a possible increase in power
and/or extended delivery schedule. The PPA signing immediately
releases Asian Development Bank (ADB) funding for the construction
of the transmission line on both sides of the border under the
supervision of Snowy Mountains Engineering Corporation (SMEC) of
Australia. Line completion is expected in April 2010.

--------------------------------------------- --- --------NEPS
INSTALLATION OF NATIONAL LOAD CONTROL CENTER (NLCC)
--------------------------------------------- --- --------

7. (SBU) - Contract award for the procurement of the NLCC was
executed on June 10 with an expected completion date of February 28,
2010. The contractor, Louis Berger/Black & Veatch (LBG/B&V), is
working on an Invitation for Bids (IFB) for the NLCC building which
is projected to be awarded by December 2008. Since Uzbek power is
expected to flow by the end of January 2009, a temporary, less
complicated, system will be put in place to handle the necessary
dispatch, communications, and control until the NLCC has been
completed. The overall objective is for the NEPS voltage level to
be maintained within international permissible limits, for system
losses to be minimized, and to maximize the power transmitted over
the NEPS.

--------------------------------------------- ---- -------
COMMERCIALIZATION OF DABS, THE NATIONAL ELECTRIC UTILITY
--------------------------------------------- ---- -------

8. (SBU)- Improving the ability of the IRoA to pay for electric
power imports, diesel fuel, salaries for utility staff, and other

KABUL 00002546 003 OF 004


operating and maintenance costs of providing electricity services to
customers will mitigate their reliance on donor assistance and help
DABS become a viable and financially self-sufficient entity. Hiring
an operating contractor and putting the firm in charge of the Kabul
system will lead to improved system management, more effective
billing and collection, and enhanced revenues to cover costs. To
that end, USAID has received informal IRoA agreement to assist DABS
with the award of an operating contract, dubbed the Kabul
Commercialization Contract (KCC),for the Kabul Electricity
Distribution (KED) system. Tender documents with specific operating
contract terms are expected to be ready by the end of November 2008.
A commercialization contractor for the Kabul network should be on
board within the next six to nine months.

------------------------------
SOUTH EAST POWER SYSTEM (SEPS)
------------------------------

9. (SBU)- In one of the largest logistical operations of its kind
since World War II, a combined NATO force delivered the 8 large
pieces of Turbine #2 to the Kajaki Dam site in early September.
The 100-vehicle convoy travelled at 5 Km per hour, reaching Kajaki
five days after departing Kandahar. Work on bringing Turbine #2
online is expected to last 14-18 months and will add an additional
18.5MW of output to the dam. Work on Turbine #3, currently being
rehabilitated, will be completed in April 2009. Total output of the
dam will be 51MW by September 2009, 16.5MW of which is being
produced now, and will ultimately benefit up to 1.7 million people
in southern Afghanistan. In conjunction with the turbine work,
USAID has released an RFP to rehabilitate the 110 kV transmission
line from Kajaki to Kandahar and the 20 kV line to Musa Qala. The
bids are due mid September, with an award anticipated by the end of
the month. Such work is crucial to mitigate the estimated 30-40%
loss of power currently being experienced. The length of time to
rehabilitate the line will be determined by an initial assessment to
be performed by the contract awardee, including an evaluation of the
degree to which security is permissive along the corridors where
work is to be performed.

-----------------------------
SHEBERGHAN GAS FIELDS TESTING
-----------------------------

10. (SBU) - ARAR, the Turkish-American subcontractor chosen for the
gas well testing, will commence drilling o/a October 1. The revised
timeline and cost structure for work notes that fewer wells than
originally anticipated will be re-opened and tested within the time
frame and budget authorized under the Task Order, though these
should provide sufficient information on commercial viability of the
gas field. The test results will be reported o/a April 15, 2009.
Once gas reserves have been established (overall consensus remains
that these wells will be productive based on the fact they lie in
the same basin as very productive Turkmenistan gas wells), well
rehabilitation will need to proceed to re-establish natural gas
production. Moreover, options for construction of a gas power plant
will need to be explored, including reaching out to other donors
such as ADB, OPIC and the private sector for construction of a power
plant which would provide electricity to northern Afghanistan and
Kabul through the NEPS. In a recent meeting with Minister Adel of
the Ministry of Mines (MOM), Econoff and EconCouns learned that the
MOM has in reserve $26 million from an ADB loan to test and develop
the gas fields. Minister Adel remains keen to move forward with
project(s) and seemed open to OPIC participation. Minister Adel was
confident significant natural gas reserves would be found. Econoff
is currently following up on a request for submission of technical
questions to OPIC made by Bearing Point advisors to the Minister of

KABUL 00002546 004.3 OF 004


Finance. Those questions should jump start seemingly dormant talks
regarding OPIC participation in project.

WOOD

© Scoop Media

 
 
 
 
 
World Headlines

 

Werewolf: Gordon Campbell On North Korea, Neo-Nazism, And Milo

With a bit of luck the planet won’t be devastated by nuclear war in the next few days. US President Donald Trump will have begun to fixate on some other way to gratify his self-esteem – maybe by invading Venezuela or starting a war with Iran. More>>

Victory Declared: New Stabilisation Funding From NZ As Mosul Is Retaken

New Zealand has congratulated the Iraqi government on the successful liberation of Mosul from ISIS after a long and hard-fought campaign. More>>

Gordon Campbell: On The Current US Moves Against North Korea

If Martians visited early last week, they’d probably be scratching their heads as to why North Korea was being treated as a potential trigger for global conflict... More>>

ALSO:

Gordon Campbell: On The Lessons From Corbyn’s Campaign

Leaving partisan politics aside – and ignoring Jeremy Corbyn’s sensational election campaign for a moment – it has to be said that Britain is now really up shit creek... More>>

ALSO:

Another US Court: Fourth Circuit Rules Muslim Ban Discriminatory

ACLU: Step by step, point by point, the court laid out what has been clear from the start: The president promised to ban Muslims from the United States, and his executive orders are an attempt to do just that. More>>

ALSO:

 
 
 
 
 
 
  • Pacific.Scoop
  • Cafe Pacific
  • PMC