VZCZCXRO4588
PP RUEHBW RUEHIK RUEHPOD RUEHPW RUEHYG
DE RUEHBUL #0984/01 1131358
ZNR UUUUU ZZH
P 221358Z APR 08
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 3660
INFO RUCNAFG/AFGHANISTAN COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEKJCS/OSD WASHINGTON DC
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RUEABND/DEA HQS WASHINGTON DC
RHMFIUU/HQ USCENTCOM MACDILL AFB FL
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 KABUL 000984 
 
SIPDIS 
 
DEPT FOR SCA/RA, SCA/A, EEB, EEB/ESC/IEC (GRIFFIN) 
DEPT PASS AID/ANE, OPIC 
DEPT PASS USTR FOR LILIENFELD AND KLEIN 
DEPT PASS OPIC FOR ZAHNISER 
DEPT PASS TDA FOR STEIN AND GREENIP 
CENTCOM FOR CG CFC-A, CG CJTF-76, POLAD, JICENT 
NSC FOR JWOOD 
TREASURY FOR ABAUKOL, BDAHL, AND MNUGENT 
MANILA PLEASE PASS ADB/USED 
PARIS FOR USOECD/ENERGY ATTACHE 
OSD FOR SHIVERS, SHINN 
COMMERCE FOR DEES, CHOPPIN, AND FONOVICH 
 
SIPDIS 
 
E.O. 12958 N/A 
TAGS: ENRG EFIN ETRD KPWR EAID PGOV AF
SUBJECT: AF: UPDATE ON USG ENERGY PROJECTS 
 
¶1. (U) The following cable provides a current status update on USG 
energy sector projects in the Islamic Republic of Afghanistan 
(IRoA). 
 
¶2. (U) KABUL 100 MW GENERATOR SETS (GENSETS) - The IRoA transferred 
another USD 10 million to the U.S. Treasury, completing the Afghan 
Government's USD 20 million contribution to the project.  We are in 
the process of selecting a subcontractor for Balance of Plant (BOP) 
works and bids for the site security contract were due April 12. 
 
¶3. (U) Two security incidents at the construction site on March 30 
and 31 resulted in the destruction of approximately 70 meters of 
perimeter wall.  As a result, and because of additional threats to 
the workers made by local inhabitants, all site work was suspended. 
It was hoped that Minister of Energy and Water (MEW) Ismail Khan 
would be able to resolve the new dispute over land with local 
elders.  After several postponements, a meeting held April 15 did 
not yield positive results.  Because the dispute centers on claims 
of land ownership, Minister of Urban Development (MUD) M. Yousuf 
Pashtun, is working with Minister Khan to resolve the issue. 
Minister Khan departed for Uzbekistan on April 20.  Minister Pashtun 
met with contractor representatives Louis Berger Group (LBG) on 
April 20 and later that day visited the site.  He seems dedicated to 
obtaining a favorable resolution of this matter, but, to date, there 
is no resolution. 
 
¶4. (U) LBG/BV (LBG and Black and Vetch), USAID contractors for the 
project, indicated that if the issue can be resolved before the end 
of April, they will be able to keep the project on schedule. 
However, if delays persist, they will be unable to guarantee the 
installation of any generation capacity before 2009.  Though site 
relocation has been mentioned as a possibility, such a move would 
cost an additional USD 2 million, push back the delivery of initial 
power from the project by at least six months (mid-2009) and would 
not guarantee security at the new site.  The contractor has 
requested government (Afghan National Army) assistance in protecting 
the site, but has not had a reply to date.  The Embassy may reach 
out shortly to the IRoA to underscore the gravity of the situation. 
A follow-on meeting with local authorities was held April 20 in the 
hopes of arriving at a final resolution; we are currently waiting to 
hear the results of that meeting. 
 
¶5. (U) North East Power System (NEPS) - UZBEK COMPONENT - On April 
16 Minister of Economy (MOE) Mohammad Shams received official 
notification from the Government of Uzbekistan that it is ready to 
sign the construction contract for the 43 km segment of NEPS line 
within its national boundary.  Shams and Minister Ismail Khan 
departed Kabul on April 20 and the official ceremony is expected to 
take place Tuesday, April 22 in Tashkent.  With the contract 
signing, Afghanistan will transfer USD 12.5 million to fund the 
construction.  Shams is expected to invite Uzbekenergo 
representatives to Afghanistan for the necessary site visits in 
order to ensure proper functioning of the line prior to its being 
energized.  Uzbekenergo reps have stated they expect the line to be 
completed and energized by October 2008 and to initially supply 150 
MW of power.  A formal PPA agreement has not been signed, although 
negotiations continue.  Now that the construction hurdle has been 
passed, Minister Shams expects rapid progress in PPA talks. 
 
¶6. (U) NEPS - TAJIKISTAN COMPONENT - Asian Development Bank (ADB) 
representatives had successful meetings in March with the Tajiks 
regarding power imports into Afghanistan.  A draft PPA, initially 
drafted by USAID's contractor, is under discussion and agreement is 
expected shortly.  An Afghan delegation, ostensibly going to 
participate in the Energy Charter Meetings to be held in Dushanbe, 
is expected depart Kabul the week of April 20.  They will be 
accompanied by USAID's technical assistance staff, who are well 
acquainted with the details of the PPA.  The successful conclusion 
of a PPA is expected shortly. 
 
KABUL 00000984  002 OF 002 
 
 
 
¶7. (U) NEPS - TURKMENISTAN COMPONENT - Ashgabat 0469 is the most 
recent cabled summary of the productive April 8-9 meetings between 
the Afghans and Turkmen.  Agreements to supply 300 MW of electricity 
to Afghanistan (via the NEPS) by 2010 were signed.  The cable notes, 
however, that some commercial aspects have yet to be worked out.  A 
joint technical working group is being formed, and progress may 
occur shortly when Turkmen President Berdimuhamedov visits Kabul on 
April 28. 
 
¶8. (U) SHEBERGHAN GAS FIELDS TESTING - Representatives of the 
contractor are expected in Kabul on April 24 to resolve the final 
details of the contract.  A site visit i also planned that week. 
We expect the contrat to be finalized and signed by April 30 with a 
mid-May contractor mobilization into the field.  USAID and ADB are 
in contact to work out the details of additional ADB funding to the 
project once contracts are signed. 
 
¶9. (U) South East Power System - SEPS - As always, security problems 
persist at the site.  The contractor completed the dismantling of 
the Unit 3 turbine and during the next two weeks will prepare a 
detailed report of all repairs and an estimated schedule for full 
refurbishment.  Attention is now focused on looking for a means to 
deliver Unit 2 parts and construction materials to the site (this 
has to occur by road because of the weight of some components) 
before winter 2009. 
 
¶10. (U) DABM Corporatization - We will be reporting separately on 
the corporatization of the Afghan electricity distribution 
organization. 
 
WOOD