TURKMENISTAN, AFGHANISTAN TO EXPAND ELECTRICITY TRADE

UNCLAS SECTION 01 OF 02 ASHGABAT 000317

SIPDIS

SENSITIVE

SIPDIS

STATE FOR SCA/CEN (PERRY),SCA/PPD, SCA/A; ASTANA PASS TO USAID

E.O. 12958: N/A
TAGS: ENRG EAID AF TX UZ TI IR
SUBJECT: TURKMENISTAN, AFGHANISTAN TO EXPAND ELECTRICITY TRADE

Ref: 06 Ashgabat 450


1. (U) Sensitive but unclassified. Please handle accordingly. Not
for public Internet.


2. (U) SUMMARY: USAID-Kabul's power team concluded an
"understanding" March 23 in Ashgabat that is likely to lead to
Turkmenistan providing northwest Afghanistan (initially) a regular
supply of electricity from the gas-fired plant at Serdar. However,
sooner rather than later, Turkmenistan will need help to understand
and implement legal requirements for contracts in international
markets. END SUMMARY.


3. (U) Acting Charge met with USAID/Kabul-contracted energy trade
specialist Ramses Khalil and members of his team March 23. Also
present were Afghanistan's Ambassador to Turkmenistan, and
Afghanistan's Deputy Minister of Mines and Industries Mir Sediq.

NORTH EAST POWER SYSTEM (NEPS) PROJECT


4. (U) The USAID team came to Turkmenistan to discuss electricity
trade and transit issues with the Ministry of Energy and Industry of
Turkmenistan as part of the North East Power System (NEPS) Project.
NEPS is an Afghan government initiative and multi-donor project
consisting of generation, transmission, and distribution, which will
combine imported power with domestically generated power for
Afghanistan. NEPS seeks electricity exports from Turkmenistan,
Uzbekistan, and Tajikistan.

EXISTING POWER LINES AND CAPACITY


5. (U) Currently, two high-voltage lines run from Turkmenistan to
Afghanistan. The first, from Mary (in Turkmenistan) to Herat, is
designed for 220 kilovolts (kV),but operates at 110 kV. Built
three years ago to deliver electricity to Afghanistan, the line is
still in good condition and can probably be converted to a 220 kV
line in two to five years. The other line, 110 kV, runs from
Turkmenistan to Andkhoy and electrifies the majority of Afghanistan
around Andkhoy. A third line, still to be constructed, would run
from Mary to Tagtabazar to Marcik.


6. (U) According to the USAID contractors, Turkmenistan is
producing 3,200 megawatts (MWs) of power a year. Given
Turkmenistan's political decision to cut the flow of power to
Uzbekistan, Turkmenistan has an excess of power from its gas-fired
power plant in Serdar, near Turkmenabat, which, even during summer
peaks, amounts to about 2,200 MW. The USAID team has validated that
Turkmenistan, which has more excess power than either Uzbekistan or
Tajikistan, has both the capacity and will to sell the 300 MW of
electricity Afghanistan currently seeks.

TURKMENISTAN'S PROPOSAL


7. (SBU) During the USAID team's most recent visit, the Government
of Turkmenistan proposed to supply power to Afghanistan through a
500 kV high-power line that it would build from the Serdar power
plant to the Turkmenistan-Afghanistan border at Sheberghan;
Afghanistan would then build the lines from the border to
Sheberghan, to Mazar-e-Sharif, and onwards. The Government of
Turkmenistan would fully fund the 400-kilometer line within
Turkmenistan at a cost of approximately $200,000 per kilometer.
However, Turkmenistan stated that it did not want the 500-to-220 kW
step-down transmission sub-station, which would cost an additional
$30-40 million to build, on its side of the border. (Note:
According to Khalil, USAID was willing to consider building the line
from Sheberghan to the Turkmenistani border and possibly the
step-down substation. End Note.) Khalil estimated that, once all
the paperwork was signed, the Turkmenistan segment of the line would
take about 18 months to complete. If built, such a line would
satisfy the current Afghanistan power demand.

EVENTUAL POWER PURCHASE AGREEMENT?


8. (SBU) Khalil informed Embassy that, during his visit, the two
sides had not discussed concrete terms, although Turkmenistan had
said it was agreeable in principle to a long-term power purchase
agreement (PPA). The USAID team had left an executive summary,

ASHGABAT 00000317 002 OF 002


which could become the basis for a PPA, but Turkmenistan had refused
to sign an "agreement." Khalil and his team left with a two-page
"protocol" that he believed could be agreed to in about two months.


OTHER NEIGHBORS AND PROJECTS


9. (SBU) Khalil said Afghanistan sees Turkmenistan as currently the
most reliable partner from which to purchase electricity. He
characterized Tajikistan potentially a good partner but currently
"over-promising" because Tajikistan will not be able to provide a
regular flow of electricity until Sangtuda-2 and, probably, Rogun
dams and power stations are completed - "10-12 years from now." For
the same reason, Khalil implied, the recent
Tajikistan-Afghanistan-Iran announced agreement for a high-tension
line from Tajikistan across Afghanistan to Iran is decidedly much
less than meets the eye.


10. (SBU) COMMENT: Turkmenistan can be a reliable source of
electricity for northwest Afghanistan, and eventually further afield
in Afghanistan, because of the reliable supply from gas-fired power
plants. Sooner rather than later, Turkmenistan will need help to
understand and implement legal requirements for contracts in the
international market. END COMMENT.

HOAGLAND