Asian Dev Bank Sees Afghan Need For Private Investment to Stimulate Recovery

The Asian Development Bank is supporting electric connections between three central Asian countries, a project that could be a net gain for Afghanistan.

(BE2C2) — The Asian Development Bank–a potential energy player in the region, said Wednesday that Afghanistan needs more investments to stimulate recovery.

The ADB expects the Afghan economy is stalled out at around 2.5 percent growth for gross domestic production through 2019. A “tenuous” political situation and tough security conditions are limiting growth. Full-year 2016 growth was 2.4 percent.

Grants account for about half of the budget revenue for land-locked, war-torn Afghanistan and private investments represent only 8 percent of total GDP, showing investors are wary of taking the risk. Parliamentary elections are set for later this year and presidential elections are scheduled for 2019.

“We could see businesses reluctant to expand their operations through increased investment as they wait to see if the security situation stabilizes and the outcomes of the elections, particularly for the presidency,” David Daniel Oldfield, ADB’s principal regional economist, said in a statement.

Through its commitments in Afghanistan, one of the poorer countries in the world, the lender has helped deliver electricity to more than 5 million people who would otherwise have 4 hours or less of power per day. Last month, the International Energy Agency said universal access to electricity and a bigger footprint for renewable energy were critical to sustainable development.

A trilateral agreement was signed in February that outlined long-term power supply and trade between Turkmenistan, Afghanistan and Pakistan. Project plans call for the construction of 310 miles of transmission lines from Turkmenistan, through Afghanistan and into Pakistan (TAP). An initial phase, which could be completed by 2021, will utilize existing infrastructure from an ADB-funded interconnector. A later phase would start power transfers from Turkmenistan starting in 2022.

The grid plan is the latest in efforts to connect the region. A natural gas pipeline that New Delhi dubbed a new “Silk Road,” the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, could carry natural gas from Turkmenistan’s Dauletabad gas field to energy-starved region east of Afghanistan, but the three countries: Afghanistan, Pakistan and India have yet to dot all the I’s and slash the T’s. Afghanistan, Pakistan and Pakistan, India have issues to settle.

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