The takeover of the Afghan central and provincial governments by the Taliban portends monumental political, economic, and social changes for the people of Afghanistan. Over the past twenty years since the US overthrew the previous Taliban Emirate, the United States, its allies, and international institutions have poured trillions of dollars into this poor, tribal country to advance the objectives of countering terrorism, depriving radical, violent groups from establishing new capacities to attack Western interests, and promoting economic and social development. From a long-term perspective, it can be argued that the massive US government funding of over $1 trillion to support the Karzai and Ghani governments provided the security and political space for important human and physical infrastructure investments by the larger Western and international community. With the collapse of the Ghani government, the US withdrawal, and the exodos of educated and skilled Afghans, the prospect may be for a rapid deterioration of the economic and social conditions on the ground given the huge past dependence on international assistance (i.e., including the bulk of the Afghan government’s $18 billion annual budget) and the lack of financial resources currently available to the Taliban given the suspension of most assistance and the US seizure of an around $9 billion in Afghan government bank assets.
Not including the US Department of Defense expenditures for military operations, US foreign assistance to Afghanistan concentrated on “peace and security” activities managed by DOD. In recent years, these activities represented about 75% of the annual US foreign assistance obligations for Afghanistan of about $5 billion per year. It peaked in FY11 when obligations reached $13 billion. But it is now painfully clear that US investments to transform a largely tribal society did not create viable, non-corrupt, and sustainable institutions that could effectively govern both central and provincial areas, had the support of the local population, and could counter the appeal and forceful methods of the hardline Islamic Taliban.
Over the twenty years, the energy sector had been an important focus of the USAID and international development assistance. USAID provided over $3 billion dollars in assistance to the energy sector and international financial institutions like the World Bank, Asian Development Bank, and Islamic Development Bank, as well as such major donors as Germany, the United Kingdom, the European Union, Japan, and India have provided billions more. The US Foreign Assistance Dashboard indicates that US energy sector funding peaked at $831 million in FY13 but has generally been between $100 and $300 million per year. This assistance is now halted as countries and organizations assess the implications of the Taliban takeover. With its shortage of funds and the country’s dependence on imported power and fuels, will the Taliban be able to keep the lights on?
US and foreign energy assistance concentrated on critical electric power infrastructure projects in generation, transmission and distribution and improving the management and operations of the national utility DABS (Da Afghanistan Breshna Sherkat), which was established in 2008. Although electricity remains unreliable in many Afghan rural villages, the country made enormous progress in improving electricity access by households. According to the latest World Bank Sustainable Energy tracking report, overall electricity access increased from 22% in 2005 to 98% in 2019 and from just 7% of the rural population to 97% during this period.
In the early days, Kabul and other areas of the country relied heavily on diesel generators for power and supplying the fuel for these units was costing the United States more than $100 million per year. Generation capacity was improved over time with the rehabilitation and construction of hydro, solar, and thermal plants and the completion of 220kv transmission lines with Tajikistan and Uzbekistan tying into the Afghan Northeast Power System (NEPS) which serves 18 provinces including Kabul, allowing imported power to flow south and replace power from Kabul’s expensive diesel units. Afghanistan also has smaller capacity electricity interconnections with Iran and Turkmenistan (110Kv) which supply power to Herat and other cities in the west. In 2018, Afghanistan generated about 1.21 TWh of electricity and consumed about 5.53 TWh, with imports from Tajikistan (3%); Uzbekistan (42%); Turkmenistan(12%); and Iran (16%), supplying about 78% of the power consumed. According to IRENA, Afghanistan generating capacity in 2019 was 602 MW, of which fossil generation of 237MW constituted 39%, hydro at 333MW was 55% and solar at 32MW was 5% of capacity. But hydro and renewables provided 965 GWh or 84% of actual generation.
In both 2020 and 2021, Afghanistan experienced electricity blackouts. Taliban attacks on transmission towers in early 2020 knocked out power to Kabul and Charikar city in Parwan province and attacks on the electricity system had increased since the February 2021 US deal with the Taliban. Shortages in January 2021 reportedly were the results of problems with generators in Uzbekistan, Afghanistan’s largest source of electricity imports. But Reports in June indicated that 23 DABS electricity pylons were destroyed or damaged in the month before by explosives.
