The Asian Development Bank is providing a $415 million grant to Afghanistan and a $325 million loan to Pakistan to boost the two countries’ energy security.
The $415 million grant, approved this week, will help finance the new 500MW back-to-back converter station at Dashte Alwan, to connect a new 500kV transmission line with Turkmenistan with another 500kv line to Kabul. The converter will import Turkmen power to the Afghan grid under a 10-year power purchase agreement signed in November 2015 between the two countries.
In addition, the project will see a 180km, 220kV transmission line built from Doshi to Bamyan, expanding the grid to at least eight more provinces.
The funding will complement the $10.1 billion national energy supply programme proposed by the local government, according to Asad Aleem, senior energy specialist in ADB’s Afghanistan Resident Mission. It aims to increase the country’s electrification rate from 30 to 83 percent and boost domestic power generation from 20 to 67 percent by 2030. Energy demand has grown by almost twice the country's economic growth rate from 2005 to 2012, with around 80 percent of the electricity supply sourcing from its neighbouring countries, the ADB added.
The bank is also supporting neighbouring Pakistan with the approval of a $325 million loan that should help improve its energy security.
Approved last month, the loan to Pakistan is expected to fund the installation of renewable energy power plants in the off-grid areas of Khyber Pakhtunkhwa Province and Punjab, two of the largest provinces in the country. The programme includes 1,000 mini-hydropower plants and rooftop solar plants for 23,000 schools and over 2,500 primary healthcare facilities.
“Although Pakistan has abundant renewable and non-renewable energy resources, public and private investment in energy infrastructure has remained inadequate, and the system suffers from the low efficiency of generation, transmission and distribution networks,” the ADB said.
In addition to the energy programme, ADB is also providing another $100 million loan to Sindh Province, south of Pakistan, to help develop its PPP programme. The UK government is co-financing the programme with a $19.23 million in grant and $4.75 million in technical assistance, through its development arm. The province has been developing PPP projects since 2010, but infrastructure investments in the region have been minimal over the last few years, representing only 4 percent of total investment requirements in infrastructure, according to the ADB.
The lender has approved loans for Afghanistan totalling almost $1 billion and grants of $3.3 billion since 1966, while providing Pakistan with more than $27 billion in loans and over $531 million in grants over the same period of time.