inter-ministerial commission for energy (ice) monday

Inter-Ministerial Commission for Energy (ICE) Malik Asgar Square, Ministry of Economy Kabul Afghanistan

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Inter-Ministerial Commission for Energy (ICE)

Coordination Meeting Monday, November 25th

1.

2013 2:00 PM – 4:00 PM

Ministry of Economy Main Conference Hall

Minutes of Meeting Summary of the Meeting: The third Inter-ministerial Commission for Energy (ICE) Coordination Meeting was chaired by the Minister of Economy H.E. Minister Abdul Hadi Arghandiwal. The Ayaat from the Holy Quran were recited to start the meeting. The Chairman welcomed and thanked the participants. The Chairman asked participants to comment upon the minutes of the previous (October 27) meeting. Since no comments were received, the minutes and decisions of the October meeting were taken as approved. A brief description of items discussed, follow-up actions and meeting decisions are given as follows: Hydrocarbon and Coal Mining Sector - Ministry of Mines and Petroleum (MoMP)

The presentation described the great potential of the country’s hydrocarbon and coal sector, the vast majority (90% - 95%) of which is untapped. When effectively developed, the sector could contribute greatly to the country’s energy security and finances. Furthermore, Afghanistan’s strategic location as a crossroads between Central Asia, China and South Asia brings ample opportunities for energy trade in the region. The MoMP is committed to the development of energy resources in partnership with the private sector. Upstream development (exploration and production) has included the tendering of oil and gas blocks in the Amu Darya and Afghan-Tajik Basins and the development of the Sheberghan area (Juma, Bashi Kurd and Jar Quduk basins). Midstream development includes the construction of pipelines from Sheberghan to Mazar-e-Sharif. Downstream development includes the roll-out of Compressed Natural Gas (CNG) stations in the Sheberghan area. Furthermore, a major focus of MoMP activities has been on institutional restructuring to support the involvement of the private sector and to corporatize state concerns such as the Afghan Gas Enterprise.

: Mr. Jalil Jumrainy, Director General of the Petroleum Authority, MoMP gave a comprehensive and informative presentation on the development of Afghanistan’s hydrocarbon and coal mining sector. The presentation is enclosed as Attachment A.

However, the significant challenges still remain. The flagship integrated Aynak copper mining and coal-fired power project is unlikely to proceed as planned. The original Aynak contract included an associated coal-fired power plant (at Ishpushta) that would provide energy for copper mining and export excess (~200 MW) to the grid, as well as railroads and associated infrastructure. The current thinking is that no excess power or railroads will be developed from Aynak. The Hajigak Iron ore mine was originally forecasted to have an associated coal-fired power plant (at Dar e Suf) that would provide several hundred megawatt power to the


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grid. This project is now considered unlikely, with the exception of Sheberghan, there is no forecasted grid-integrated power production in spite of available Afghanistan’s indigenous resources. To attract private sector investment in the sector, several priorities were identified:

• Documented strategies for particular sectors (e.g. coal and natural gas), including the facility to attract medium-scale investors (rather than only mega-projects).

• A greater level of information needed on mineral and hydrocarbon deposits. • An enabling regulatory environment (e.g. a mining law, an electricity law, a well-defined gas and

power purchase agreements. • Capability to effectively process raw materials into finished energy products (e.g. refinery capacity

and power plants). • Effective inter-ministerial coordination.

2. The second presentation was delivered by Gene Lin of the USAID:

Significant progress has been achieved in the past and upcoming milestones include.

Gene delivered an inclusive presentation on Power Transmission Expansion and Connectivity (PTEC) which includes NEPS/ SEPS interconnection and some other projects and presentation is enclosed as Attachment B. USAID’s presentation stressed the number of stakeholders involved in developing this major project - ADB (administer the multi-donor AITF), USFOR-A, World Bank, Govt. of India and the French Government are involved in developing segments and effective coordination. Much of the work is being done on-budget through MEW and DABS and requires significant capacity building.

• RFPs for the Arghandi - Ghazni transmission line and substations. • Salang Tunnel Substation, Hisar-e-Shahi Industrial Park (HIP) T/L, Tarakhil Power Plant Water Piping,

NEPS Stability Improvements. • MEW Capacity building.

Notwithstanding the significant progress, challenges and issues to be resolved include: a) Security b) Sustainable power to the South (Kandahar and Helmand): The Ghazni-Kandahar transmission line will be

completed in 2017-18. In the interim, the populations of Helmand and Kandahar will continue to rely on the limited power supply from the Kajaki (HPP) and from Kandahar (diesel generation). However, the later is not financially and environmentally attractive.

c) Funding for the Arghandi substation to Jalalabad which would then enable interconnection and power trade with Pakistan.

d) Alignment on how the proposed CASA – 1000 project and HVAC 500 kV system will effectively tie into a 220 kV Kabul grid and 110 kV System. 3. Energy Sector Database:

The ICE Secretariat team provided a brief progress update on data collection and achieving from various government ministries, donors and development agencies. Further discussions are needed to streamline the ICE data collection process. The ICE Secretariat team was thankful for the support of all stakeholders (ministries and development partners) and hopes to include ICE ST initial assessments as part of an upcoming quarterly report.

4. ICE Secretariat is maintaining the record through a tracker on decisions and actions required by the stakeholders to reflect the status and progress. For further details please refer to Attachment C.

5. Other Business:

ICE participants proposed discussion items for inclusion into the next ICE meetings. These included:


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a. An update on the Electricity Law b. An update on the Kajaki HPP c. An update on the Afghan Energy Information Centre (AEIC).

6. Next ICE meeting

: If schedules of stakeholders permit, an ICE meeting will be held in December. If this will not be useful due to non-availability of participants because of holidays around the end of year, the next ICE meeting will be held in January. After consultation with the ICE Chairman and stakeholders, the ICE Secretariat will propose a date for the next meeting.

