Sian Crampsie
The Asian Development Bank (ADB) has approved $1.2 billion in grants to help Afghanistan reinforce its energy sector operations.
The grants include $750 million from ADB's Special Funds resources and up to $450 million from the Afghanistan Infrastructure Trust Fund, which will be administered by ADB. The funds will help to reinforce existing energy sector projects, boost energy supplies, improve power sector efficiency and promote cross border trade in energy.
"Insufficient energy supplies and a demand-supply imbalance constrain growth and income opportunities and create economic disparities that can fuel ethnic and regional tensions and insecurity," said Asad Aleem, Senior Energy Specialist in ADB's Central and West Asia Department. "This assistance will support the government's national energy supply program of more than $10 billion, which aims to expand power supply to boost economic growth and cut poverty."
Afghanistan has seen energy demand grow by almost twice its economic growth rate from 2005 to 2012, and it taps around 80 per cent of its total supplies from neighbouring countries. The reliance on energy imports, small size of the domestic market, limitations in transmission and distribution networks, and governance and financing weaknesses leave energy security highly vulnerable.
The first tranche of the grants will be used to expand cross-border power interconnections, while subsequent tranches will focus on transmission network upgrades, as well as support for domestic renewable energy projects and measures to boost both domestic gas production and imports via the Turkmenistan-Afghanistan-Pakistan-India gas pipeline.
Assistance for building up the human resource capabilities of relevant agencies, and to introduce regulatory reforms, will also be provided.
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