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