7. Conclusion:

Decisions:

The meeting concluded with thanking remarks from the Chairman of the ICE to all the participants for coming over for the meeting and for their continual support to ICE.

1. The ICE Secretariat will propose a date and draft agenda for the next meeting, after consultation with the ICE Chairman and major stakeholders.

2. The USAID was asked to present a brief update on Kajaki HPP Rehabilitation project and plans for Kajaki 2.

Action Items: No Action Item To be undertaken by 1 Update on Electricity Law MEW 2 Exploring Funding Gaps in NEPS/SEPS system ICE Secretariat 3 Process to update Power Sector Master Plan MEW 4 Corporatization of Afghan Gas Economic Committee

Meeting Participants The meeting was attended by around 32 participants representing government ministries, donors, development partners and other stakeholders in the energy sector. The list of attendees enclosed as Attachment D. Meeting/ Discussion Narrative: The meeting started with the recitation of few verses from the Holy Quran by Mr. Qari Ruhollah Sanjar, Payment Officer, MoEc. ICE Meeting Chairman H.E Minster of Economy:

1 After the recitation of few verses from the Holy book Al-Quran, H.E. Minister Arghandiwal, Minister Of Economy welcomed all participants and started the third ICE meeting with an anecdote - “we are here again in this little cold weather with ICE' meeting. Hope this momentum of ICE will not be melting down during the summer season in the next year”.

2 H.E asked the members if there were any question not asked or answered adequately in the previous meeting, please ask. If there are no comments/questions, the meeting minutes and decisions from the last meeting were taken as approved.

3 H.E. then offered the floor to MoMP’s representative, Mr. Jalil Jumrainy of MoMP, whose presentation would cover the possibilities of power generation using indigenous coal and natural gas.

Mr. Jalil Jumrainy of the Ministry of Mines and Petroleum (MoMP):

1 Mr. Jalil Jumrainy thanked H.E. the Minister of Economy, H.E. Deputy Minister Esmati of MRRD, Mr. Samadi CEO of DABS and other ICE participants. Mr. Jumrainy delivered a comprehensive presentation


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on Afghanistan Hydrocarbons & Mining Sector Development. Mr. Jumrainy updated the ICE participants on the ongoing projects under the Hydrocarbons & Mining sector in the country, what development has been taken place, what challenges are being faced by the hydrocarbon sector, and the requirements for future development.

2 The presentation was divided into three sections: Upstream, Midstream, and Downstream Development.

MoMP has tendered blocks in the Amu Darya and Afghan – Tajik basins (which are shared with Turkmenistan and Tajikistan).There is also sizeable potential for the installation of coal based thermal power stations. Stressing the importance of inter-ministerial coordination, Mr. Jumrainy pointed out that coal power generation falls under the Ministry of Energy and Water (MEW), gas distribution is under the Ministry of Commerce and Industries (MoCI). Natural gas-based power generation would involve the Ministry of Energy and Water (MEW), Da Afghanistan Breshna Sherkat (DABS) and Independent Power Producers IPP (e.g. Sheberghan).

3 Upstream: There are 5 established hydrocarbon basins in Afghanistan: Amu Darya, Afghan – Tajik,

Kushka Basin, Tirpul Basin and Helmand Basin. The sixth one may be added in the list as Katawaz basin. However, not much study has been carried out on Katawaz basin and this declaration is based only on preliminary assessments studies only. Two of these basins are the most prominent; Amu Darya and Afghan–Tajik basin. The Amu Darya basin is the world’s second largest gas reserve and is largely in Turkmenistan. About 18% of Amu Darya basin area is in Afghanistan.

4 Mr. Jumrainy informed the participants that MoMP has signed exploration / production contracts for Amu

Darya and Afghan – Tajik basins, and pointed out about the misconception that MoMP has no hydrocarbon reserves left for the future. Mr. Jumrainy stated that the process of contracting has barely begun - not even 5 -10% of the country’s Hydrocarbon has been contracted so far. Amu Darya and Kandahar basin extends up to Herat, and even in Herat there is an oil basin known as Tirpul and Kushka. There is another oil basin in the south named Helmand basin which requires studies, exploration and investments. Similarly, there are other blocks of oil and natural gas which require exploration and field studies. This will initially be taken up by the government of Afghanistan to start up the process.

5 Afghanistan has little information and data archiving systems in place unlike the US. Afghanistan has only

326 oil & gas wells in the entire country.

6 MoMP identified 6 blocks suitable for exploration in Afghan – Tajik basin and have invited tenders from the potential bidders. So far only two bids for two blocks have been received from a consortium of companies consisting of Dragon Oil, Turkish Petroleum and Ghazanfar Group. The contract has recently been signed and mobilization has already begun. Hopefully full-fledged seismic exploration activities will begin in late February or early March 2014.

7 Similar activities are expected to start in the northern Amu Darya region. The preliminary study reveals

that the area under northern Amu Darya has about 75 billion cum of natural gas.

8 The government is planning to corporatize the gas sector and is now seeking an approval from the Economic Committee, so that the Afghan Gas Enterprise (AGE) can be corporatized like DABS and re-named Afghan Gas Corporation (AGC).

9 There is another area on the North-North West of Afghanistan, named Andkhoy that has limited amount

of gas extraction at present. Two projects are going on with the help of Turkish Petroleum, where government of Afghanistan has paid around $ 8 - $10 million (with ADB assistance) for rehabilitation of these wells to make them fully operational and which could yield significant quantities of gas. These wells were operational 20-25 years ago but have since deteriorated without maintenance.

