VZCZCXRO7722
RR RUEHAG RUEHAST RUEHBI RUEHCI RUEHDF RUEHIK RUEHLH RUEHLN RUEHLZ
RUEHPW RUEHROV RUEHVK RUEHYG
DE RUEHAH #0469/01 1061002
ZNR UUUUU ZZH
R 151002Z APR 08
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC 0597
INFO RUCNCIS/CIS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 1446
RUEHAK/AMEMBASSY ANKARA 3628
RUEHKO/AMEMBASSY TOKYO 1313
RUEHIT/AMCONSUL ISTANBUL 1882
RUEHVEN/USMISSION USOSCE 2409
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHEHNSC/NSC WASHDC
RUEKJCS/JOINT STAFF WASHDC
RUEKJCS/SECDEF WASHDC

UNCLAS SECTION 01 OF 03 ASHGABAT 000469 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR SCA/FO, SCA/CEN, SCA/A, EUR/ACE, EEB 
USAID/W FOR EE/AA 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EAID ENRG AF TX
SUBJECT:  TURKMEN-AFGHAN ENERGY DIALOGUE - PROTOCOL A BREAKTHOUGH ON 
WAY TO INCREASED EXPORTS TO AFGHANISTAN 
 
REF: A. 07 ASHGABAT 0660 
      ¶B. 07 ASHGABAT 0523 
      ¶C. 07 ASHGABAT 0317 
 
¶1.  (U) Sensitive but unclassified.  Not for public internet. 
 
¶2.  (U) SUMMARY:  Following intensive meetings on April 8-9, 
officials from Turkmenistan's Ministry of Energy and Industry (MOEI) 
and Afghanistan's Ministry of Energy and Water (MEW) signed a 
landmark agreement to supply additional 300 MW of electricity to 
Afghanistan by 2010 and build related supporting infrastructures in 
their respective territories.  Additionally, both sides agreed to 
improve future decision-making processes by establishing a Joint 
Working Group (JWG).  The new agreement will be utilized to enlarge 
the scope to include additional supply.  Turkmenistan President 
Berdimuhamedov's upcoming visit to Afghanistan at end-April 
represents an historic opportunity to reach agreement on pricing and 
commercial arrangement for the delivery of the additional 300 MW by 
¶2010.  END SUMMARY. 
 
STRONG COMMITMENT TO PROCESS DEMONSTRATED BY ALL SIDES 
 
¶3.  (U) The meeting's purpose was to discuss export of 300 MW to 
Afghanistan from Turkmenistan and to finalize technical parameters 
for the construction of 500 KV transmission line from Serdar 
generating station in Turkmenistan to 500/220 KV substation in 
Afghanistan.  After delays postponed the originally proposed dates 
in November 2007, an Afghan delegation headed by Gulam Rabbani, DABM 
General President, and supported by USAID/Kabul consultants Krish 
Krishnan and Prem Babu, met with Turkmenistan Ministry of Energy and 
Industry counterparts in Ashgabat on April 8-9.  Accompanying DABM's 
Rabbani were two senior officials Ms. Zia Gul, Ministry of Energy 
and Water's (MEW) Director of Planning, and N. Amani, DABM's 
President, 220 KV System.  In addition, the Afghan Government's 
strong commitment for the deal was demonstrated by the presence of 
Ambassador of Afghanistan to Turkmenistan Abdul Karim Kaddam and 
First Secretary  Mansouri.  Ambassador Kaddam and First Secretary 
Mansouri participated in all meetings and showed keen interest. 
 
¶4.  (U) USAID Representatives from both USAID Central Asia Republics 
(CAR) and Afghanistan also actively participated in the meetings. 
USAID/CAR Mission Director William Frej led the USAID team, and Anil 
Mishra, Senior Energy Policy Advisor (CAR), Anthony Carvalho, Head 
of Energy and Natural Resources (Afghanistan) and Serdar Yagmurov, 
Program Management Specialist (Turkmenistan) joined the 
discussions. 
 
¶5.  (U) Deputy Minister of Energy and Industry Yarmuhammet 
Orazgulyev headed the Turkmen delegation accompanied by  Azatguly 
Ovlyagulyev, Acting Chairman of the state energy corporation, 
"Turkmenenergo," and six other department heads. 
 
