fDi Markets Newswire:

Home / Locations / Asia-Pacific / Afghanistan / Bayat Group's Afghanistan risks bring rich rewards

Dr Ehsanollah Bayat

As telecoms company Bayat Group launches an energy arm in Afghanistan, CEO Ehsanollah Bayat tells Natasha Turak how he hopes that by showcasing the opportunities in the country, other investors will follow its lead to help grow the economy. 

For Dr Ehsanollah Bayat, CEO of Bayat Group, building businesses in Afghanistan is not so much about risk as reward. And as an Afghan national, the reward has a personal side to it.

In 1998, Mr Bayat set out to build Afghanistan’s first wireless network with Afghan Wireless, the country’s first wireless communications company. The US-educated telecoms entrepreneur, who left Afghanistan during the Soviet invasion of 1980, won an exclusive licence from the ruling Afghan government to establish computerised telephone exchanges in Kabul and Kandahar.

After the US invasion in 2001, once sanctions on the country were lifted, Mr Bayat restarted business with the new Afghan government, undeterred by political turbulence, conflict and unpredictability.

Connected to the world

Today Afghan Wireless has more than 5 million users, connecting the country to the outside world and making communication affordable for the local population. Building on the success of what became the premier mobile phone company in the country, Mr Bayat launched the Ariana Radio and Television Networks – which reach 40 million viewers worldwide – to increase the flow of information across the country.

“When we first started, nobody wanted to go to Afghanistan. Nobody,” says Mr Bayat, describing the business climate in 2001. “So we said okay, we’re going in because we know the potential. We learned a lot of lessons, being the first. It’s a growing pain to start a new venture in a country whose laws haven’t changed since the 1940s and 1950s.”  

By bringing his vision to fruition, connecting millions of Afghans and developing productive partnerships with the Afghan government, Mr Bayat paved the way for other investors. “After us, billion-dollar companies moved into the country,” he says. “We saw how it improved the lives of our people, so we wanted to then transfer that success to other sectors in Afghanistan.”  

Double first

The Bayat Group of companies (to whom Afghan Wireless, Ariana TV and several other infrastructure, security and logistics companies belong) recently launched Bayat Energy, an oil and gas exploration, development and production company. In another endeavour to build where few others are willing to go, Bayat Energy has signed a $250m memorandum of understanding with the Afghan government to build Bayat-1, a 200-megawatt (MW) gas-fired power plant in northern Afghanistan. It is the first 100% equity-financed power plant in the country and the first gas-to-energy plant built there since the Soviet invasion.

“Afghanistan is one of the least self-sufficient countries in the world in terms of power,” says Mr Bayat. Decades of warfare have left the country’s grids severely damaged and it currently generates only 600MW of energy on its own, importing the vast majority from neighbouring Uzbekistan, Turkmenistan and Iran.

Bayat Energy stresses the potential of the undiscovered gas reserves in the country’s north, particularly its Sheberghan/Yatimtaq region. “Right now, we have gas reserves in the north of Afghanistan that we can easily tap into for the national grid system,” says Mr Bayat. “Our hope is that it will catalyse change in the power network and the laws and make it easier to come and invest in this field.”

Meeting needs

Energy officials in the country estimate the country will require about 3000MW to meet its needs by 2020. Its dependence on foreign energy means it has one of the highest electricity tariffs in the world.

“If we can be instrumental in lowering electricity costs and generating more power, imagine how we can improve the lives of farmers who cannot save the fruit they harvest because they lack cooling systems,” says Mr Bayat. “Imagine how agriculture will improve, and everything else that comes with power – factories that have been sitting idle, our manufacturing capacity, etc. We proved it could be done with Afghan Wireless – I think we can be pioneers in both telecoms and power generation.”   

An obvious concern deterring many foreign investors is security. Afghanistan suffers from one of the heaviest rates of terror attacks in the world. But Mr Bayat says, “you need to take risks to gain the benefit of the reward”. Any physical detriment to his company’s assets generally comes from theft or natural elements, he adds. “They are security challenges but they’re not so bad, otherwise we wouldn’t work here and invest $250m on an energy project.”

To counter security challenges, Mr Bayat stresses the importance of hiring and engaging local workers. “By employing locals for projects – building roads, hospitals, cell towers – you minimise risks to your network, because it is now their livelihoods and they have a vested interest in making sure it’s successful,” he says.

Bayat Group employs 30,000 Afghans across the country, making it Afghanistan’s biggest private employer.

Accentuate the positive

Mr Bayat also attests to the support of the Afghan government, calling it “a very strong and positive partner” – which might be surprising to some considering Afghanistan’s reputation for corruption (the country ranked 166th out of 168 in Transparency International’s 2015 Corruption Perception Index). “We’re the number one tax provider to the country in the telecoms sector, and the government is very enthusiastic about the revenues it will collect from our project,” says Mr Bayat. “We haven’t really seen much of a problem.”

Audited by the four largest public accounting firms in the world, Bayat Group takes its corporate integrity and transparency as a point of pride. “Afghanistan is not like what you see on the news,” says Mr Bayat. “I strongly suggest big companies go in themselves and see the opportunities in power generation and telecoms. Energy and mining are virgin territories.”

Continuing its mission to improve the lives of Afghans, in 2006 Bayat Group created the Bayat Foundation, run by Mr Bayat’s wife, Fatema. The company’s philanthropic wing has since put millions of dollars into programmes and partnerships offering healthcare for women and children, new and refurbished schools, orphanages and hospitals, and economic empowerment through skills training and entrepreneurship. Thirteen hospitals and clinics across the country bear the Bayat name, with more in the works.

The lives touched by Bayat’s education and health initiatives number well into the tens of thousands. “We believe in growing a healthy, productive citizenry that will help bring investment and grow the economy,” says Mr Bayat. The Bayat Group’s resilience in such a trying environment has offered not just economic prospects for many Afghans, but perhaps something just as important: hope. 

This article is sourced from fDi Magazine
fDi Magazine

The fDi Report 2018: Free Download

The fDi Report 2018 promobox

Crossborder investment monitor

fDi Markets - Cross border investment monitor

fDi Markets is the only online database tracking crossborder greenfield investment covering all sectors and countries worldwide. It provides real-time monitoring of investment projects, capital investment and job creation with powerful tools to track and profile companies investing overseas.

Click here to find out more about fDi Markets

Corporate location benchmarking tool

fDi Benchmark is the only online tool to benchmark the competitiveness of countries and cities in over 50 sectors. Its comprehensive location data series covers the main cost and quality competitiveness indicators for over 300 locations around the world.

Click here to find out more about fDi Benchmark

Research report

fDi Intelligence provides customised reports and data research which deliver vital business intelligence to corporations, investment promotion agencies, economic development organisations, consulting firms and research institutions.

Find out more.
Follow us on Twitter