10 There are other areas of interest as well such as Juma and Bashikurd. The extracted gas will be sold out

to a gas based power generation plant (Sheberghan), expected to generate 200 MW of electricity. The


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contract for gas extraction was given to a Turkish company in the past. However, not much progress has been made because the drilling operations were stopped due to non availability of explosives (as the government could not arrange import permissions).Development partner and government money was lost in the process. Now the MoMP has invited tenders for three wells. These three wells are expected to yield not more than 1.2 million cum of gas. This gas may not be sufficient for generating 200 MW electricity, but MoMP wants to move forward, drill these three wells, and start extraction.

11 It is forecasted that an IPP will build the power plant and DABS will buy and distribute the power. The

total cost of the drilling and extraction of gas from the wells cost around $ 37 million, out of which $ 30 million are being arranged by USAID with $7 million Contribution from MoMP.

12 Mr. Jalil Jumrainy thanked ADB for providing support for eight gas well rehabilitation at Jarkudooq and

Hakimataq area to start flow of gas to the Northern fertilizer and Power plant in Kod Barq, the surplus gas will be supplied to Afghan army’s Shaheen base (Mazar-e-Sharif) and the remaining gas will be given to the Industrial park in Mazar e Sharif.

13 In Amu Darya basin the Russians extracted some 76 million cum of gas during the years 1980 – 1990.

There are still massive proven resources to the tune of 74-75 billion cum of gas in the Amu Darya and Afghan – Tajik basin. However, very little exploration work has been done so far at Afghan – Tajik basin to quantify the resources and more rigorous efforts are needed to attract investors. In the recent past companies such as TOTAL, CNPCI and other companies signed a contract with Tajikistan to characterize gas reserves. The exploration results in both the countries - Tajikistan and Turkmenistan are encouraging and hence Afghanistan may also expect some considerable reserves.

14 It is important to keep exploring the oil and natural gas resources but at the same time, the Afghanistan needs to develop good markets for selling these products. Afghanistan should learn lessons from countries which were having sufficient oil and natural gas but were not able to access their markets. Qatar can be considered as an example which was not able to sell its gas for more than 20 years until it was able to access markets through LNG tankers.

15 Fortunately Afghanistan is having good access to national and International markets. China, India and

Pakistan are potential buyers for Afghanistan gas. There is already four gas supply pipelines to China from Turkmenistan, Uzbekistan, Kirgizstan and Tajikistan. Afghanistan may also supply gas to China by adding another pipeline. The Turkmenistan, Afghanistan, Pakistan and India (TAPI) pipeline is an inspiring example for the gas trade between several countries.

16 However, laying pipeline to supply gas from the north to the south of the country is not an easy task due

to difficult terrains and cost. The cost estimated during 2006-07 for laying a pipeline to supply gas from north to the south and other areas worked out to around $2billion. Therefore, the best way to supply power to south and other areas are through onsite generation of electricity and transmission through grid lines.

17 Even during the Russian invasion, the Russians were exporting gas using pipelines from Afghanistan to

Turkmenistan and Uzbekistan. Currently around 250,000 tons of crude oil is being extracted from Amu Darya basin by CNPCI with a local partner Watan Group (WG).These exploration rigs were established first by the Russians and then by the Afghan freedom fighters.

18 There are two noticeable problems being faced by the refineries, 1) Heaviness of crude oil and 2) Higher

concentration of sulfur that needs proper treatment for handling and to avoid corrosion of carrying pipes. The Afghanistan refineries are currently not in a position to treat this oil and therefore, an Afghanistan delegation was sent to Turkmenistan to find out a solution for the treatment of crude oil. However, an agreement could not be reached due to gaps on treatment facilities. The Ministry of Commerce – Afghanistan is now discussing the issue of transit agreement for treating Afghan crude oil at Uzbekistan. In the meanwhile exploration is continuing and three other sources are identified. If more sources are


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found, there is a possibility that Afghanistan will have its own refinery to treat the crude oil to international standards in the next 2 to 3 years.

19 Mr. Jalil Jumrainy also provided an update on the 200 MW gas-fired power plant at Sheberghan. The

project is supported by USAID and ADB. The bidding for well rehabilitation has concluded and Turkish Petroleum has won the contract. The deal has been signed and it is expected that the drilling and construction work will start from December 2013. He also talked about the challenges and difficulties being faced. Removing higher concentration of sulfur in the gas stream requires sweetening plants. A new sweetening plant can cost $30- $40 million. In addition, large investments are required for laying new pipelines for transporting gas and oil from one part of the country to another or to the neighboring countries.

20 There is no regulatory agency to fix the prices for the oil and natural gas; no gas sales and purchase

agreement in existence, and no power purchase agreement between DABS and investors; lack of funds availability for continuing exploration, restoration of drills.

21 Hope these issues will be resolved once MoMP has the clear picture on the quality and quantity of gas,

the concentration of sulfur in the gas, power and gas purchase agreement in place.

22 He emphasized that the government should play a proactive role in fixing up all these issues as early as possible. Actions taken now would yield results only after a gap of 8-10 years due to long project cycle.

23 The side mixer ways alone cost $25,000 to $30,000 per kilometers, therefore, requires huge investments.

These side mixer ways are built for each block and each block have 1200 to 1500 Km of the side mixer data. This is the area through which the data is collected to reach to some conclusion for future line of actions.

24 Mr. Jalil acknowledged his thanks to all, TFBSO initially funding the exploration and investigation for gas

in Afghan – Tajik area. Luckily MoMP could able to find an investor and invested $12 million on exploration. And finally the Ministry of Finance, gave around $7.5 million for Amu Darya basin exploration. Now TFBSO again offered an investigation for Herat basin and MoMP may be starting the site investigation in the coming weeks and the investigation is expected to be completed within 3-4 months.

