The Afghan Power Plant Company Limited (APPC) has secured a $10 million loan from the Asian Development Bank (ADB) to enhance energy security.
The utility will use the loan to build its 58.56 MW Mazar gas-fired powered plant in northern Afghanistan.
The $89 million project will generate 404 GWh of energy per annum using local gas.
The project is the first private sector gas-fired plant in Afghanistan to be funded by development finance institutions.
Afghanistan has the world’s lowest electricity penetration rate, with only 34% of the population connected to the grid as of 2019.
Since 2005, energy demand has grown at nearly twice the economic growth rate. As a consequence, the country needs to import at least 75% of its energy needs.
The ADB will administer a $10 million loan for the project provided by the Leading Asia’s Private Infrastructure Fund (LEAP). The International Finance Corporation and DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH are also co-financing the project.
Shantanu Chakraborty, the head of ADB’s private sector operations department, said: “This project is definitive proof that indigenous gas-based power generation is capable of displacing electricity imports in Afghanistan and helping to deliver energy security.
“Its success will send an important signal to the market that Afghanistan’s power industry is now ready to attract more private sector investment and financing.”
Ismail Ghazanfar, the chairman of APPC, adds: “This is a first step in Ghazanfar Group’s vision of helping to develop 5,000 megawatts of energy generation facilities in Afghanistan through partnerships with international development banks, local and international companies, and the Government of Afghanistan.”