AF: UPDATE ON USG ENERGY PROJECTS

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E.O. 12958 N/A
TAGS: ENRG EFIN ETRD KPWR EAID PGOV AF
SUBJECT: AF: UPDATE ON USG ENERGY PROJECTS


1. (SBU) The following cable provides an update on USG energy sector
projects in Afghanistan.


2. (SBU) KABUL 100 MW GENERATOR SETS (GENSETS) - Work on the site
continues apace and the contractor appears to be on schedule.
Arrangements for the transportation of the generator sets themselves
to Afghanistan and subsequently to the site are complete.


3. (SBU) North East Power System (NEPS) - Task orders to proceed
with the Reactive Power Compensation and NEPS Control Center
projects have been signed and are moving forward.


4. (SBU) NEPS - TURKMEN COMPONENT - USAID will issue tender
documents for the construction of a substation at Andkhoy, near the
Turkmen border, once there is an agreed-upon good-faith commitment
by the Turkmen government to construct their portion of the NEPS
line - approximately 400 km within Turkmenistan. We believe this
commitment will come in the form of a Memorandum of Understanding
(MOU) or Power Purchase Agreement (PPA) between the Afghan and
Turkmen governments some time before August 15, 2008.


5. (SBU) NEPS - UZBEK COMPONENT - Negotiations to set a final
construction price continue. Despite many delays, an Uzbek two-man
technical team arrived in Naibabad, Afghanistan near the border with
Uzbekistan on June 9. They, their Afghan counterparts, and
donor-funded advisors are reviewing the status (and technical
specifications) of the NEPS line already constructed between the
Uzbek border and Kabul. This is being done to allay Uzbek concerns
about Afghanistan's ability to properly absorb and use the 150 MW of
power to be imported from the Uzbeks. This has been a prerequisite
to Uzbekistan concluding both a construction contract and PPA with
Afghanistan for the construction of the 43 km line within Uzbekistan
to facilitate power export to Afghanistan.


6. (SBU) Although Embassy Kabul has received some reports indicating
the Uzbek power utility, Uzbekenergo, claims to have already begun
work on the construction of the power line, we have been unable to
confirm. However, Mr. Ghulam Rabbani, Energy Advisor to the
Minister of Energy and Water, and former General Director of the
Afghan power utility DABM, claims this could be possible because the
new Uzbek line follows the route of an older, defunct line.
According to Rabbani, much of the preparation (like clearing and
leveling) was done previously, cutting the time needed for
construction of the new line. In fact the most difficult towers to
construct for the line, on either side of the Panj River between
Uzbekistan and Afghanistan, are already in place. While the Uzbeks
claim they will need six months to complete the line, Rabbani
believes they are hedging their bets and once begun in earnest, the
line could be completed in as little as three to four months.
Without a signed construction contract however, it is difficult to
predict if Uzbek power will be available for the 2008-2009 winter
heating season in Kabul.
We continue to monitor the progress of these negotiations.


6. (U) NEPS - TAJIKISTAN COMPONENT - Following successful meetings
in Dushanbe in April, negotiations on a PPA with the Tajiks appear
almost complete. Minister of Energy and Water Ismail Khan is
expected to travel to Dushanbe June 20 for the official signing
ceremony. This will allow the Asian Development Bank (ADB) to
proceed with its internal processes to fund the construction of the
Afghan NEPS line to Tajikistan, which will run from Pul-e-Khumri
north through the cities of Baghlan and Kunduz to the Tajik border.


7. (SBU) The proposed PPA between the Tajiks and Afghans provides
that by 2010 Tajikistan will sell at least 400 million KWH per year
to Afghanistan during the five-month peak hydro-power season from
May to September. The agreement is to take effect on May 1, 2010
for a period of 20 years. The price per megawatt hour will be 0.035

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USD (for firm energy),with a two percent yearly increase. New
negotiations are expected in 2013 should the Tajiks build additional
facilities and the Afghans wish to purchase additional energy.


8. (U) SHEBERGHAN GAS FIELDS TESTING - USAID expects to obtain an
indemnification letter from the Ministry of Mines for its
subcontractor by June 17. With this letter in hand we expect a
final contract signing which will allow mobilization into the field
in August, with initial well test results expected by mid
September.


9. (U) South East Power System - SEPS - As always, security problems
persist at the site, but work continues. In addition to the work on
the Kajaki Dam's turbines, USAID is proceeding with an RFP for the
assessment and repair of the 110 kv power line from the dam's power
house to Durai Junction (south West) and to Mousa Qala (West). This
is expected to be completed by the end of July. A recent
three-dimensional aerial survey of the 110 kv line route will prove
a useful tool in its rehabilitation as well as in the construction
of future 220 kv line.

DELL