25 Midstream development again require a pipeline, currently Afghanistan has only one pipeline, 89 km long

connecting Sheberghan and Mazar – e – Sharif. This pipeline is carrying gas to the factory called Kod-e-Barq.. The pipeline carrying capacity of the pipeline is about 1 million cum of gas, whereas, the requirement of the Kod-e-Barq factory is around 630,000 cum. Therefore, the remaining 370,000 cum of surplus gas can be supplied to Mazar –e – Sharif or the airbase. This pipeline was laid some 20 years ago and now undergoing some rehabilitation program with an investment of $30 million for 15 km length. Now there is a need to lay out another pipeline for 89 km all the way from gas fields to the Kod-e-Barq in Mazar –e – Sharif. There are construction challenges due to difficult terrain; even sometime the movement of heavy machines such as cranes is inaccessible. These problems are resolved by Afghan construction labor through pushing heavy pipes manually to get these fixed. Around 5 km of pipeline has been laid and the remaining 10 km pipeline is left. In addition compression gas stations are to be constructed.

26 On the Downstream side, the first gas station has been established at Sheberghan. More than 100 cars

have been converted to Compressed Natural Gas (CNG). This activity has high development impact, as gas is cheaper, clean and environmental friendly fuel with low greenhouse gas (GHG) emissions. However, it is unfortunate that Afghanistan is not having a network of gas pipeline and hence this activity cannot be extended to other areas and truck fleets cannot be added to CNG fuel. Laying pipeline for supply of gas requires huge investment. However, it can be a good idea to be considered once the pipeline is constructed for supply of gas to the Mazar-e-Sharif.


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27 Once the pipeline is constructed between the Sheberghan and Mazar e Sharif, the generators owned by the ministry of interior and ministry of defense can be converted to run on dual fuel - CNG / Diesel. This change will have a positive impact on GHG reduction, use of environmental friendly fuel and could also save government revenues as CNG is 35% cheaper compared to Diesel. Diesel is expensive as it is imported, diesel imports causes loss of foreign exchange to the country. Replacing diesel with CNG will have cost benefits as well as energy self reliance for Afghanistan. MoMP is trying PRT Sheberghan. These areas belongs to the border police, and have converted two generator sets of 0.2MW and 0.38 MW capacity to dual fuels and now seeking permission from the Ministry of Interior to supply the gas to these two utilities. Currently the users are hesitant to use CNG and hence MoMP is giving the CNG free for 3 months, the cost is supported and approved by the Ministry Of Economy to encourage the use of CNG by the users. These two utilities are serving as a pilot project and if this experiment goes well. The conversion activity can be expanded to three other facilities in future. After completion of the gas pipeline from Sheberghan to Mazar e Sharif, Shaheen airbase can also be added to this activity of using CNG and replacing Diesel.

28 The mining projects are important for fulfilling the energy requirement of the country but these projects

like Hajigak and others are currently not moving forward. Even planned production of 400 MW power plant at Ishpushta for Mes– e- Aynak copper mine is now reduced to just 40 MW due to financing difficulties, non availability of mining law and Aynak railway line. The coal extracted by private investors/operators is being sold to a cement plant in Rawalpindi, Pakistan. This is similar to the 800 MW power plant at Dara e Suf in Samangan province to supply power to the iron ore mine at Hajigak. This project may not come up as planned as there is no commitment from the government on building a railway line for iron ore transport.

29 Mr. Jalil thanked ADB for helping Afghanistan through technical assistance program, and appreciated that

the earlier Power sector master plan was prepared with the help of ADB and now ADB is helping again through an Indian company to prepare Afghanistan Gas sector master plan.

30 He asked for government attention to take an early action on these priorities to open the doors for

progress. Afghanistan coal power generation is just about 1%, possibly the lowest in the world, despite of the huge power requirement within the country and possibilities of export of power to the neighboring countries as well. The availability of indigenous good quality coal and sizable potential and opportunities to be explored for energy security.

31 H.E. Minister Arghandiwal appreciated the presentation given by Mr. Jalil Jumrainy. The minister acknowledged the problems and informed that the MoEc is trying to resolve the important issues such as Energy Policy, PPA from several countries, Mining Law and others. He has raised the issue in the board meetings and meetings with other ministers as well; hopefully these issues will be initiated in the commission session of Parliament. H. E also informed that electricity from Sheberghan gas can be through Independent Power Producer (IPP) but we need to ensure and uphold the people faith that this is their country and this gas and electricity also belongs to them, therefore, the price of electricity should be set in such a way that it should be cost to cost without profit. The PPP should come out with a financial model acceptable to the community; otherwise it will be difficult for the community to accept it.

Gene Lin of the USAID:

1 Mr. Gene started USAID presentation on Power Transmission Expansion and Connectivity. He welcomed all participants with another anecdote, “Welcome Participants to the Second ICE Age still it is cold here, I have seen many Old faces and some new faces here, for those who don’t know me I am Gene Lin, I am responsible for USAID program on Power Transmission Expansion and Connectivity Program, commonly known as PTEC".

2 Mr. Gene informed the participants about the PTEC program. He showed in his presentation a map showing entire activities being initiated by different developers such as ADB, USFOR – A and USAID and


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what each developer is doing for the development of Power transmission Expansion and Connectivity programme.

3 USAID has participated in a multi donor fund (AITF), and have contributed its share for PTEC program to ADB. ADB is administering the Afghanistan Infrastructure Trust Fund (AITF). With this funding USAID finishes the section with the connection of NEPS with SEPS.

4 The most important issue here is to build an inter connection between NEPS and SEPS. DABS has to work out a way to connect and paired these two lines which has different configurations, double conductor, double circuit transmission line, 220 kV from Arghandi to Ghazni, this is very similar to 600 MW capacity transmission line from Naibabad to Puli Khumri,

5 USAID is committed to provide extensive technical support, directly and through third party implementers to assist DABS procurement procedures with solicitation, selection, and contract award process for all on budget activities, including Arghandi-Ghazni construction & Kajaki Turbine Unit 2 installations.

