Afghanistan signs $160 million renewable energy deal with US, Turkey and India

110 megawatts will be added to the country's grid. (Shutterstock)
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Updated 24 September 2020

Afghanistan signs $160 million renewable energy deal with US, Turkey and India

  • Solar and wind power projects will be developed in Kabul, Balkh and Herat provinces
  • Afghanistan imports 1,200 megawatts of energy from Iran, Tajikistan, Uzbekistan and Turkmenistan

KABUL: Solar photovoltaic and wind power projects signed by Afghanistan under a $160 million international deal on Wednesday evening will add 110 megawatts to the country’s grid in the next 16 months, officials said.

The projects will be developed in Kabul, Balkh and Herat by a local company with partners from Turkey, India and the US Agency for International Development (USAID).

“With the implementation of these projects, we will not only witness improvement in the energy sector, but (in other areas) as energy is the basic need for the improvement of other sectors,” Lima Khoram, policy and development chief at the Afghan Finance Ministry, told Arab News on Thursday.

“We will also see the development of other major sectors. This is not only good news for the citizens, but for all investors and entrepreneurs too,” she said.

Afghanistan needs to increase access to energy to enable development — and the projects signed on Wednesday are going to be the country’s biggest investment in solar power so far, according to Wahidullah Tawhidi, a spokesman for DABS, the country’s main power producer.

“This will be a highly efficient work for the generating of more electricity in Afghanistan,” he said.

Tawhidi told Arab News that the projects will be developed in partnership with USAID by an Afghan company, a firm from Turkey, and one from India.

One of the projects, a photovoltaic station designed to produce 40 megawatts of power, will be built in the northern Balkh province, which is the main gateway to Central Asia.

Two plants — one solar and one wind powered with a capacity of 25 megawatts each — will be installed in western Herat province, near the border with Iran Turkmenistan.

The fourth one, a floating solar power station, will be built at Naghlu dam, east of Kabul.

Afghanistan currently imports 1,200 megawatts of energy from Iran, Tajikistan, Uzbekistan and Turkmenistan as it can only generate 400 megawatts from its dams.

The country, whose infrastructure has been destroyed by decades of conflict, requires 7,500 megawatts for its nearly 33 million population to have access to electricity.

The lack of security in recent years caused many businesses to flee Afghanistan so the renewable energy agreement is expected to encourage more foreign investment.

Talha Hidayat, director general for public-private partnership at the Finance Ministry, said that 16 projects worth $3.1 billion, which include two power dams and involve the agricultural and telecommunications sectors, were ready for investment.

“Feasibility studies are finalized. We will announce it for open competition. Currently nine national and international firms have shown interest,” he said.
 


Oil world tries to read Chinese post-pandemic demand

Updated 25 October 2020

Oil world tries to read Chinese post-pandemic demand

  • The economic outlook for Asia will help decide some pretty pressing short-term policy issues
  • China’s refineries are getting back in top gear, and are looking to increase crude purchases in anticipation of economic recovery

DUBAI: While all eyes are on the US presidential election, the energy sector is keeping a watchful scrutiny on what is happening on the other side of the world, in China and the rest of Asia. Who the Americans choose will of course have enormous influence on energy policy for years to come, not least because Donald Trump versus Joe Biden is, in many ways, a runoff between the traditional oil and gas industry and the alternative renewable future.

But policymakers in the Middle East and in the broader OPEC+ alliance led by Saudi Arabia and Russia are looking eastward to determine more immediate priorities. The economic outlook for Asia, and of China in particular, will help decide some pretty pressing short-term policy issues.

At what official selling price should big producers such as Saudi Aramco and Adnoc mark their exports to China in the coming weeks? What stance should OPEC+ take toward compliance and compensation for the rest of this year? And, crucially, should it press ahead with plans to put an extra 2 million barrels per day (bpd) of oil on global markets in January, as the historic April cuts deal envisaged?

An added variable has been thrown into the works with higher-than-expected output from Libya, which has resumed production and exports from its war-torn facilities and could, according to some energy experts, be producing another 1 million barrels by the end of the year.

That is hardly a deluge of crude by global standards, in a world that consumes above 90 million bpd, though it is enough to complicate the already-delicate calculations of OPEC+ analysts.

But the big imponderable is China. The country blew hot and cold on oil imports since the April crisis, snapping up cheap oil one month and easing back on imports the next. It was hard to read the signals coming out of China.

Were the pauses in imports due to a slower rate of recovery from the pandemic economic lockdowns? Or was China simply chock-full of crude, to the extent that it had filled its strategic reserve and had nowhere else to store it?

Evidence of the latter came in the form of the flotilla of crude tankers waiting to unload off the coast of the Shandong oil terminal. At one stage, there were as many as 60 million barrels afloat awaiting discharge off China’s coast.

The people who make a living from tracking these things say that there has recently been evidence of a slow unloading from these ships, but that there is still an awful lot of crude afloat, waiting to come onshore.

There have also been signs that China’s refineries are getting back in top gear, and are looking to increase crude purchases in anticipation of economic recovery. One of the biggest, Rongsheng Petrochemical, recently snapped up 7 million barrels through Singapore, in a move taken by some to be the starting gun on an aggressive Chinese buying spree.

The economic logic suggests that if that is going to happen, it will take place pretty soon. According to the International Monetary Fund’s latest review, China — the only major economy forecast to grow in 2020, with 1.9 percent growth — will soar to 8.2 percent expansion next year. The country’s early and rigorous lockdown, and high levels of economic stimulus since then, are clearly paying off.

Whether the Chinese lift-off comes in time to affect OPEC+ calculations over the planned January increase remains to be seen. From where oil policymakers are looking at it at the moment, it looks like a good bet that China, at least, will need plenty of crude next year to fuel its post-pandemic recovery.