VZCZCXYZ0001
RR RUEHWEB

DE RUEHBUL #1787/01 1900050
ZNR UUUUU ZZH
R 090050Z JUL 09
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC 0041
INFO RUCNAFG/AFGHANISTAN COLLECTIVE

UNCLAS KABUL 001787 
 
DEPARTMENT FOR SRAP, SCA/FO, SCA/A, EUR/RPM 
STATE PASS TO AID FOR ASIA/SCAA 
USFOR-A FOR POLAD 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAID ECON ENRG AF
 
SUBJECT:  Baghlan Industry and Energy Sector Poised For Expansion 
 
¶1. (SBU) Summary: Baghlan Province is well positioned to take 
advantage of its energy production and industrial potential, though 
some of its business leaders seem overly ambitious.  With its intact 
hydropower plants and location along one of Afghanistan's primary 
electrical backbones, Baghlan almost has the energy it needs to both 
power its capital city, Pul-i-Khumri, and its myriad of industrial 
enterprises.  Though Baghlan's dominant business conglomerate, 
Afghan Investment Company, operates at a loss, it plans to construct 
new cement plants and a large coal burning power plant within the 
next few years.  It remains unclear if Baghlan's coal mines have the 
infrastructure or the coal to keep up.  End Summary 
 
Baghlan Hydropower - Still Working But Not Enough 
--------------------------------------------- ---- 
 
¶2. (SBU) Pul-i-Khumri has two hydropower energy plants which harness 
the energy of the Kunduz River.  The first plant (PK-1) was built in 
the 1941 has three turbines, each with 1.6 MW capacity.  In the 
early 1960s, a 5.5 kilometer canal was dug connecting PK-1 to a new 
plant with still greater capacity.  Because the twenty meter wide 
and four meter deep canal has never been cleaned or dredged, water 
often backs up, causing the pressure at PK-1 to drop.  Because of 
this (as well as use of primarily original equipment), despite its 
4.8 MW capacity, PK-1 is only able to produce a maximum of 2.1 MW of 
energy, all of which is distributed to Pul-i-Khumri city residents. 
Pul-i-Khumri's second plant (PK-2) also has three turbines with a 
total capacity of 9 MW.  From November through April, there is not 
enough water to run all of the turbines, though the plant manages to 
generate a minimum of 3 MW, enough to feed the energy needs of 
Baghlan's four coal mines and the Baghlan Cement Factory.  Any power 
generated above this 3 MW minimum is distributed to Pul-i-Khumri's 
general power grid.  From May to October, the three turbines 
generally run 24 hours a day, meaning a surplus 6 MW are distributed 
to the public.  As a component of USAID's Renewable Energy Project, 
the U.S. Army Corps of Engineers is working jointly with USAID to 
restore and develop hydroelectric resources in Pul-i-Khumri through 
rehabilitation projects projects on both plants.  Technical 
assessments were completed in April 2008 and it is expected that the 
contract will be awarded in November or December 2009.  Once work 
begins, it is expected to take 12 - 16 months to complete the 
project. 
 
 
Imported Energy From Uzbekistan Makes An Impact 
--------------------------------------------- -- 
 
¶3. (SBU) On June 8, Water and Energy Minister Ismael Khan 
inaugurated a new 220-Kw substation near the Pul-i-Khumri.  The 
substation feeds off the new Heyraton-Kabul energy backbone, which 
currently carries up to 150 MW of power imported from Uzbekistan. 
Baghlan has placed a new transformer at the substation to siphon off 
up to 16 MW of this energy.  According to local Water and Energy 
Department head Haidar Sidiqi, Kabul has agreed to allow Baghlan 
access to up to 32 MW, though it has not yet funded a second 16 MW 
transformer.  Of this 16 MW, 1 MW is now being pushed north along 
newly laid power lines to Fabrika and Baghlan-i-Jadid, 6 MW are for 
public consumption and 9 MW are destined to power the newly built 
second cement factory. 
 
How Much Power Does Pul-i-Khumri Need? 
-------------------------------------- 
 
¶4. (SBU) At any given time, the city is subject to rolling brown 
outs, particularly from January through March when the water level 
in the canal remains low.  According to the Chief of Baghlan's 
Department of Energy, Pul-i-Khumri is wired to distribute 
electricity in a radius of 15 kilometers around the city center.  In 
order to keep the city lit for 24 hours a day, the system requires 
around 13 MW of power.  The Department of Energy is now expanding 
the network of power lines out to Fabrika, home of Baghlan's sugar 
and cheese factories, and Baghlan-i-Jadid.  This extended network 
would need 30 MW to remain fully charged.  With the Uzbek 
electricity now on line, the cement factories and mines are slated 
to receive a steady 12 KW, while the general population will receive 
anywhere from 8 to 14 MW of power, depending upon the season. 
 
Baghlan Cement Factory 
---------------------- 
 
¶5. (SBU) The Baghlan Cement Factory dominates Pul-i-Khumri, from its 
chimneyed skyline to its privileged access to energy.  The Afghan 
Investment Company (AIC) was organized in 2007 to purchase and run 
the cement factory (Afghan Cement LLC), the nearby coal mines and 
the city hospital.  In addition to private investors, both Kabul 
Bank and the NAF Group are corporate sponsors of AIC.  The first 
cement factory, Ghori 1, named after its location within 
Pul-i-Khumri city, was built in the early 1960s and currently has 
the capacity of producing up to 400 MT of "wet process" portland 
cement per day.  Begun in 2007, a second wet process portland cement 
factory (Ghori 2) is now 92 percent complete and is slated to begin 
t 
eft 125 dead.  As it is, the mines are primitive, using what little 
1930s technology that remains after years of looting.  During a 
visit to Karkar, PRTOff observed several miners struggling to keep a 
carload of coal on its tracks while pushing it up and out of the 
primary shaft.  An additional problem is that nobody is really sure 
exactly how much coal there is in the Baghlan.  Engineer Munir 
admits as much, noting that a fully professional assessment needs to 
be conducted.  When confronted directly with this question, AIC 
officials Farokh and Hadi disagreed with each other.  When Hadi 
expressed some doubt as to whether the current mines had enough coal 
to provide a steady supply, Farokh interrupted, assuring the PRTOff 
that unnamed experts believe Baghlan's coal vein runs well into 
Bamyan province. 
 
Comment 
------- 
 
¶9. (SBU) Despite its apparent setbacks, and inability to generate a 
profit, AIC seems poised to forge ahead with its ambitious plans. 
Clearly, a full survey of Baghlan's coal fields needs to be 
conducted before moving ahead with its coal burning power plant. 
However, Baghlan's ability to tap its hydro, coal and imported 
energy power places it far ahead of other provinces in the Northeast 
who either depend on unsteady, expensive energy from Tajikistan or 
generators.  This steady supply of power will undoubtedly prove 
attractive to future investors willing to take a chance on 
Afghanistan's future. 
 
EIKENBERRY