Afghanistan signs Power Purchase Agreement

Dushanbe: The governments of Tajikistan and Afghanistan signed a power purchase agreement under the Regional Power Transmission Interconnection Project that was approved by the Asian Development Bank (ADB) in December 2006 to tap Tajikistan's summer power surplus to meet shortfalls in neighboring Afghanistan.

Mr. Sharifkhon Samiyev, Chairman of Barqi Tojik Power Holding signed the agreement for Tajikistan, while Mr. Ghulam Rabbani, President of Afghanistan Electricity Enterprise DABM signed on behalf of Afghanistan. The signing took place in Dushanbe.

The project will construct a 220 kilovolt double circuit transmission line that will link the hydropower stations on Tajikistan's Vakhsh River to the border town of Sherkan Bandar, then to Kunduz, Baglad, Pul-e Khumri and, ultimately, Kabul in Afghanistan.

The project will also include new investments and upgrading in Tajikistan that will help reduce the winter power deficit by boosting the available level of generation and decreasing technical losses in the south of the country resulting in an additional 320 gigawatt-hours annually.

'The project offers a win-win situation for both Afghanistan and Tajikistan,' says Jim Liston, ADB’s Principal Energy Specialist. 'It will restore power supply and reduce costs for consumers in Afghanistan while allowing Tajikistan to export up to 300 megawatts of surplus summer energy which would otherwise be unused.

The total net economic benefits of regional cooperation of the project are estimated to be $114 million, split fairly evenly between the two countries.

ADB's loans $21.5 million to Tajikistan and $35 million to Afghanistan come from its confessional Asian Development Fund and carry a 32 year term, including a grace period of 8 years. Interest on each is charged at 1% per annum during the grace period and 1.5% during the rest of the term.

Other financiers of the project, which will cost an estimated $109.5 million, are the OPEC Fund for International Development, Islamic Development Bank, Afghanistan Reconstruction Trust Fund, and the Afghanistan and Tajikistan governments.

Barqi Tojik in Tajikistan and the Ministry of Energy and Water in Afghanistan are the executing agencies for the project.

ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2007, it approved $10.1 billion of loans, $673 million of grant projects, and technical assistance amounting to $243 million.