Progress On Afghan Electricity from Uzbekistan?

UNCLAS SECTION 01 OF 02 KABUL 003993 SIPDIS DEPT FOR SCA/FO, SCA/RA, AND SCA/A DEPT PASS AID/ANE DEPT PASS USTR FOR GERBER AND KLEIN DEPT PASS OPIC FOR ZAHNISER DEPT PASS TDA FOR STEIN AND GREENIP CENTCOM FOR CSTC-A NSC FOR JWOOD TREASURY FOR LMCDONALD, ABAUKOL, BDAHL, AND MNUGENT OSD FOR SHIVERS COMMERCE FOR DEES, CHOPPIN, AND FONOVICH SENSITIVE SIPDIS E.O. 12958 N/A TAGS: ENGR ECON EPET ETRD KPWR EAID PGOV AF SUBJECT: Progress On Afghan Electricity from Uzbekistan? ¶1. (SBU) SUMMARY: Discussion with Afghans and donors on the North East Power System (NEPS) connection to Uzbekistan, yielded signs of increased Uzbek commitment to provide 150 MW of electricity to Afghanistan by the end of 2008 (including completing 43 KM of transmission lines to the Afghan border). Uzbek commitment was reiterated at the highest level to Afghanistan and the Asian Development Bank (ADB). An Afghan delegation to Tashkent the week of November 20 tested the Uzbek engagement on technical and commercial issues. We will evaluate the results of that mission prior to engaging further on this question with the Uzbeks. The ADB reps confirm that they were prepared to organize payment guarantees if the Uzbeks requested some proof of Afghanistan's ability to pay. END SUMMARY. ¶2. (SBU) SCA Senior Advisor, Robert Deutsch, held a series of meetings November 12 and 13 on Afghan and donor efforts to complete arrangements for the connections of the developing Afghan NEPS electricity grid to its northern neighbors. Deutsch reviewed the status of the arrangements with the Ministers of Economy and Energy and Water and with key representatives of ADB, World Bank (WB) and Islamic Development Bank (IDB),all of whom were present in Kabul for the Central Asia South Asia Regional Electricity Market Ministerial (CASAREM). The discussions focused mainly on completing the Uzbek inter-connection and electricity trade commitment. The Afghans and the international financial institutions (IFIs) believe that with accelerated activity on the part of the Uzbeks that could have some 100 MW of power could flow on the NEPS to Kabul by late ¶2008. ¶3. (SBU) Over the last several weeks, there were significant exchanges between Uzbekistan and Afghanistan and with the ADB and IDB on the margins of the Central Asian Regional Cooperation Conference (CAREC) in Dushanbe, November 2 and 3. According to Minister of Economy, Dr. Mohammad Jalil Shams, Afghan First Vice-President Ahmad Zia Masoud visited Tashkent and received renewed confirmation of Uzbekistan's commitment to take the steps required to provide power. ¶4. (U) ADB Energy Project Officer, Jim Liston, reported that ADB President Kuroda had met with President Karimov, and the latter, in the presence of the head of Uzbekenergo, assured Kuroda that he was committed to providing increased electricity to Afghanistan. ¶5. (SBU) Consistent with these renewed political commitments, Dr. Shams told us that the Uzbeks have invited the Afghans to send a delegation to Tashkent to pursue the technical discussions necessary to complete power sales arrangements. That exchange was to begin in November when an Afghan delegation led by the Deputy Minister of Energy and Water was to have visited Tashkent. The delegation was to have met at Uzbekistan's southernmost substation at Surkhan to review the capacities of the connecting point for power to Afghanistan. Dr. Shams indicated that the Uzbeks are said to have begun work on extending 43 KM of 220 KV transmission line from the Surkhan substation to the Uzbek border, in order to deliver the increased electricity to Afghanistan; the delegation had hoped to see signs of that effort. USAID contractor advisors had prepared the Afghan team for both the technical and commercial issues they needed to address with the Uzbeks, but Dr. Shams told us that he KABUL 00003993 002 OF 002 believed that the Uzbeks would not react positively to a direct USG role in this effort, and his strong preference is to continue the effort with U.S. assistance only behind the scenes. ¶6. (SBU) According to the IDB regional project officer, Imtiarz Hizkil, who came to Kabul via Tashkent, the Uzbeks are not seeking external financing for the 43 KM line south of Surkhan. They have, however, expressed an interest in assistance with the 500 KV line stretching the 200 KM between the Guzar and Surkhan associated transformers that will be required to make 300 MW available to Afghanistan. Hizkil indicated that the IDB and ADB are continuing discussions with the Uzbeks on financing for that project. Hizkil noted that his trip to Uzbekistan was connected to a project review of another ongoing electricity transmission project. In response to our query he opined that the IDB experience left him convinced the Uzbeks would not have a problem constructing the 220 KV line the 43 KM to the border and would need only limited quantities of readily available components from outside Uzbekistan. ¶7. (SBU) In commenting on the renewed activity, Rune Staune of ADB said that ADB has informed the Uzbeks that it would be willing to organize a payment guarantee on behalf of the Afghans, if the Uzbeks deemed that a group we agreed that a full power purchase agreement is not necessary and a relatively simple agreement should be sufficient. However, a payment guarantee would necessitate some more detailed commitments. ¶8. (SBU) COMMENT: The diplomatic and technical activity on the Uzbek-Afghan electric connector is encouraging. Embassy Kabul and USAID energy contractors will continue to support and prepare the Afghans in this regard. Given their reluctance to have the U.S. play a more visible role at this point, we will want to hear the results of the Afghan's efforts before determining how the U.S. will engage further directly with the Uzbeks. END COMMENT. ¶9. (U) This message was drafted by SCA Senior Advisor, Robert Deutsch. DELL