6 The construction of 500 kV line by the ADB, which will bring Turkmen power to Arghandi substation for distribution into the NEPS. The NEPS/ SEPS interconnection line will displace/ substitute the Diesel Generators installed in Ghazni (6 MW), Qalat (1 MW) and Kandahar (20 MW). By having This line with Turkmen power will relieve financial pressure on DABS to distribute electricity to the surrounding population centers in southern Afghanistan.

7 The other activity initiated by USAID is to construct a 24 km long power transmission line between

Jalalabad to Hesar-e Shahi Industrial Park (HIP). Based on the study conducted by the USAID with an assessment that Laghman and Nangarhar provinces will need 380 MW and the planned city (Ghazi Amanullah Khan City) to the south of HIP requires around 240 MW. All these transmission lines will be 220kV Transmission line in anticipation that there will be another line of 220 kV between Kabul, Arghandi to Jalalabad.

8 USAID also affirmed about the Salang Pass Tunnel Substation which will be fed by the Puli Khumri to Chimtala 220 kV Transmission line and will facilitate distribution of power to surrounding population. Gene also said about the existing project which is NEPS system stability and relays improvement, Tetra Tech is performing the study, the study will help to bring stability to Kabul grid (220 kV and 110 kV substations). Gene's presentation is enclosed as Attachment B.

9 H.E. Minister Arghandiwal asked the participants to question

Question and Answer session:

1. After Mr. Gene presentation Mohsin Amin Of ICE –ST, raised a question regarding second phase of

NEPS and SEPS interconnection after Ghazni to Kandahar which is about 300 - 350 KM?

2. Mr. Gene answered the question that USAID gave funding to PTEC to connect Kandahar with that in addition to other section of grid line which may be needed.

3. DABS raised a question that there was funding gap for Arghandi and Ghowchak 2 (Jalalabad Substation), these interconnection are not yet funded by USAID as heard. If this fund is not available then Arghandi and Ghowchak 2 will not be connected.

4. Why there is a delay on the Mining law? And when it is expected to pass through the parliament. Mr. Jalil informed that it is in the process, this delay is also callusing problems for projects to start under ministry of mines and petroleum. Hopefully some decision is expected in the coming session of parliament.

5. ADB resident mission’s office representative, Mr. Hamid Durrani added that it is important that the master plan should be updated and MEW needs to take a lead on it. Arghandi to Jalalabad Transmission line


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project and other will be added to this master plan. He informed that ADB has received a letter from MoF to finance distribution line to support 30,000 households and a transmission from Arghandi to Jalalabad. The letter has been sent to our HQ and decision is not yet made on that by the HQ management. He wanted to know about the government plan on corporatization of gas. Mr. Jalil informed that the matter is currently under the discussion at economic committee (EC), once EC passes, the matter will be sent to cabinet and finally to Parliament for his approval. It will take quite a good time to get through. However, the DABS can start working for the corporatization as soon as the cabinet approval is received.

Energy Sector database: The ICE Secretariat team outlined the progress made on data collection and achieving from various government ministries, donors and development agencies. Further discussions are needed to streamline the ICE data collection process and to streamline the systems. ICE will include a monitoring and reporting function as part of its activities. Conclusion The Meeting Chairman thanked all the participants and noted that date time and agenda of the next meeting will be soon shared with all participants.

Attachment A

Ministry of Mines and Petroleum (MoMP) Presentation

Hydrocarbons & Mining Sector Development

Afghanistan Hydrocarbons & Mining

Sector Development

Ministry of Mines and Petroleum

25 November 2013

• Upstream Development

• Midstream Development

• Downstream Development

Agenda

Ministry of MinesHydrocarbon Basins

FOUO – For Official Use Only

CENTRAL ASIA ENERGY MARKET

4

Massive proven resources in the Amu Darya and Afghan Tajik Basin extend into Afghanistan

Little exploration work conducted to quantify resources

12 BBOE Reserve

0.7 BBOE Resource


HYDROCARBON MARKETS

5

Amu DaryaBasin

Afghan-TajikBasin

KushkaBasin

TirpulBasin

HelmandBasin

South Yoloten

Dauletabad


HYDROCARBON MARKETS

6

Upstream Development

8

Amu Darya Oil Tender

First Tender

Contractors: CNPCI, Watan Group

Award Date: December 2011

Contract Type: EPSC

Blocks: Kashkari, Bazarkhami, Zamarudsay

Resource: Crude Oil

Scope: 80 Mbbls (Reserves)80 Mbbls (Resources)

First Production:

Q1 2013

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2012 Highlights:

• 57.61 km2 3D Seismic

• 6 Well Workovers

• More than $60M Invested

2013 - 2014 Projections:

• 130 km2 3D Seismic

• 10 New Wells

• 1.72 MMbbls produced

CNPCI-W currently capable of producing 1,950 bpd

10

Second Tender

EOIs:

ExxonMobil, Dragon Oil, Kuwait Energy, ONGC Videsh, PTT, TPAO, Petra Energia, PPL

Bidders: Dragon Oil, TPAO, Ghazanfar

Blocks: Sanduqli, Mazar-i-Sharif

Contract Award: Q4 2013 (expected)

Resource: Oil & Gas

*Scope: 391 MMBO159 BCF

Afghan-Tajik Basin Tender

Northern Amu Darya Tender Process

• 7,131 square km of total area

• Afghan Gas will have an immediate 20% interest• Qualified Bidders will submit:

• Required Bid with Afghan Gas as 20% partner• Optional Bid without Afghan Gas as partner

• Block contains the Juma and Bashikurd gas fields• 28 BCM gas reserves• Allows for near term revenue to the Government

