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Electricity: a main driver for economic growth in post-2014 Afghanistan



By: Habib Sangar


Beginning in 2014, Afghanistan is heading from journey of transition toward transformation. While there are widespread concerns among Afghans about the ability of their government to maintain security throughout Afghanistan and protect them from the Taliban and remnants of Al Qaeda, sustainable economic development in post-2014 raise more concerns, as the volume of aid provided by the international community will substantially decline.

Transforming Afghan economy from aid-dependence into self-sufficiency, which is one of the most important objectives set by the international community and its Afghan partner, is only feasible if Afghan government efficiently utilizes and invests in its abundant mineral resources and builds a commercialized, market-led agriculture sector. However, investment in mineral industry and agriculture sector requires sustainable and low-cost electricity. Not only is electricity required for investing in and developing mineral industry and agriculture sector, it similarly is an important contributing factor for overall socio-economic development in Afghan nation. Equally, provision of sustainable, affordable, and efficient electricity can upshot in economic growth and employment opportunities- alleviation of poverty, women empowerment, and advancing access to quality basic human services.
Despite of unprecedented influx of $ 62 billion in aid since 2002 into the country, which mostly has been spent on quick-impact counterinsurgency type projects, electricity sector as an important driver for growth has gained pintsize to generate and supply electricity desired for sustainable economic development and progress.  It also seems that there has been no specific roadmap and strategy to take Afghanistan towards electricity-independence and sufficiency in foreseeable future. Set in Afghanistan National Development Strategy, providing and supplying electricity to 65 percent urban and 25 percent rural households by 2013 now seems overly ambitious to achieve.

 Despite all the money poured into the country - with 2.226 billion kWh electricity consumption Afghanistan is among the least amount of electricity generation and supply countries in the world. According to the Afghan electricity company (De Afghanistan Breshna Sherkat), Kabul, the capital, is the only city, where about 70 percent of the households have regular access to electricity.
While most of the Afghan households struggle with lack of electricity and spend nights in dark, Afghan small-scale industries, which seem to be the main booster of economic growth in post-2014, get only15 percent of overall 600 MW, currently available electricity. While speaking on TOLO-NEWS, President of Afghanistan Investment Support Agency (AISA), Wafiullah Iftikhar, reported that around 80 small-scale afghan factories are expected to return soon from Pakistan. As much as return and operation of these factories are promising to economy development, providing and maintaining of energy supply is similarly essential to retain and further attract investments into the country.
Agriculture as a vital sector, comprising about half of Afghan GDP, still faces numerous challenges. Lack of sufficient electricity to irrigate, run storage and process facilities consider as a major obstacles ahead of this sector. Provision and supplying sufficient electricity will boost agriculture productivity and will help to transform “traditional” agriculture into technologically- sophisticated, modern, commercialized, and market-led sector.

To address electricity shortage dilemma, Afghanistan has potential to generate about 23,000 MW of electricity, mostly from renewable sources. Whereas, in order to fulfill the demand for supplying electricity for its urban and rural population, Afghanistan only needs about 3000 MW electricity. The current source of electricity, which to a larger extent is saturated from the imported electricity and diesel-burned USAID-funded generators, will soon face formidable financial challenges as foreign aid substantially shrinks after 2014.

In immediate term, to improve and enhance production capacity of its existing hydropower plants, beside of renovating and refurbishing the existing electricity generation infrastructure, mainly dams and turbines, it is important to improve efficiency of currently available electricity by investing in and modernizing transmission and distribution facilities. Similarly, Afghanistan’s geographical terrains provide a favorable climate for implementation of micro-hydropower, mini-off-grid solar, and wind electricity generation projects. Implementing such decentralized projects will help societies to transform and ensure access of the target population to quality basic services.

While the short run strategy ensures provision of abundant and affordable electricity to the households in rural and urban areas and to small-sale industries- in long-term, Afghanistan, in collaboration with the international community and monetary institutions, such as the World Bank and the Asian Development Bank, has to focus on construction of dams, reservoirs, and coal and natural gas-based electricity generation projects.  And since feasibility studies to determine existing potential of hydropower dam has already been completed, the planning, designing, and implementing phase of these projects should receive critical attention and should be made one of the top priorities of Afghan government after 2014.
Implementing projects of such scale, besides security and stability, requires tremendous amount of financial resources and funds. Attracting and allocation of such resources requires political will and a firm commitment from Afghan government and the international community. In addition to that, while embarking on legal and institutional reforms, the government has to adopt and create favorable environment for public-private partnership. Although Afghan government has introduced some reforms into the energy and electricity sector, substantial efforts to create conducive environment for public-private partnership to attract private investments and to ensure provision of quality services through competition is still absent.
Failures to bridge the gap between public and private sector in the field of energy and electricity are mainly due to lack of clear energy policy, legal and institutional framework, administrative capacity, and existence of overwhelming corruption.

Considering the potential of using various renewable and clean sources for generating electricity, Afghanistan can become self-sufficient in terms of generating and supplying electricity to ensure steady economic growth and development. However, looking at current track record of current administration and presence of overwhelming corruption, the likelihood to successfully utilize this existing potential into actual goods will stay a dream for many Afghans unless fundamental changes and reforms takes place. 

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