Afghanistan Power System Development Project: Decentralised

Power Supply with Renewable Energy Sources

https://www.slideshare.net/atikbarbhuiya/afghanistan-power-system-development-project-final-project

Background:An estimated 1.2 billion people — almost one in every five people in the world — are living in areas affected by conflict and fragility today. Some of these people are fleeing from war, while others have escaped natural disasters. Most are trying to earn a living in very challenging environments. It is estimated that by 2030, 62% of the global poor will live in fragile and conflict-affected situations (FCS). This will jeopardize the ‘leave no one behind’ commitment in the 2030-Agenda. In countries not marred by fragility, many among the poor are projected to be lifted out of poverty by substantial economic growth, accelerated technology adoption and slower population increases. 

Background:These communities need investment to create jobs, spur economic growth, generate tax revenues, bolster infrastructure, and create a sense of hope for their people. And, simply put, a society with an economic stake in peace is less likely to return to conflict. Many of the constraints to match expectations of investors and entrepreneurs in fragile markets are. Weak government institutions, lax legal and regulatory frameworks and inadequate infrastructure and services all make doing business difficult.

 

Background:To attract investment and help companies and people prosper, governments need support in improving their tax systems and public expenditure management to get more accountable, rebuild trust and increase future domestic resources. Scaling up finance in FCS to support sustainable development and job creation is urgently needed and will significantly contribute to achieving the goals of the Addis Ababa Action Agenda (AAAA) and the 2030-Agenda.

 

Country Brief: 

Country Brief: 

Country Brief: 

Country Brief: 

Country Brief: 

Country Brief: 

Afghanistan's Economic Drivers

Country Context: Unprecedented political, security, and economic challenges since 2012 have affected Afghanistan's economic growth, resulting in a fiscal crisis. Domestic revenues fell to 8.4 percent of GDP in 2014 from a peak of 11.6 percent in 2011. Economic growth has also fallen sharply from an annual average of 9.4 percent during 2003-12 to 1.5 percent in 2014. By 2021/22, the Government of Afghanistan's financing gap is projected to be 25% of GDP. Unemployment and underemployment, already at 8 percent and 48 percent respectively in 2009/10, is projected to rise just as the labour force is expanding by 300,000 new entrants per year.The new Government has declared its commitment to address these challenges as outlined in its paper “Realizing Self Reliance: Commitments to Reforms and Renewed Partnership”, that was presented at the London Conference on Afghanistan in December 2014.

Country Context: Growth, Revenue Generation and Infrastructure Development Initiatives in all sectors are oriented toward contributing to growth, revenue, and employment to varying degrees. Accelerating growth and revenue will require a balanced approach but improvement in Afghanistan’s infrastructure is critical to facilitating access and progress in the extractive industries and, therefore, a top development priority.

Country Context: The strategic vision of the government for the energy sector is “an energy sector that provides [the] citizens of Afghanistan and drivers of growth in the economy with long-term reliable and affordable energy access based on market-based private sector investment and public sector oversight.” The overall energy sector goals include rehabilitation and expansion of the public power grid and attraction of private investments. Economic growth demands increased energy consumption; therefore, there is a direct relationship between per capita GDP and per capita energy consumption. The per capita energy consumption of Afghanistan was fourth in the region and greater than Srilanka and Bangladesh in 1980. At that time, Afghanistan was an exporter of natural gas to Russia but currently imports substantial amount of energy for its domestic consumption.

Project Context: As night falls, most villages in Afghanistan are plunged into darkness. By day, smoke rises from the courtyards, where many households cook with wood or animal dung. Living without electricity is onerous and can damage health. Three quarters of all families complain of breathing difficulties caused by smoke. Kerosene and diesel-powered generators are expensive, so only a small proportion of the rural population can afford them. An improved electricity supply not only makes everyday life easier. It is also the starting point for economic development.

