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Ali Ahmad Osmani

Despite abundant domestic resources, Afghanistan still imports about 80% of its energy as investors stay away from what they still consider a high-risk location. But the situation is changing and the government can now guarantee the safety of a project, energy and water minister Ali Ahmad Osmani tells Jacopo Dettoni. 

Q: What are the challenges that Afghanistan is facing in terms of energy dependence?

A: Afghanistan imports more than 80% of its energy from central Asia and Iran. The challenge here is that we buy in US dollars and sell electricity to final consumers in the local currency. But when the afghani depreciates against the dollar, the cost for the final consumer goes up. The currency has been very volatile and prices for final users have been changing, and they were not happy about that. As a result, we cannot easily get paid by the final customers. Another challenge concerns the need for investment in generation and distribution.

Q: Why has investment into power generation and distribution been a challenge?

A: We invited foreign investors to invest in our projects, we asked construction companies to participate in the bidding process, to win projects, but they don’t seem to be interested because of the dire situation that is currently projected by the media, which doesn’t mirror the current reality in Afghanistan.

Q: What is the real situation in the country?

A: The overall situation is not too bad. There are still areas that are not under the control of the government, but most of the country is under our control. Besides, Afghanistan has lived through turbulent times for many years and we are very experienced in guaranteeing the security of a project [in these circumstances]. And we should invest in our own [energy] generation if we want to reduce reliance on energy imports.

Q: What are the resources that Afghanistan can devote to power generation?

A: We have huge resources, from hydropower to solar and wind, but also oil and gas. We specifically want to emphasise investment in renewable energies.

Q: How are you trying to mitigate risks for foreign investors willing to explore opportunities in the country?

A: The international community pledged $15.2bn in financial aid to Afghanistan until 2020 in October. It emphasised that we must get the private sector on board and invest in our own resources. It is supporting us, providing us with financial guarantees [for our investment programme], but its economic and financial support will not continue forever.

Q: Afghanistan is also participating in the Casa 1000 project, which entails the development of a regional transmission network connecting the country to Kyrgyzstan, Tajikistan and Pakistan and thus redistributing energy surpluses among the four countries. What is the status of development of the project?

A: The project is currently in its procurement phase. There were a few problems connected to the fact that it entailed three alternative current/direct current converter stations, and we couldn’t find many companies that could do the bidding for three converter stations. Therefore we changed the project and reduced the number of converter stations to two units. The launching ceremony was held in May in Tajikistan, and we are aiming to kick off works for the Afghan stretch in early 2019.

Q: Your ministry also deals with water, which has been a very sensitive issue as talks with Iran over the governance of trans-boundary rivers have been tense for years. What is your position on the issue?

A: We recently finished a big dam on the Heri-Rud river, and Iran [which is downstream in the river’s basin] was not happy. We know that, but it’s our right to control our waters. Iran also built a dam along the Heri-Rud river basin on the border with Turkmenistan without any notification. But we don’t believe in the concept of water wars. We want to change that; we think water is for co-operation, not for wars, and we are willing to sit and talk with Iran. 

This article is sourced from fDi Magazine
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