AF: Update on USG Energy Projects.

UNCLAS KABUL 000578

SIPDIS

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SIPDIS

E.O. 12958 N/A
TAGS: ENRG EFIN ETRD KPWR EAID PGOV AF
SUBJECT: AF: Update on USG Energy Projects.


1. (U) The following cable provides a current status update on USG
energy sector projects in Afghanistan.


2. (U) KABUL 100 MW GENERATOR SETS (GENSETS) - Delivery of the first
six (of total 18) generators for the project is expected in May

2008. While progress is on track with manufacturing, we are
watching delivery logistics closely. Contractor Louis Berger
Group/Black & Veitch (LBG/B&V) is finalizing transportation
arrangements and USAID is working with them to ensure the project
does not fall behind schedule. Per the agreement reached when the
project began, the IRoA has transferred USD 10 million, half of its
total contribution to the project, to the U.S. Treasury. The second
USD 10 million payment is due in April 2008.


2. (U) North East Power System (NEPS) - UZBEK COMPONENT - Following
two successful visits by IRoA officials in December 2007 and January
2008, a third visit took place February 4 - 10, 2008. As of
February 21, the Ministry of Economy reported that the Uzbeks and
Afghans have agreed upon a USD 12.5 million price tag for the
construction of 43 km of 220 kv line within Uzbekistan to link the
two power systems as well as the upgrade of the Surkhan substation
located on their shared border. The IRoA will fund the project in
order to facilitate power imports in October 2008. DABM, the Afghan
national power utility, will sign the construction contract with
Uzbekenergo, the Uzbek power utility, once the project is ratified
by the Uzbek Cabinet. Ratification is expected shortly. This will
be followed by a second negotiation to finalize and sign a Power
Purchase Agreement (PPA) for long-term (20 year) imports of 150 MW
of power, expected to rise to 300 MW within the next three years.
Although Ministry of Energy and Water (MEW) officials tell us the
basics of the PPA have been agreed, a formal negotiation, followed
by Uzbek Cabinet ratification is expected to take several months.


3. (U) Two components essential to the successful functioning of the
NEPS system, Reactive Power Compensation (RPC) and a National Load
Dispatch and Control Center (NLDCC) are also proceeding apace.
Although full RPC implementation is expected to take over 12 months,
the portion of the RPC needed to successfully receive Uzbek power
will be completed by October/November 2008. The NLDCC is expected
to be completed in 24 months (March 2010),however interim
provisions for communications and protection of the NEPS
transmission lines (particularly the Uzbek line) are being prepared
to ensure proper function once imports begin in late 2008.


4. (U) NEPS - TAJIK AND TURKMEN COMPONENTS - Although the MEW plans
to send delegations to both nations over then next few months to
begin PPA discussions, no other significant developments have
occurred. Both nations continue to indicate a willingness to sell
available power and financing and construction timelines remain
under discussion.


5. (U) SHEBERGHAN GAS FIELD TESTING - Although the contract for
mobilization to the site was signed February 6, there have been some
delays as the bidder subsequently increased his price for the
mobilization and testing work. The project was then awarded to the
second bidder and is expected to be finalized in mid-March. Unlike
the 100 days for mobilization for the first bidder, the second
bidder is expected to take only 30 days to mobilize into the field,
keeping the late June timeline for initial well test results on
track.


6. (U) South East Power System (SEPS) - Security problems persist in
the Kajaki Dam area but some progress is being made. Parts delivery
via helicopter airlift was completed. This will enable work on
Turbine 3 to proceed. Negotiations are underway with the
subcontractor to add additional shifts and complete work earlier
than previously scheduled thereby minimizing the time the turbine
must be off-line. Additional personnel are expected at the site in
mid March. This too is expected to increase the pace and cost of

turbine rehabilitation. Delivery of Turbine 2 to the site remains
problematic. Its heavy components can not be air lifted; hence land
transport must be arranged. The security situation continues to
preclude regular delivery by a subcontractor although we continue to
explore ways to facilitate such a move.


7. (U) DABM COMMERCIALIZATION - please refer to KABUL 0516 for
further information.

Wood