Saturday, 11 August 2012

Afghans Fear U.S. Pullout Will Unplug Key Projects

Afghanistan--Here in the cradle of the Taliban movement, Faizulhaq Mushkani sold his land for $600,000 last year to buy equipment to open a packaging factory in a booming industrial park.

The industrial park—powered by military-run electrical generators—is a pillar of the U.S. strategy against the Afghan insurgency. The arrival of reliable electricity in late 2010 revitalized Kandahar. More than 100 new factories have sprouted.

These days, however, Mr. Mushkani and fellow entrepreneurs are grappling with a fatal flaw in their business plans: They expected the Americans to stick around longer. But, now, with U.S. forces preparing to depart Kandahar next year, the American electricity will disappear, too.

American funding for the generators runs out at the end of next year, well before alternative energy sources reach the city. The cash-strapped Afghan government says it can't afford to foot the bill.

"Day and night, I worry about the future," says Mr. Mushkani, a white-bearded man in flowing white robes who plans to employ 122 people when his factory in the Shurandam park starts production this summer. "Once there will be no electricity, there will be no industry here, and no security."

U.S. officials say they hope the lost electricity will be replaced in late 2016 or so, when the Afghan national power grid should reach Kandahar. But many Afghan businessmen say they expect most of the new factories to close in the meantime. In a statement, the U.S. Agency for International Development, which administers most U.S. aid to Afghanistan, acknowledged "a potential gap created by loss of funding" for the power plants.

Kandahar's power project mirrors the story of America's decadelong drive to develop Afghanistan--a series of costly, ambitious efforts that sometimes generate ephemeral effects, leaving behind disappointment among the local population that they were designed to impress.

Now, as the U.S. and allies are withdrawing their forces and their cash ahead of President Barack Obama's 2014 deadline to hand over the war to the Afghans, officials across Afghanistan are wondering what to do with the slew of similar aid projects nationwide, in various stages of completion. The Kandahar generators in particular, says Afghan Finance Minister Omar Zakhilwal, "are not easy for us—we cannot maintain, and we cannot operate them either."

The U.S. has worked on a grand plan to bring electricity to Afghanistan ever since the 2001 invasion, spending billions of dollars. The projects were often plagued by delays, corruption and cost overruns.
Results have been patchy: Three-quarters of the Afghan population still lacks access to power. More than 70% of the electricity that does reach Afghans is imported from neighboring countries such as Uzbekistan and Iran.

That imported power isn't available in Kandahar, Afghanistan's second-largest city and the focus of Mr. Obama's troop surge in 2010. As the surge got under way, coalition commanders Gen. Stanley McChrystal and Gen. David Petraeus pushed hard for the power plants here, seeing them as a key weapon against the insurgency.

Many U.S. civilian officials, including then Ambassador Karl Eikenberry, didn't share this belief. The U.S. Embassy in Kabul at the time produced a classified report outlining the project's long-term pitfalls, officials familiar with the document say. "The view was that this project should not go forward because it was unsustainable and hugely expensive," a former senior U.S. official says.

Afghan leaders say they had raised similar objections. "Nobody was thinking of something permanent. Everybody was talking just of short-term, quick impact projects," recalls Kandahar provincial governor Tooryalai Wesa. "We were told we had to take it or leave it. This was their money and they spent it the way they wanted."

As the Shurandam park was inaugurated in January 2011, however, it was presented to the world as an Afghan initiative, with Mr. Eikenberry and Gov. Wesa cutting the ribbon. The new facilities, Mr. Eikenberry said at the time, "demonstrate that the government of Kandahar is providing better services to its people."

The 10-megawatt diesel power plant in Shurandam, and its twin station west of the city, cost $106 million to build, according to the U.S. Army Corps of Engineers, which oversees the facilities. Accounting for some 60% of the city's electric supply, they provide the only reliable 24-hour power to Kandahar's new industries.

The result has been a flourishing of businesses. Both Afghan and coalition officials say that this business boom has fulfilled the short-term military objective of weakening the Taliban in the southern city from which the Islamist movement began its march to power in the 1990s. "We remain convinced that the project has been beneficial to both the Afghan people served by it, and to our campaign," says Pentagon spokesman Cmdr. Bill Speaks.

According to military statistics, insurgent attacks within Kandahar city—which now boasts American-style billiard halls and even a Starbucks-inspired coffee shop on the main square—have dramatically declined this year. "Electricity has brought security, as it provided jobs to people who could otherwise be drawn into the insurgency," says Mohammed Omer, Kandahar's mayor.

In Shurandam, on the eastern edge of the city, there were only three factories in 2010, powered by their own small generators. "All the income that we were making was going to pay for diesel," says Mohammed Halim, owner of one of these three factories, a cotton processor. "We could only afford to work two or three days a week."

Now, there are 66 factories in Shurandam, ranging from makers of plastic pipes, bottles and dishes, to construction materials, to a cold-storage facility, with more on the way. "We were so happy and so hopeful when the power arrived," says Mr. Mushkani, whose factory recycles cardboard into food packaging.

Power from the Shurandam plant also flows to the control tower of the Kandahar airport, which recently opened to international civilian flights, and to several residential areas. All that electricity comes from burning diesel—which is particularly expensive in Afghanistan because of Taliban attacks and Pakistani border closures to coalition supplies.