• Afghan Gas immediate participating interest

11


NORTHERN AMU DARYA TENDER

12

ADB Grant Assistance forRehabilitation of 8 Wells

TPAO Workover Rig at YT-38

USAID 200 MW Sheberghan Gas Project

Bids received for work on wells in Juma-Bahikurd – To be awarded in Q4 2013

15

EPSC Between MoMP and Afghan Petroleum Company

Afghan Petroleum CompanyAsset Acquisition Plan

15

16

Gas Exploration Tender - Fall 2013• Kushka Blocks – 300 km 2D Seismic to be acquired• Northern Amu Darya Blocks – 236 km 2D Seismic recently acquired

Kushka Northern Amu Darya

Upstream Development Next Steps

16

17

Planned 2013300 km

Northern Afghanistan Seismic

17

MidstreamDevelopment

19

Test HeaderDehy Reboiler skid Afghan Ingenuity and Commitment

Sheberghan to Mazar Pipeline Rehabilitation – 15.5 KM

Perfect Example of Donor Coordination –ADB Gas Well Rehab gas to flow to TFBSO Pipeline

Sheberghan to Mazar New Pipeline Construction

Feb 2014

Sheberghan to Mazar Pipeline Construction

DownstreamDevelopment

Sheberghan Compressed NaturalGas Complex

CNG Complex Tender EoI’s DueIn October 2013

100 Cars already converted to CNG

200 additional Kits currently in inventory

CNG Generator Sites

• RTC Shiberghan (Afghan Border Police Training Center) CNG 200 KW + 380 KW

• ANA Barrack attached to PRT Shiberghan

• Shaheen Base (Mazar Sharif)

Dual Fuel Savings are 35% as compared to Diesel

Aynak Copper (2010)

HajigakIron Ore(2013)

Dushi Gold(2010)

Amu Darya and Afghan Tajik Basin(2011- 2013)

Integrated Mining and Power Projects

Coal Exploration is concentrated in North-Central Afghanistan

Mining Projects Power Plant

Hajigak Proposed Plan

• 800 MW Power Plant• 160 MW to be sold to

Government of Afghanistan.

• Negotiations on going.

Aynak Original Proposed Plan• 400 MW Coal Fired Power

Plant• 32 million tons Coal

available • 200 MW for Government of

Afghanistan & 200 MW for Smelter Plant.

New Proposal • 40 MW Generators for

Mining only

Afghanistan Petroleum Authority (APA)Current Initiatives

• New Petroleum Supply Law Coordination with MoCI – in process• Gas Master Plan – Committed by ADB• Afghan Gas Corportization to Afghan Petroleum Company• Refinery Contract – in process• Petroleum Data Receipt and Storage – in process

Current Challenges• Gas Pricing Strategy – in process• Standardized Gas Sales and Purchase Agreement – in process• No Power Purchase Agreement in place• Gas Pricing as related to Power Pricing• Gas Pricing as related to other Industries • Gas Allocation Strategy• Coal Exploration• Coal Strategy• Coal Fired Power Plant (Hajigak and Aynak) • Joint Coal Sale and Power Purchase Agreements• Afghan Gas Corporatization

Afghanistan Energy

The Ministry of Mines and Petroleum has made significant progress over the last 2 years in developing the Hydrocarbons Sector

With continued support of our donor partners, we can further develop our hydrocarbon resources and provide regulation and oversight to achieve sustainable growth

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Attachment B

United States Agency for International Development Presentation

Power Transmission Expansion and Connectivity (PTEC)

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Power Transmission Expansion & Connectivity (PTEC) 2013 November 25

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Milestones

Achieved (Q4 2013 through November 2013)• Implementation Letters (ILs) – Obligated funds for on-budget activities including

DABS Capacity Building and Arghandi-to-Ghazni Transmission Line

• Afghanistan Infrastructure Trust Fund (AITF) – USAID committed to participate in multi-donor assistance fund to be implemented by ADB

Forward Milestones• DABS’ Release of On-Budget RFPs - Arghandi - Ghazni T/L and SSs, Construction Management,

Capacity Building, Commercialization, SEPS Management. Contracts to be executed by end-2013.• Salang Tunnel Substation, Hisarshahi Industrial Park T/L, Tarakhil Power Plant Water

Piping, NEPS Stability Improvements – Development of on-budget bid packages to be completed 2013 December – 2014 January

• Off-budget MEW Capacity Building – Technical support to plan, manage, and regulate energy resources expected procured 2013 Q4, 3-year duration

• 2nd disbursement to Afghanistan Infrastructure Trust Fund (AITF) – Contribution for T/L project in 2013 November. Obligation of remaining funds expected.

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• DABS Capacity

• USAID providing extensive technical support, directly and through third party implementers, to assist DABS procurement with solicitation, selection, and award process for all on-budget activities, including Arghandi-Ghazniconstruction & Kajaki Turbine Unit 2 installation

• Mitigating security challenges through public awareness - Inform the public and communities about planned & ongoing energy infrastructure investments & anticipated outcomes, off-budget “DABS Public Awareness Campaign” is currently being procured. Award expected 2013 October, mobilization planned for 2014 January to coincide with construction mobilization

• Kandahar Fuel Bridging Solution and SEPS Power Supply Post-2014 – PTEC is transferring funding to ADB through AITF for completion of the NEPS-SEPS Connector from Ghazni to Kandahar which will delay the completion of the transmission line by 2 years from initial projections to 2017/2018. Until the NEPS-SEPS Connector is completed, Kandahar and Helmand Provinces will continue to rely on limited power supply from Kajaki HPP and unsustainable diesel power plants. Diesel power supply to Kandahar will decline as diesel fuel subsidies end. Fuel subsidy glide-path still being considered.

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Challenges

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• DABS Completion of Conditions Precedent (CPs)

• DABS has successfully resolved initial high risk CPs; Implementation Letter 22-2 identified remaining CPs that must be resolved before obligation and award of on-budget contracts

• DABS has submitted the twelve completed CPs to USAID for its confirmation that they have been met. Approval is expected by the end of November 2013.