Sectoral and institutional Context: 

Afghanistan is at the bottom 10% globally in electricity consumption per capita and only 28% of its population is connected to the grid, making it one of the lowest rates of electrification in the world. Three decades of war damage and a fragmented power grid drive this energy scarcity; the wars destroyed 65% of the power lines. In June 2015 Afghanistan’s access to electricity rate is estimated at about 25% with about 1 million residential connections. This is a significant increase to the levels around 2005, when the rate of electrification was only at 6%. Discrepancies with under-served rural areas remain. Due to the interconnection in place with Uzbekistan and Tajikistan, load shedding and outages have been significantly reduced in the past five years..

Sectoral and institutional Context: 

Overall the Afghan power system remains small, fragmented and underdeveloped but demand is growing rapidly. Grid-based electricity is estimated to meet the needs of about 25% of Afghanistan's population, mainly in the urban areas and along a few transmission corridors. About 80% of electricity is imported from Iran, Tajikistan, Turkmenistan and Uzbekistan, and accounts for about 1000 MW of the capacity available in the country. Domestic diesel generators, thermal and hydropower account for about 519MW across the country. The transmission system consists of islands linking the different generation sources to the loads. .

Sectoral and institutional Context: 

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Sectoral and institutional Context: 

.The expected outcome of the strategy is greater access and reliability in electricity supplies throughout the country, based on increased utilization of domestic energy resources and imports. The Government seeks to create a strong enabling environment for private sector investment in energy production and in the distribution and sale of electricity. Reducing poverty and expanding employment and entrepreneurial opportunities in rural areas hinge on the extension of electricity through both the private sector and public investment in various offgrid projects

Sectoral and institutional Context: 

. The private sector has identified the lack of availability of reliable electricity as the most critical impediment to its growth, as have the World Bank's Doing Business indicators for Afghanistan. The Afghan people have one of the lowest access rates and per capita consumption of electricity. Afghanistan will continue to face demand-supply imbalances due to sub-optimal development of its own resources, as well its high dependence on imports from neighbouring countries.  Energy is a critical sector. However, it remains institutionally underdeveloped and cannot meet Afghanistan’s energy requirements in the short, medium and long terms. Therefore, there is a need for strengthening the sector’s institutional capacity for improved management and the development of domestic energy resources, including the identification and promotion of renewable energy, energy efficiency and the facilitation of public-private investment.

Sectoral and institutional Context: 

. The National Energy Supply Program (NESP) will be instrumental in addressing critical power sector development needs through institutional development, improvements in planning, operations and maintenance, investment in generation, transmission and distribution as well as in demand side management. NESP also aims to strike an appropriate balance between importing inexpensive power from neighbors and developing a greater degree of energy security through development of its indigenous resources.  

Sectoral and institutional Context: 

. To achieve this, the sector is undergoing significant reform. Da Afghanistan Breshna Sherkat (the Afghan Power Corporation) has been corporatized and is undergoing commercialization, with a particular focus on raising revenues to cost recovery levels - including covering the cost of operations and maintenance, and some level of self-financing of new investment through concentration on metering, billing and collection for services provided. Further separation of sector operations from policy and regulatory functions is envisaged, and sector-level master planning is under way, including tariff reform. In conjunction with this, Afghanistan will continue the program of investment started in 2008 to expand and strengthen the grid power system through development of new capacity in generation, transmission and distribution. Although substantial ground has been gained from a low base, NESP envisages additional investments of $1.5 billion in the short term.

Project Development Objectives . creating the framework for a sustainable, decentralised

power supply using renewable energy sources;developing a strategy for rural electrification with a focus on renewable energy sources;introducing electro technical standards in line with international guidelines to boost energy efficiency;piloting private sector operating models for a decentralised power supply from hydropower and solar power;constructing small-scale hydropower plants and solar hybrid systems, and operating them sustainably;training skilled staff to run decentralised energy systems sustainably.

Project Finance.

50.00 USD Million Dollar

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