In addition to building power plants in Afghanistan at a total cost of $305.5 million, US taxpayer funds have also been expended to purchase fuel because the host country could not afford to buy it.
The USAID/OIG had just released its audit of USAID/Afghanistan’s power sector activities under its Afghanistan Infrastructure Rehabilitation Program. This does not look pretty; you might want to cover your eyes: $249.6 million had been expended for 12 megawatts of power (the goal was to generate 140 MW); an additional $15.6 million was also used for procurement of fuel last year.
Quick summary from the report:
The utilities sector in Afghanistan is among the least developed sectors in the economy. Only about 15 percent of the population has access to electricity. […] To promote political stability, providing sufficient electrical power has been important for both the capital city of Kabul as well as for the agricultural provinces of Helmand and Kandahar. The Governments of Afghanistan and the United States became increasingly concerned that Afghanistan’s North East Power System might not be able to provide sufficient power to Kabul by the winter of 2008–2009. Furthermore, the Kajakai Dam hydroelectric power plant has been considered a vital component of the South East Power System in Afghanistan, which provides electricity primarily to the provinces of Helmand and Kandahar—the agricultural breadbaskets of the country.
So in an effort to help the Afghan Government and to make electricity more available within Kabul and within the southern provinces of Helmand and Kandahar, USAID/Afghanistan awarded two task orders under its Afghanistan Infrastructure Rehabilitation Program to Louis Berger Inc./Black and Veatch Special Projects Corp. Joint Venture.
1: Task Order 9 was awarded in July 2007, with an objective to build a diesel-powered electricity generating plant that would provide 105 megawatts of additional generating capacity in Kabul by the 2008–2009 winter season. This task order had a completion date of April 2009. Results: As of May 13, 2009, when audit field work ended, the mission-funded projects were able to deliver only 12 megawatts of power, far less than the original goal of 140 megawatts. Moreover, this modest increase in power had not actually been delivered by the new Kabul power plant to the city’s population. By that date only 3 of 18 planned generators had been installed at the plant, 2 of which could generate the 12 megawatts of power. The third generator installed at the plant—which the project had expected to generate 5.8 megawatts—had yet to undergo startup and testing activities.
2: Task Order 2, awarded in January 2007 for the completion of work at the Kajakai Dam in Helmand Province, included refurbishment of an existing turbine, installation of a new turbine, and various supporting services. The objective of this task order was to increase capacity of the dam by 35 megawatts (to a total of 51.5 megawatts) by an estimated completion date of June 30, 2008.
Results: None of the 35 extra megawatts of power had been delivered to the local population as of May 13, 2009.
Extracted from USAID/OIG Report
As of April 30, 2009, the combined ceiling price for these two task orders (including $2.8 million for related activities, such as demining and building a perimeter wall, specified under another task order) was $305.5 million. By that date, USAID/Afghanistan had obligated $290.8 million and expended $249.6 million for the two projects.
Of course, all is not lost. The OIG points out that “Although the mission-funded projects have not succeeded in providing the electrical production in accordance with its original schedule, USAID/Afghanistan has experienced some successes under each task order. With regard to the 105-megawatt plant, the mission has funded ongoing training, and to date seven engineering interns, three mechanical and four civil, have been trained to maintain the plant. The interns perform tasks that include maintaining a detailed material control and inventory of equipment, monitoring civil installation, performing materials testing, preparing daily construction reports, and interpreting technical drawings.”
Except that the 7 trainees cited above may not really mean anything because --- the report also says that:
Host Government May Not Be Able to Meet Its Commitment to Provide Fuel to Operate the Kabul Power Plant
“Sustainability is a core element of USAID program design guidance. However, it is unlikely that the host government can afford to pay for the fuel to operate the facility, for reasons such as increases in fuel prices and the inability to collect on utility bills. In addition, the current configuration of the northern Kabul transmission system does not allow for use of cheaper electricity alternatives at certain times of the year, although these alternatives could ultimately reduce overall fuel costs. Without fuel to run the facility, the plant will not be able to produce sufficient electricity to meet consumer demands. As a result, businesses will almost certainly suffer, and the anticipated economic gains from having this reliable power source will not be achieved.”
The OIG report cited Section 611(e) of the Foreign Assistance Act of 1961, as amended and codified in 22 U.S.C. 2361, which provides that whenever certain types of funds are proposed to be used for a capital assistance project exceeding $1 million, the head of agency must take into consideration the mission director’s certification as to the capability of the country to effectively maintain and utilize the project.
Apparently at the start of this project, the mission received a commitment from the Afghan Government to budget and provide for the fuel required to operate the facility. The mission director also certified that the host country had the capability to effectively maintain and utilize the project.
But then in October 2008, the Afghan government notified the mission that it would be unable to purchase fuel for the new facility when it was completed and requested financial assistance to purchase fuel for the upcoming winter when the plant was to have been completed.
In fact, the OIG report says that “the mission reduced its contribution to the Afghanistan Reconstruction Trust Fund, a trust fund managed by the World Bank, by $28 million and used these funds to purchase fuel. However, since the project was not completed on time, the $28 million was used to purchase fuel for an existing plant. Approximately $15.6 million for fuel was procured out of the $28 million, and in April 2009 the host government requested that the remaining funds be reserved for the next winter.”
Huh? Holy mother of goat and all her crazy uncles!
Marshal Sokolov during the Politburo Session of January 21, 1987 had this to say about economic assistance to Afghanistan during the Soviet excursion there in the 80’s:
“We have to sort out the economic assistance: they are asking for three times more than they need. Yes, we will have to help. But—so that there is [some] benefit. In 1981, we gave them 100 mln. [rubles] of free assistance. And all of that went to the elite. And there was nothing in the hamlets—no kerosene, no matches.”
Twenty years later, it’s hard to disagree with the officer who led the ground forces in the Soviet invasion of Afghanistan. Yes, let’s do that --- sort out the economic assistance. It’s not like we have a surplus to brag about.
Related Item: Audit of USAID/Afghanistan’s Power Sector Activities Under its Afghanistan Infrastructure Rehabilitation Program | Audit Report No. 5-306-10-002-P | November 10, 2009
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