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Challenges (Continued)

1.Monitoring/Evaluation Plan 7.Business Planning2.Financial Statements 8.Procurement Plan3.Financial Mgmt/Reporting Plan 9.Commercial Systems Plan4.Ministry of Finance Accounts 10.Information Tech. Plan5.Asset Management Plan 11.Human Resources Plan6.Internal Auditing Plan 12.Tarakhil Power Plant O&M

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On-Budget Construction Activities implemented by DABS:• Transmission line from Arghandi to Ghazni –120 km section of the 490 km

NEPS-SEPS Connector, bids received 16 July 2013, award expected November 2013

• Construction Management Consultant –support DABS for all on-budget construction activities, bids received 3 July 2013; award expected November 2013

• Transmission line from Jalalabad to Hisare Shahi Industrial Park (HIP) –USAID developing bid package; award expected February/March 2014

• Salang Tunnel Substation – USAID developing bid package; determining if the substation can be constructed in the short construction season ending September 2014 with early procurement of equipment

• Tarakhil Power Plant replacement of leaking Fire Suppression water pipe –USAID developing bid package; award expected February 2014

• NEPS Stability Improvements – Under study for development of bid packages. Work to include SS relay settings and procurement of distribution fuses. Award expected March 2014

Status – PTEC Components

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Off-Budget Activities through direct USAID Contracts:• Quality Assurance for On-Budget Construction Activities – Scope of work

being developed; award anticipated before start of construction.

• DABS Public Awareness Campaign – Negotiation underway, award expected Oct 2013

Status – PTEC Components (continued)On-Budget Capacity Building Activities implemented by DABS:• Commercialization for Distribution – increases revenues and reduce dist.

losses

• Technical selection made, negotiation underway, award expected Oct 2013

• Commercialization for Generation/Transmission – establishes wholesale mkt

• Bids received 6 August 2013, selection underway, award expected Oct/Nov 2013

• Corporate Management Support – improving DABS capacity

• Contract in the award process ,November 2013

• Management Contract (MC) for SEPS – In the contract negotiation process with award expected by early-December 2013.

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Off-Budget activities with MEW & Educational InstitutionsTo be awarded via Energy & Water IQC Task Order by end of 2013

• Training and Mentoring - to strengthen policy and planning skills, assist with creation of regulatory agencies, strengthening MEW’s ability to deal with important trans-boundary water issues necessary to develop the large hydro-power resources of the country and reduce reliance on imported power

• Assistance to Vocational Training Center (VTC) and Educational Institutions - To provide courses to MEW and DABS staff and connect qualified graduates to hiring organizations. Includes training equipment for the VTC and laboratories in Educational Institutions

Status – PTEC Components (continued)

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USAID• Kandahar Helmand Power Project (KHPP) - $266M, off-budget, implemented

by Black and Veatch; includes replacement of inefficient generators in Kandahar City, upgrades to the city’s distribution system, and rehabilitation of substations.

• Contract components extended to Dec 2013. 1-month extension with extra month option expected to allow for transition to on-budget KajakiUnit 2 (see next bullet) project.

• Kajaki Unit 2 – Moved from KHPP to DABS for on-budget implementation; award selection in process; allowing for GIRoA procurement processing, award expected Sep/Oct 2013

• Sheberghan Gas Development Project (SGDP) - $35M off-budget, implemented by AEAI; incl. training of DABS & MoMP/Gas Business Unit on O&M & business processes; on-budget to MoMP to refurbish two wells & drill one new well with award expected Sep 2013.

Asian Development Bank (all in planning or ongoing)

• NEPS 220KV transmission line: Chimtata (Kabul) to Arghandi substation – first 40 km section of the NEPS-SEPS Connector, awarded

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Other Related Energy Investments

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PTEC TimelineQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

PTEC (On-Budget):

Arghandi to Ghazni Transmission Line

Salang Tunnel Substation (under development)

HIP Transmission Line (under development)

DABS Capacity Development~

NEPS Improvements* (under development)

PTEC (Off-Budget):

MEW Capacity Development~

~estimated completion June 2016*includes Tarakhil PP upgrades, MV relay settings, MV equipment procurement

2013 2014 2015 2016

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Key Contacts:Ministry of Energy and Water Minister Khan, Deputy Minister Gulam Faruq

DABS Chief Executive Officer Mr. Abdul Razique Samadi (0700 276 473)

DABS Chief Commercial Officer Mr. Mirwais Alami (0700 241 000)

DABS Chief Operations Officer Mr. Shekeeb Nessar (0700 294 722)

DABS Chief Financial Officer Mr. Ahmad Sahil (0799 322 292)

USAID Energy Division Chief Gary Shu (0702 323 289)

USAID PTEC Project Manager Gene Lin (0702 636 358)USAID PTEC Construction Gene Lin (0702 636 358)USAID PTEC DABS Capacity Building Gary Shu (0702 323 289)USAID PTEC MEW Capacity Building Gul Afghan Saleh (0700 276 307)USAID PTEC On-Budget Kevin Pieters (0702 594 107)USFOR-A/JPIO – USACE Jim Baker (0702 274 530)Asian Development Bank Hamid Durrani (0773 620 397)

Attachment C

ICE Meetings- Actions Tracker

Ministry of Economy (MoEc)Inter-Ministerial Commission for Energy (ICE)As on 1 December 2013

ICE Mtn No

Action Item Responsible Organization (s) Priority level ICE Meeting No. and Date Status Comments/Remarks

1Expand participation in ICE meeting for coordination groups.

