ADB is backing a project to tap Tajikistan's power surplus to meet shortfalls in neighboring Afghanistan through loans to the two countries totaling US$56.5 million. Tajikistan's annual generated capacity is 4,405 MW, most of which comes from hydropower. An annual surplus of about 1,500 gigawatt-hours is available for export, but only for about half a year during the spring-summer period. Part of the surplus is already exported through Uzbekistan via its southern grid while the rest is not utilized.

Afghanistan, on the other hand, faces serious power supply shortages, which are expected to become more acute as demand grows. Its power generation, transmission and distribution systems have been severely damaged by years of conflict. All around the country, including the capital Kabul, power is available for just a few hours a day.

To meet the needs of both countries, the project will construct a 220 kilovolt double circuit transmission line that will link the hydropower stations on Tajikistan's Vakhsh River to the border town of Sherkan Bandar, then to Kunduz, Baglad, Pul-e-Khumri and, ultimately, Kabul in Afghanistan.

The project will also include new investments and upgrading in Tajikistan that will help reduce the winter power deficit by boosting the available level of generation and decreasing technical losses in the south of the country resulting in an additional 320 gigawatt-hours annually.

"The project offers a win-win situation for both Afghanistan and Tajikistan," says Xavier Humbert, an ADB Energy Specialist. "It will restore power supply and reduce costs for consumers in the former while allowing Tajikistan to export 300 megawatts." The total net economic benefits of regional cooperation of the project are estimated to be $114 million, split fairly evenly between the two countries.

ADB's loans - $35 million to Afghanistan and $21.5 to Tajikistan - come from its concessional Asian Development Fund and carry a 32 year term, including a grace period of 8 years. Interest on each is charged at 1% per annum during the grace period and 1.5% during the rest of the term.

Other financiers of the project, which will cost an estimated $109.5 million, are the OPEC Fund for International Development, Islamic Development Bank, Afghanistan Reconstruction Trust Fund, and the Afghanistan and Tajikistan governments.

The Ministry of Energy and Water in Afghanistan and Barki Tajik in Tajikistan are the executing agencies for the project, which is due for completion in March 2009 and June 2010 in the two respective countries.

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