ADB Lends $4 Million in Loan to Afghanistan’s 15 MW Solar Project
Solar power accounts for only about 1% or 3 MW of Afghanistan’s total installed generation capacity
May 28, 2019
A $4 million loan agreement has been signed between the Asian Development Bank (ADB) and Barakat Kandahar Solar Energy (BKSE). BKSE is a special purpose vehicle (SPV) with its majority owned by 77 Afghanistan, a subsidiary of 77 Group. The co-borrowers in this deal include three subsidiaries of 77 Group, ADB said in a media statement.
The 77 Construction, Contracting, and Trading Group (77 Group), is an international civil works contracting firm headquartered in Turkey. The loan agreement was signed to build a 15.1 MW solar power project and promote the development of renewable energy in Afghanistan, the release added.
“Having a stable, sustainable, and reliable energy source is important for the growth and development prospects of Afghanistan, where power generation and access is one of the lowest in the world. ADB’s support for this important project will help provide long-term financing that is not available locally to build and operate a state-of-the-art solar power plant in Afghanistan,” said Mohammad Azim Hashimi, senior public-private partnership specialist at ADB.
“77 Group would like to thank ADB for paving the way for investors in Afghanistan by supporting the first private sector-financed independent power producer (IPP),” said 77 Group representative and project director Burak Unsal.
Afghanistan ranks in the bottom 5% in terms of per capita electricity usage, with only 30% of the country’s population connected to the grid in 2015. In terms of the energy mix, solar power accounts for only about 1% or 3 MW of the country’s total installed generation capacity. This is despite Afghanistan having about 220,000 MW of solar power generation potential. The Government of Afghanistan aims to develop the country’s renewable energy generation, including solar power so that it can contribute at least 5,000 MW (40% share) to the national grid by 2032.
The 15.1 MW Kandhar solar power project will generate about 27.5 GWh of electricity annually and avoid 8,500 tons of carbon dioxide emissions. It will also help lift the share of renewable energy in the country’s total installed power generation capacity up to 5,000 MW by 2032, the release informed.
ADB will also administer a $3.85 million loan from the Canadian Climate Fund for Private Sector in Asia II (CFPS II) for the project. CFPS II was established in March 2017 to support greater private sector participation in climate change mitigation and adaptation in low and lower-middle-income countries in Asia and the Pacific.
Earlier, the Ministry of Energy and Water (MEW)of Afghanistan had issued a tender under international competitive bidding for a 5 MW hybrid solar project to be developed at the Ghor province in central Afghanistan, Mercom had reported. Moreover, MEW had awarded 50 MW of solar hybrid projects to be developed in the country in two separate orders; a 40 MW solar hybrid project at the Hisar-e-Shahi Industrial Park in Nangarhar province of Afghanistan, and 10 MW solar hybrid project in Khost province of Afghanistan.
The national power utility of Afghanistan, Da Afghanistan Breshna Sherkat (DABS), has also entered Power Purchase Agreements for the purchase of power from two grid-connected solar PV projects having a capacity of 15 MW each. The projects are being developed by Turkey-based 77 Construction Company and Zularistan Energy for Afghanistan in Kandahar province of the country. DABS has entered the PPAs with both the firms for 20 years.
Previously, in November 2017, ADB had agreed to provide a $44.76 million (~₹2.88 billion) grant to help develop 20 MW of grid-connected solar PV project in Naghlu, located in Kabul’s Surobi district.
Soumik is a staff reporter at Mercom India. Prior to joining Mercom, Soumik was a correspondent for UNI, New Delhi covering the Northeast region for seven years. He has also worked as an Asia Correspondent for Washington DC-based Hundred Reporters. He has contributed as a freelancer to several national and international digital publications with a focus on data-based investigative stories on environmental corruption, hydro power projects, energy transition and the circular economy. Soumik is an Economics graduate from Scottish Church College, Calcutta University.