ICE Secretariat to formally involve Renewable Energy Coordination Group and Sheberghan GasAll participants to recommend additional parties who should attend ICE meetings

Normal 1st ICE Meeting September 23rd 2013 Resolved

Complete - Renewable Energy Coordination Committee (RECC) and Sheberghan presentations in 2nd ICE meeting and groups are now part of ICE participants. Ongoing coordination with regards to activities

2USAID to confirm details of Kabul-Kandahar transmission line specifications to MEW

USAID to confirm details with MEW. All participants to please inform ICE secretariat whether this is a larger issue (e.g. implementation specifications in deviation with any agreed grid plans). If so, will be taken up at ICE. If not, to be furthered bilaterally between USAID

Normal 1st ICE Meeting September 23rd 2013 Resolved Answered by Gene Lin in third ICE meeting and will dropped from next tracker

1Process to update Power Sector Master Plan

MEW High 3rd ICE Meeting November, 25th 2013 In progress To be discussed in Next ICE meeting : Can suggested changes be included in ADB TA for updating Power Sector Master Plan

2 Update on Electricity Law MEW High 3rd ICE Meeting November, 25th 2013 In progress To present update in next ICE meeting

3Exploring Funding Gaps in NEPS/SEPS system

ICE Secretariat Normal 3rd ICE Meeting November, 25th 2013 In progress As part of 'state of the industry' reports

4 Evaluate need for ICE Standing Committee ICE Secretariat in consultation with ministries and development partners. Normal 2nd ICE Meeting October, 27th 2013 In progress Thus far ICE secretariat setting agenda in consulation with line ministries and development partners against evolving 'agenda landscape' document Discussion on whether a

5 Corporatization of Afghan Gas Economic Committee Normal 3rd ICE Meeting November, 25th 2013 In progress To present update in next ICE meeting

6Establish common source of information on Energy projects.

All participants to provide Project/ Portfolio progress updates to ICE secretariat as requested.

Normal 2nd ICE Meeting October, 27th 2013 In progress

Working group on database formed with focal points from all ministries. Data gathering and analysis underway. Integration with other data source (e.g. AEIC) needs to be discussed

1MoF to forward issues for delay in customs clearance for MEW project infrastructure

Neak Mohamed – MoF to forward MEW concern to relevant department.All participants to please inform ICE secretariat whether customs clearance is an issue. If this is a common issue, will be taken up at ICE. If not, will be furthered bilaterally between MEW and MoF.

Normal 1st ICE Meeting September 23rd 2013 Pending MoF to update us on the progress

Resolved

In Progress

Pending

Open Discussion Items Tracker

Attachment D ICE Meeting Participants List

No. Name Organization Designation Email Phone Number1 H.E. Abdul Hadi Arghandehwal MoEc Minister/ ICE Chairman [email protected] 0799 829 797 2 Jalil Jumrainy MoMP Head of Afghan Petroleum Authority [email protected] 7993021843 H.E. Abdul Raziq Samadi DABS Chief Executive Officer [email protected] 0772 262 262 4 Shekeeb Nessar DABS Chief Operation Officer [email protected] 7002947225 M. Tariq Asmaty MRRD Deputy Minister Program [email protected] 7003063116 Dr. Ismail Rahimi MoEc DG Policy [email protected] 7992917007 Jubair Ahmad Musazay MoEc ADNS M&E Egineer [email protected] 7951210638 Aimal Rassoly MoEc B. Advisor [email protected] 700037192

9 Abdul Hashim Hekmat MoEcDirector of Industries and Communication [email protected] 778687558

10 Khan Mohammad Alamyar MoEc ANDS Poverty Analysis Expert [email protected] 79885890611 Rohit Rathish Idian Embassy Frist Secretary

p g , [email protected] 93706131585

12 Gene Lin USAID PTEC Program Manager [email protected] 70263635813 David Young Tetra Tech AESP Technical Service Manager [email protected] 79450053314 Douglas Tjader Tetra Tech AESP Enginary Sectory lead [email protected] 794500546

15 Stanislava MladennovaOffice of the NATO Senior Civilian Represenattive in Afghanistan

Political Advisor to the NATO Senior Civilian Representative [email protected] 793384015

16 Hamid Durrani Asian Development Bank (ADB) Sr. Project Officer [email protected] 0773 620 397 17 Rachelle Tayag Ramirez Asian Development Bank (ADB) Portfolio Management Specialist [email protected] Dr. Haress Abawi KFW (German) Development Bank Regional Coordinator [email protected] 0706 292 937 19 Marton Kerkapoly KFW (German) Development Bank Sector Coordinator Energy [email protected] 79902099120 Zabiullah Tahirzada GIZ Development Program Director [email protected] 70066012721 Wahid Waissi MoFA DG of Economics Coopperation [email protected] 79905365722 Neak Mohammad Mohibi MoF Infrastructure Sector Manager [email protected] 0707 275 853 23 Shoaib Sahibzada DCDA Power Specialist [email protected] 79962002824 Nasrullah Habibi UN- Habitat Program Manager [email protected] 79161109725 Mark Marvey DFID Infrastructure Advisor [email protected] 79619107126 A. Mirwais Sheberghan Gas ABAT/USAID G.L.O [email protected] 79940605427 Syed Khursheed Zaidi ICE Secretariat Team Leader / Energy Specialist [email protected] +93 786 728 523 / +91 971 77 45 45 628 Mohsin Amin ICE Secretariat Deputy Team Leader/Energy Specialist [email protected] 078929527029 Sayed Abdul Ahad Reshtya ICE Secretariat Office and Logistics Manager [email protected] 078875987130 Mohammad.Hashim Alimi ICE Secretariat Project Coordinator [email protected] 079771750531 Majid Labib ICE Secretariat Project Coordinator [email protected] 079891323732 Gautam Narasimhan ICE Secretariat [email protected] 0780607358

Ministry of Economy (MoEc)The Inter-Ministerial Commission for Energy (ICE)Second Coordination MeetingMonday November, 25th 2013, 2:00 PM - 4:00 PMParticipants list

mailto:[email protected]�








inter-ministerial commission for energy (ice) monday

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