International efforts to help Afghanistan in the power sector also involved the attempt to develop an electricity transmission corridor linking Central Asia with Pakistan. US Secretary of State Condoleezza Rice was a strong supporter of creating an economic bridge linking Central Asia -South Asia via Afghanistan and Pakistan. This strategic approach was consistent with the action by the Bush Administration to move the five Central Asia countries, which had been under the Europe and Eurasia Bureau, into the State Department’s larger South and Central Asia Bureau (SCA) in 2006, and the subsequent establishment of a separate office of the Special Representative for Afghanistan/Pakistan affairs in 2009.
Two large high-voltage electricity transmission projects were supported by Western institutions and these were under construction. The US helped finance with the World Bank the $1.17 billion CASA-1000 project 500kV HVDC line which would link the Kyrgyz Republic, Tajikistan, Afghanistan, and Pakistan (near Peshawar). The second project was a 500 kV, 153-kilometre power transmission line connecting Kerki, Turkmenistan, to Sheberghan, Afghanistan. This link, which was inaugurated by Presidents Gurbanguly Berdymukhamedov and Ashraf Ghani in January 2021, constituted the first phase of the Turkmenistan-Afghanistan-Pakistan project (TAP), which had been supported by the Asian Development Bank and other donors and was to create a southern power corridor through Kandahar on to Quetta in Baluchistan, Pakistan.
Another project that involved the promotion of Central-South Asia energy trade is the TAPI (Turkmenistan, Afghanistan, Pakistan, India) gas pipeline project – a project which would allow Turkmenistan to diversify its gas exports and tap energy markets in the rapidly growing South Asia region, especially in India. The idea of a gas transit pipeline was not new. In the 1990s before the 9/11 attack, the US oil company UNOCAL worked with governments in Turkmenistan, Afghanistan, and Pakistan on feasibility studies. In fact, in December 1997, UNOCAL hosted a delegation of the Taliban to Houston to discuss the project and view their capabilities. But UNOCAL withdrew from these development efforts in 1998.
The United States continued to promote private Western oil company investment in Turkmenistan’s gas development and the pipeline. But this never materialized, and the Turkmen government moved ahead to develop its domestic gas resources on its own. Turkmenistan, with ADB support, has developed the TAPI project through many agreements with Afghanistan, Pakistan and India dating from 2010. The project, involving the state gas companies from the four countries, is estimated to cost at least $10 billion and construction had started on the Turkmen segment when the recent Taliban takeover occurred. The Galkynysh gas field in Turkmenistan is to provide the gas for the up to 33 bcm per year pipeline. In Afghanistan, it is proposed to run along the highway linking Herat and Kandhar and Afghanistan will offtake a limited amount of gas for the domestic market. Recently, the Taliban reaffirmed their position that TAPI was priority project.
Western efforts also provided increased funding for the development of renewable energy resources, especially hydro and solar. Afghanistan has excellent solar insolation and in recent years, with the drop in costs of solar pv systems and the suitability for Afghan villages of distributed energy systems, the adoption of solar systems had increased substantially. USAID funded a first of a kind solar pv project to provide power to 75,000 people in Kandahar in 2017 as well as wind and solar projects in Herat, Naghlu, and Mazar.
The future of the Afghan energy sector is highly uncertain. The US and Western governments and international institutions like the IMF and the World Bank have halted assistance and are assessing the Taliban effort to establish a government and whether they will be as ruthless in their rule as they were during their 1996-2001 period of governance. The potential for a substantial exodus of Afghan energy engineers and managers is certainly a possibility and could affect the management and operation of the energy sector. With limited budgetary resources, the Taliban will have to scale back significantly their electricity and fuel imports, although energy demand will also be greatly reduced.
The US and other countries pledged $1 billion in humanitarian assistance at a September 13th UN Conference in Geneva to be delivered through UN bodies and international NGOs. But the future of most external energy assistance and investor financing for energy projects is in doubt and the halting of assistance will seriously affect the capabilities of the electric utility DABS.
Afghanistan is likely to face a period of great instability. In addition to US and NATO concerns over whether the Afghanistan will become a greater haven to Al Qaeda, ISIS and other militant Islamic groups, China and Russia will also be leery of potential terrorist actions targeting their major interests in Pakistan and Xinjiang for China and in Tajikistan and Uzbekistan for Russia. But China and Russia have already shown that they are ready to engage the new Taliban regime, with China recently announcing a pledge of $31 million in humanitarian aid to the Taliban. The energy and related critical minerals sector is likely to be an area of their future involvement, especially for China as they have done in Pakistan with the China Pakistan Economic Corridor under the Belt Road Initiative.
Future blogs will follow developments in the sector.