VZCZCXRO5869
PP RUEHDBU RUEHPW
DE RUEHBUL #0903/01 1010753
ZNR UUUUU ZZH
P 110753Z APR 09
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 8334
INFO RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC 0142
RUEATRS/DEPT OF TREASURY WASHINGTON DC 0780
RUCNAFG/AFGHANISTAN COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 03 KABUL 000903 
 
DEPT FOR SRAP, SCA/FO, SCA/RA, AND SCA/A 
DEPT PASS FOR AID/ANE 
DEPT PASS USTR FOR DELANEY AND DEANGELIS 
DEPT PASS OPIC 
DEPT PASS FOR TDA FOR STEIN AND GREENIP 
USOECD FOR ENERGY ATTACHE 
CENTCOM FOR CSTC-A 
NSC FOR JWOOD 
TREASURY FOR MHIRSON, ABAUKOL, BDAHL, AND MNUGET 
COMMERCE FOR DEES, CHOPPIN, AND FONOVICH 
 
SENSITIVE 
SIPDIS 
 
E.O.  12958 N/A 
TAGS: EINV EAID ELTN ECON ETRD AF
SUBJECT: AFGHANISTAN LAND TRANSPORT SECTOR REPORT PART 3: 
The Future of Roads and Rail 
 
REF: A) Kabul 899 
      B) Kabul 839 
      C) Kabul 784 
      D) Kabul 782 
      E) Kabul 705 
 
¶1. (SBU) Summary:  Roads will remain an important economic 
development priority in Afghanistan.  The Ministry of Public Works 
(MPW) aims ultimately to develop a network of 17,000 km of roads for 
Afghanistan at an additional cost of some USD 7 billion. 
Discussions and plans are underway to improve overland supply routes 
to China and develop rail links to China and Iran in the near- and 
long-term future.  The Deputy Minister of Public Works has 
criticized donors for not coordinating better with MPW and for not 
doing more to develop MPW capacity to manage road construction 
projects.  In turn, donors and Afghan business leaders are skeptical 
of the GIRoA's capacity to manage projects.  Road maintenance is a 
growing concern, and discussions are underway between MPW and USAID 
to develop a highway authority responsible for road toll collection 
and maintenance.  The GIRoA will likely need to show some measurable 
improvements in project management, road maintenance, and revenue 
collection before donors are willing to continue to fund such an 
expansive, and expensive, infrastructure program.  This message is 
the third in a three-part series (see Refs A and B).  End Summary. 
 
************************************* 
Plans for Future Road Infrastructure; 
Overland Routes to China 
************************************* 
 
¶2. (SBU) In a March 17 meeting, Deputy Minister of Public Works 
Rasooli told Econoff that since 97 percent of freight traffic is 
carried by road, roads will remain a critical economic development 
priority for Afghanistan for years to come.  Since 2001, donors have 
spent USD 2.4 billion in road construction (Ref C).  Rasooli told 
Econoff that constructing a 17,000 km network of provincial and 
regional roads is a priority for the Afghan government under the 
Afghanistan National Development Strategy (ANDS).  Rasooli said that 
in addition to constructing provincial roads, the GIRoA hopes to 
start building a north-south corridor from Kandahar to 
Mazar-e-Sharif through the central provinces and an east-west 
highway from Kabul to Herat. MPW estimates that future road 
development will cost USD 7 billion. 
 
¶3. (SBU) Better overland routes to China are also of interest to 
both the Afghan and Chinese governments.  On March 18, Chinese 
Economic Counselor Hu Yuanteng said alternate supply routes between 
China and Afghanistan are a priority for the Chinese government 
owing to the security problems at the Khyber Pass and because sea 
routes through Iran to Nimroz are too costly for Chinese 
contractors.  Deputy Minister Rasooli said he has talked to the 
Chinese about building a road through the Wakhan corridor (about 200 
km).  However, construction costs may be prohibitive at USD 2 
million per kilometer (at least USD 400 million in total) owing to 
the Wakhan's high mountainous terrain.  Hu confirmed to Econoff that 
developing a Wakhan corridor route is not possible in the near 
future.  Rasooli said the two governments are also exploring the 
option of building a road to Eshkashem near the northeastern border 
with Tajikistan in Badakhshan province that would connect to roads 
leading to China through Kyrgyzstan. 
 
**************************** 
A Growing Rail Sector: China 
and Iran Lead Development 
**************************** 
 
¶4. (SBU) Deputy Minister Rasooli told Econoff that Afghanistan is 
keen to develop a rail sector as a more cost effective and faster 
alternative for transporting freight than roads.  Rasooli believes 
railroad connections would better support military supply imports 
and decrease the burden on already deteriorating roads at key 
chokepoints at Pul-e-Khumri and the Khyber Pass.  Rasooli said 
Afghanistan needs a rail link through Zaranj to Iran as a long-term 
goal.  In the near future, Rasooli envisions extending rail links 
from neighboring countries inside the Afghan border.  Then the 
Afghan government could build depots for processing and transferring 
freight.  These depots would then connect via road to the Ring Road 
 
KABUL 00000903  002 OF 003 
 
 
and major provincial roads. 
 