AFGHAN PRESENTATION WAS PROFESSIONAL AND TO THE POINT 
 
¶6.  (U) DABM's Rabbani provided a snapshot of Afghanistan's 
electricity supply and demand.  He reviewed the power generation and 
distribution projects being implemented in the country, and outlined 
the deficit in supply and stressed significant additional capacity 
required to meet the demand.  He described the initiatives taken by 
the Afghan government to import electricity from Turkmenistan, 
Uzbekistan, and Tajikistan.  He thanked the Turkmen government for 
existing supply of electricity to Afghanistan and sought the 
commitment of the Turkmen government to export an additional 300 MW 
to Afghanistan by May 2010. 
 
¶7.  (U) Rabbani further elaborated on the role donors have played in 
funding various power projects in Afghanistan.  He specially praised 
USAID for its unwavering financial support and commitment to bring 
24/7 electricity to people in Kabul and other parts of Afghanistan. 
 
USAID ADDRESSED CONCERNS ON FINANCING AFGHAN INFRASTRUCTURE 
 
 
ASHGABAT 00000469  002 OF 003 
 
 
¶8.  (U) USAID/CAR Director Frej stressed the importance of the 
supply of electricity to Afghanistan from Turkmenistan. He pointed 
out that the United States through its State Department and USAID 
stands behind Afghanistan to bring stability and support sustainable 
economic growth to the entire Central Asian region. 
 
¶9.  (U) USAID/Afghanistan assured Turkmen delegates on its committed 
financial support for the construction of infrastructure needed to 
import power from Turkmenistan. There is a firm commitment by 
USAID/Afghanistan to finance the costs of building power lines and 
500/220 KV sub-station on Afghan side.  The project design and 
implementation plans are just awaiting commitment from the Turkmen 
side. 
 
¶10.  (U) The technical consultants to MEW and USAID/Afghanistan 
presented the findings of the 2007 feasibility study on load flow, 
routing of transmission lines and interconnection for 300 MW supply 
of electricity via a 500 KV transmission line.  They discussed 
various options explored and the recommended routing of transmission 
lines, border-crossing point, and location of 500/220 KV sub-station 
at Andkhoy inside Afghanistan. 
 
AT FIRST TURKMEN WERE RESERVED AND COOL, THEN WARMED UP 
 
¶11.  (U) The Deputy Minister expressed disappointment at the time 
taken by the Afghan side to reach current level of development, poor 
interaction and communication that was taken as a sign of lack of 
interest.  The Deputy Minister was surprised by lack of 
communication with the Turkmen side on the decision taken by the 
Afghans four months ago on the transmission line crossing point and 
the location of the sub-station in Afghanistan.  He stressed the 
need for mutual decision-making and keeping a good flow of 
communication. 
 
¶12.  (U) Following the Deputy Minister's comments, Turkmenenergo 
made a presentation on its progress toward increasing electricity 
supply to Afghanistan.  It advised that Turkmenistan could increase 
supply of additional electricity to Badghis province, Qerqeen, and 
Khamyab districts via the existing 110 KV line, provided Afghanistan 
constructs the related receiving facilities inside its territory. 
 
¶13.  (U) In order to increase power supply to Herat, Afghanistan, 
and upon completion of construction of 220/110 kV substations at 
Herat by Afghanistan, Turkmenistan will upgrade the operating 
voltage of the transmission line Serhetabat-Herat from 110 kV to 220 
kV.  Through these upgrades, additional power supply of up to 50-60 
MW can be easily made available in the near term to Herat and Afghan 
villages close to the Turkmenistan border. 
 
¶14.  (U) Turkmenenergo exports 10-15% of its current power 
generation to neighboring countries of Turkey, Iran and Tajikistan. 
To meet its export obligations and meet its own 8-10% increase in 
domestic consumption, the government has decided to install one 
additional power plant consisting of two additional 127 MW 
gas-turbines, a new 500 KV and 220 KV sub-stations at Serdar. 
Turkmenenergo plans to supply an additional 300 MW to Afghanistan 
from a single generation source at Serdar and building 420 km of a 
500 KV transmission line to Afghan border and installing a 500 KV 
substation near the border.  Turkmenenergo has the expertise and 
resources to build the planned facilities inside Turkmenistan within 
24-30 months once an agreement is reached. It expects all financing 
to be provided by the state budget and will not need external 
financing. 
 
