VZCZCXRO7076
PP RUEHDBU RUEHPW RUEHSL
DE RUEHBUL #2670/01 2451449
ZNR UUUUU ZZH
P 021449Z SEP 09
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC PRIORITY 1301
INFO RUCNAFG/AFGHANISTAN COLLECTIVE

UNCLAS SECTION 01 OF 02 KABUL 002670 
 
SIPDIS 
 
E.O. 12958 N/A 
TAGS: EAID ENRG ECON SENV EINV PREL AF
SUBJECT:  President Karzai Inaugurates USAID-funded Kabul Diesel 
ower Plant 
 
REF: Kabul 2363 
 
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Summary 
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¶1. (U) President Karzai and Energy and Water Minister Ismail Khan 
presided over the inauguration of the first phase of Kabul's 
USAID-financed 105 Megawatt (MW) diesel-fired power plant near Kabul 
on August 5.  President Karzai thanked Ambassador Eikenberry, USAID 
Director Frej, and the U.S. people for the US$ 300 million plant 
that, will provide backup power to more than half a million Kabul 
residents during winter peak use once completed in December 2009. 
Looking ahead, the Afghan government seeks to diversify their energy 
matrix to exploit Afghanistan vast hydro and hydrocarbon potential. 
End summary. 
 
¶2. (U) The Kabul 105MW "Tarakhil" high-efficiency diesel-fired power 
plant will provide power to more than half a million Afghans when 
the project is completed later this year.  Construction of the US$ 
300 million USAID-funded project began in 2007, and the initial 
phase of the project (powered up on August 5) will provide 35MW of 
power to over 200,000 residents of Kabul.  When complete, the plant 
will include 18 diesel engines, each providing approximately 6.3MW. 
The first six engines have been installed, and the remaining 12 
engines are scheduled to become operational by December 2009, in 
time to provide energy through winter's high-demand.  The plant will 
provide an estimated 150 permanent Afghan jobs (including a number 
of skilled technical positions); at peak construction, the project 
employed 500 Afghans. 
 
¶3. (U) The televised dedication ceremony featured speeches by 
President Karzai, Energy and Water Minister Ismail Khan, and 
Ambassador Eikenberry.  President Karzai thanked the Ambassador and 
the people of the United States for their "investment in 
Afghanistan."  In his response, the Ambassador reminded his audience 
of the situation eight years ago, when there was "darkness across 
Kabul and Afghanistan...darkness from political oppression, 
intolerance and isolation--and a literal darkness due to the absence 
of critical infrastructure--including electricity."  By contrast, he 
continued, Afghanistan is now in the process of its first Afghan-led 
elections, and the U.S. people are proud of their contributions to 
Afghanistan's development future through projects like Tarakhil. 
 
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The Way Forward for Tarakhil 
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¶3. (U) USAID's prime contractor, Louis Berger/Black & Veatch Joint 
Venture (LBG/B&V), is committed to a December 2009 deadline to 
complete the entire plant.  A variety of subcontracts still require 
approval, and USAID must also modify the contract budget to reflect 
actual (higher than expected) spending trends. 
 
¶4. (U) An important component of the project involves training 
Afghans to operate the plant.  An initial group of thirteen utility 
staff are currently being trained in plant operations and 
maintenance through April of next year, with another twenty-seven to 
be added to the course over time.  In addition, utility staff will 
be trained in sub-station management and engine maintenance.  When 
the USAID contract ends in April 2010, the electrical utility will 
likely hire these staff. 
 
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Comment 
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¶5. (SBU) According to the most recent estimates, Afghanistan has an 
installed grid-connected capacity of almost 700MW, of which 400MW 
are operating.  Only twenty percent of the population has access to 
grid-supplied public power, however, and often only on certain days 
for a limited number of hours.  Although Kabul has only fifteen 
percent of Afghanistan's population, it accounts for over forty 
percent of the country's 1.6 million MWh of electricity consumption. 
 Isolated diesel generation (from private generators) has increased 
dramatically since 2002 and will continue to play a large role in 
power supplies, especially in rural areas.  Diesel generators are 
among the most costly sources of electricity at over forty cents per 
KWh (by comparison, imported power and existing hydro dams provide 
power at less than ten cents per KWh.) 
 
¶6. (SBU) Intended primarily as back-up during peak-use times, 
Tarakhil's electricity production falls in the middle of this price 
range at an estimated 26 cents per KWh.  Kabul electricity users do 
not pay this price, however, because the GIRoA subsidizes 
electricity from the grid.  The government's inability to charge 
grid users based on level of use creates an additional de-facto 
subsidy through illicit consumption (in Kabul, the electricity 
utility DABS is only able to charge for about 50 percent of 
commercial and residential use and only 60 percent of government 
use.) For these reasons, the energy sector is currently a major 
drain on government resources.  Illicit or unmetered use also 
 
KABUL 00002670  002 OF 002 
 
 
encourages inefficiency because users do not pay the real price for 
what they use.  The GIRoA has agreed to phase out electricity 
subsidies over the next five years, and USAID is working with the 
Ministry of Energy and Water to commercialize the electricity sector 
to increase efficiency and decrease the sector's drain on government 
coffers. 
 
¶7. (SBU) Diesel power plants are relatively costly and dependent on 
imported fuel supplies and so potentially vulnerable to insurgent 
sabotage.  To diversify its energy sources and expand national 
energy production in line with the Afghan National Development 
Strategy, the Inter-Ministerial Commission for Energy (ICE) and 
international donor community are investigating "homemade" energy 
sources such as hydro, hydrocarbons, and renewables (wind, solar, 
and micro-hydro).  Afghanistan's northern gas fields in Jawzjan 
province have attracted interest from large international investors, 
and the Aynak copper mine contract requires China Metallurgical to 
build a 400MW coal-fired power plant to support the mine (and to 
provide 200MW to the Afghan national grid).  Moreover, the GIRoA is 
intent on harnessing Afghanistan's hydropower (septel). 
Diversification will improve Afghanistan's power situation but also 
require increased donor participation to build Afghan capacity.  End 
comment. 
 
Eikenberry