¶5. (SBU) On February 28, Asian Development Bank (ADB) officials told 
Econoff that the ADB recently approved a USD 1 million project to 
complete a survey for a railroad linking the northeast provinces to 
Herat.  Meanwhile, unconfirmed rumors suggest that Iran and China 
have agreed to fund jointly a railroad connecting the northeast 
provinces to the rail link that Iran is currently building from the 
Iranian border to Herat (Refs C, D, and E).  Chinese Economic 
Counselor Hu said that China, Afghanistan, and the Central Asian 
countries need to establish a transit trade agreement in order to 
maximize the benefits of possible rail development.  He added that 
using rail to carry supplies from China would be more cost effective 
for Afghan businessmen and Chinese contractors working here because 
one rail wagon can carry 60 tons of cargo at a cost of USD 6,000 
while a container shipped by sea through Karachi costs at least the 
same amount but carries far less cargo and may suffer delays or 
insurgent attacks while transiting Pakistan to Kabul. 
 
******************************* 
Developing Local Contractor and 
Afghan Government Capacity 
******************************* 
 
¶6. (SBU) Deputy Minister Rasooli charged that donors need to work 
more closely with MPW on funding priorities and in project 
management in order to increase the capacity of the Afghan 
government and private sector contractors in road construction.  He 
said that road projects are costly because donors hire international 
project managers and engineers rather than Afghans.  He said MPW 
road construction projects typically cost 30 percent less than 
private sector contractor projects.  As an example, he noted that a 
foreign road construction engineer earns USD 25,000-30,000 per 
month, two to three times the cost of an Afghan engineer.  Rasooli 
said that donors should funnel their project resources to the MPW 
for management and use the MPW's staff of 70 engineers.  He strongly 
believes that the MPW now has the capacity to manage projects; 
however, because of what he described as donor bias against Afghan 
government management, MPW does not have the budget it needs to 
oversee all road construction projects. 
 
¶7. (SBU) In meetings with Econoff, Chinese, Japanese, German, and 
ADB officials were all skeptical of MPW capacity to effectively 
manage donor funds for road construction projects.  In a March 22 
meeting, German Emboffs dismissed MPW's criticism of donors not 
developing Afghan capacity as simply "donor bashing" in the lead up 
to elections.  In a March 17 meeting, Afghanistan Chamber of 
Commerce and Industry (ACCI) leaders criticized the GIRoA's 
construction contracting policies, charging that the Afghan 
government is not transparent.  ACCI leaders called for increased 
contract opportunities and training for Afghan construction 
businesses, to enable them to compete for and successfully manage 
road projects. 
 
************************************ 
Addressing Road Maintenance: 
A Highway Authority for Afghanistan? 
************************************ 
 
¶8. (SBU) International partners have told Econoff in recent meetings 
that road maintenance is a concern and that donors are increasingly 
focusing funds on maintenance projects as well as construction.  ADB 
estimated that maintenance of the Ring Road will cost up to USD 25 
million by 2012.  In a March 25 meeting with Econoff, Japanese 
Emboff said that Japan plans to spend a portion of its USD 250 
million roads assistance budget to Afghanistan to maintain the 650 
km of roads Japan has already or is currently constructing.  Afghan 
business leaders claim that 40 percent of the roads constructed 
since 2001 have deteriorated to the point of being unusable. 
 
¶9. (SBU) USAID is developing plans for an independent highway 
authority that could use revenues from toll collection to maintain 
road infrastructure.  However, without appropriate legislation, it 
is unclear which of the ministries sharing responsibility for road 
development and management has control over road maintenance.  MPW, 
the Ministry of Transport and Civil Aviation (MoTCA), and the 
Ministry of Finance (MOF) all claim to have authority over aspects 
 
KABUL 00000903  003 OF 003 
 
 
of revenue collection.  Thus, a highway authority dependent on those 
funds would have to struggle to maintain independence from these 
ministries.  Under the ANDS, MPW is responsible for constructing and 
maintaining roads, MoTCA is responsible for road toll collection, 
and MOF receives and disburses revenue from toll collection through 
the central budget.  In reality, MoTCA has no capacity to oversee 
aspects of the land transport sector, while MPW, with donor support, 
constructs roads and would want to maintain control over any road 
monies allocated to a highway authority. 
 
¶10. (SBU) COMMENT: Rasooli is perhaps unrealistic in his assumption 
that donors will continue to foot the bill for all road projects 
without some contribution from the Afghan government's budget and a 
clear plan for maintenance of existing roads.  We suspect that the 
GIRoA will need to show some measurable improvements in project 
management and revenue collection before donors are willing to fund 
the forecast additional USD 7 billion needed for road projects in 
the next 12-15 years. 
 
RICCIARDONE