CHANGED TURKMEN ATTITUDE - UPBEAT AFTERNOON SESSION 
 
¶15.  (U) The Deputy Minister informed the delegation that President 
Berdimuhamedov has decided to extend the existing electricity supply 
agreement to Afghanistan at $0.02/kwh till 2010, despite its 
production cost being $0.05/kwh.  He presented to the Afghan 
delegate copies of the Presidential Order and implementation 
agreement for acceptance and signing. 
 
ASHGABAT 00000469  003 OF 003 
 
 
 
¶16.  (U) Rabbani thanked the Turkmen President and the government 
for the courtesy extended and sought time to present the new 
agreement to Afghan Energy Minister for signing.  Rabbani assured 
the Deputy Minister a quick turnaround soon after his return to 
Kabul.  The Deputy Minister further announced that the Government of 
Turkmenistan looks very positively at Afghanistan's request for an 
additional 300 MW supply.  They were convinced of the Afghan 
government's resolve to build the new line and sub-station on their 
side and the U.S. commitment to provide financing for the 
construction of these facilities. 
 
WORKING GROUP - NEW CHAPTER IN TURKMEN/AFGHAN RELATIONS 
 
¶17.  (U) The Deputy Minister wanted the project to move at a faster 
pace.  He proposed establishing a dual channel of communication 
between the two sides - the existing formal one through the MFA and 
another one direct with the Ministry of Energy and Industry.  The 
Deputy Minister agreed to the Afghan proposal to establish a joint 
working group (JWG) to meet and review, approve, and monitor design 
and construction of the proposed transmission lines and 
sub-stations. 
 
¶18.  (U) Rabbani informed the Deputy Minister that the Afghan side 
is prepared to name the Afghan nominees for the Joint Working Group 
and offered to host the first meeting of the JWG in Kabul.  The 
Deputy Minister agreed to provide the names of Turkmen nominees 
shortly in a formal communication to the Afghan Energy Ministry. 
 
¶19.  (U) Rabbani also requested that the Deputy Minister establish a 
separate commercial working group to finalize a Power Purchase 
Agreement (PPA), commercial arrangements, and decide on the pricing 
for additional sale of electricity.  The Deputy Minister pointed out 
that it is outside his authority to decide on commercial matters and 
pricing.  All commercial decisions are to be taken at a higher 
cabinet level and by the President.  However, he agreed that the 
proposed JWG could draw on the other resources of the government to 
take up the matter related to PPA and commercial arrangements after 
all technical issues are settled.  The Deputy Minister further 
suggested that the pricing issue could be raised and discussed by 
two presidents in the upcoming visit of Turkmenistan's President 
Berdimuhamedov to Kabul on April 28. 
 
A LANDMARK BREAK-THROUGH AGREEMENT IS AGREED TO AND SIGNED 
 
¶20.  (U) The protocol of the joint meeting of technical experts of 
the Ministry of Energy and Water of the Islamic Republic of 
Afghanistan and the Ministry of Energy and Industry of Turkmenistan 
was drawn up and agreed to.  After the protocol was reviewed and 
approved by the Turkmen Cabinet of Ministers, both sides signed it 
in the presence of all the participants at approximately 10:00 pm 
that night. 
 
¶21.  (SBU) COMMENT: There was a marked difference in the attitude of 
the Turkmen Government towards the Afghanistan Delegation.  Compared 
to the cool reception the Afghans received a year ago, there was a 
180 degree turnaround.  Overall, the meetings were conducted in a 
very positive, friendly, and accommodating environment. 
Considerable credit for the meetings' results goes to the strong 
USAID presence and level of preparedness and commitment shown by 
Afghans in the meetings.  END COMMENT. 
 
¶22.  (U) USAID/CAR Mission Director Bill Frej and Embassy Kabul 
cleared this cable. 
HOAGLAND