For fiscal 2013, fuel and maintenance costs for the Kandahar plants are budgeted at $100 million, according to the Army Corps of Engineers. That is up from $48 million in fiscal 2011.

A year from now, the military is scheduled to transfer these plants, currently cocooned by U.S. Army bases, to the Afghan national electricity utility, DABS. Shortly thereafter, the American money flow would stop: approved Department of Defense funding for the fuel and maintenance in Kandahar runs out by January 2014, according to Cmdr. Speaks. USAID says it has no current plans to fund the plants afterward.

Without American cash, the Kandahar diesel stations—each made of eight gleaming-white Caterpillar generator blocks—will shut down, Afghan officials say. These officials already are talking about shipping the Kandahar generator blocks to other, more needy, provinces, or even selling them abroad. "We may move some, to one place or another," ponders DABS Chief Executive Abdul Razique Samadi.
Basic math explains the Afghans' predicament. Projected U.S. spending on the Kandahar plants next fiscal year equals nearly two-thirds of DABS's nationwide annual revenue.

Diesel fuel costs per kilowatt-hour of electricity in Kandahar are as much as 10 times what DABS receives from its paying customers. And only a fraction of customers actually pays, due to persistent corruption, webs of pirate power lines and few electricity meters, according to Afghan and U.S. officials.

Amid the American aid endeavors in Afghanistan, the Kandahar plants installed by the Corps of Engineers are considered a success: they were built quickly, run smoothly and rarely have outages of more than a few minutes.

That contrasts with the USAID-built $300 million Tarakhil diesel power plant in Kabul that opened a year behind schedule in 2010, tens of millions of dollars above budget. By then, a separate project funded by the Asian Development Bank connected Kabul to far cheaper hydropower from Uzbekistan. Tarakhil was powered up only on three occasions over the past year.

Unlike Tarakhil, the Kandahar diesel plants were supposed from the get-go to be temporary. They were to become unnecessary once the city was connected to the national power grid, and a new 18.5-megawatt turbine was installed at the Kajaki hydropower plant in Helmand province that supplies part of its output to the city.

Persistent insecurity in southern Afghanistan, however, meant that American plans to bring more sustainable electricity are years behind schedule. "It is a well-known fact that diesel is not the best way to make power," says Chief Warrant Officer Robert Hopkins, deputy commander of the Kandahar-based U.S. Army Corps of Engineers task force dealing with electricity. "The bridging solution is supposed to be just that, the bridge to the other shore."

USAID says it plans early next year to award the contract for the national power-grid connector to Kandahar, a line that would have to traverse 300 miles across some of Afghanistan's most dangerous terrain.

Meanwhile in Kajaki, the U.S. Marines are withdrawing in coming months from the key road to the hydropower plant that they only recently secured. It is unclear whether the Afghan security forces will be able to keep the area safe enough for contractors to ship the construction materials to install the new turbine, and to refurbish the decrepit power lines between the dam and Kandahar.

USAID currently estimates that the Kajaki turbine—insufficient on its own to fully replace the current Kandahar generators—will be online by late 2014 or early 2015. It predicts that the national power grid should reach Kandahar city in late 2016 or so.

Kandahar investors lured by American electricity are berating themselves for their foolishness as they ponder what will happen to their investments. Amid their frustration, conspiracy theories abound.
"The foreigners just don't want us to be self-sufficient," says Khalil Ahmed Rahmani, whose factory makes PVC pipes and other plastics. The Taliban, he adds, had managed to restore reliable power to Kandahar in just eight months after taking over in 1994, despite international sanctions.

Across the highway from Mr. Rahmani's compound, Mr. Halim—who expected the Americans to stay a long time—earlier this year ordered $150,000 of machinery for his cotton factory, which employs 40 full-time workers to extract oil, make animal feed and produce semiprocessed cotton. His raw materials, hauled in antiquated trucks, come from farmers in rural Helmand areas where most other villagers prefer to grow opium.

"All the people like me, who invested a lot of money, are stuck. We can't leave and start over elsewhere because we've already spent all our cash here," Mr. Halim says as barefoot workers in stained overalls feed orange sack-loads of raw cotton into a belching machine painted baby blue.
It isn't just the factory owners who are alarmed. "If there is no electricity, we won't be able to feed our families," says press operator Niamatullah, 33 years old.

American officials say one possible solution after next year is to ask the factory owners to pay much higher power rates that actually cover the diesel-generation costs. "Maybe some of these industrial parks will pick up a couple of these diesel units, as an industrial park, and maybe they can mix it with solar," says USAID's mission director in Afghanistan, S. Ken Yamashita. "The industrial parks need to make a commercial decision."

That is something that is already happening in Afghanistan's Ghazni, Khost, Paktia and Farah provinces, says Mr. Samadi of DABS. In those places, small generators are powered for a few hours a day with local citizens' contributions.

This approach, however, is unlikely to work for Kandahar's new factories, which need affordable round-the-clock electricity. Many businessmen here will go bankrupt, predicts Mr. Rahmani, the plastics entrepreneur in Shurandam. The more resilient ones, he says, will relocate their production to cities like Herat, which enjoys cheap Iranian power.

"Once the electricity goes, maybe five or six factories will remain here," he says. "All the others will disappear." Asian Defence News

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