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Viewing cable 07KABUL1206, Afghanistan Energy: Letter From Ministers of Finance and

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Reference ID Created Released Classification Origin
07KABUL1206 2007-04-11 11:50 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Kabul
VZCZCXRO1215
OO RUEHDBU RUEHIK RUEHPW RUEHYG
DE RUEHBUL #1206/01 1011150
ZNR UUUUU ZZH
O 111150Z APR 07
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7432
INFO RUCNAFG/AFGHANISTAN COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEKJCS/OSD WASHINGTON DC
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RUEABND/DEA HQS WASHINGTON DC
RHMFIUU/HQ USCENTCOM MACDILL AFB FL
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC 0426
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUCNDT/USMISSION USUN NEW YORK 3946
UNCLAS SECTION 01 OF 03 KABUL 001206 
 
SIPDIS 
 
DEPT FOR SCA/FO, SCA/RA, AND SCA/A 
DEPT PASS AID/ANE 
DEPT ALSO PASS OPIC AND TDA 
CENTCOM FOR CG CFC-A 
NSC FOR AHARRIMAN 
TREASURY PASS TO LMCDONALD, ABAUKOL, AND JCIORCIARI 
OSD FOR BRERZINZSKI 
COMMERCE FOR DEES 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958 N/A 
TAGS: ENGR EAID ECON ETRD KPWR PGOV AF
SUBJECT:  Afghanistan Energy: Letter From Ministers of Finance and 
Economy Requesting Kabul Power Supply Assistance 
 
Ref: A) Kabul 1033; B) Kabul 936/935; 
C) Kabul 692/317/274/162; D) 06 Kabul 5353/5194/4319 and previous 
 
Sensitive But Unclassified 
 
(U) This is an action request message -- see para 3. 
 
1. (U) On April 4, Embassy received para 4 letter from Minister of 
Finance Dr. Anwar Ul-Haq Ahady and Minister of Economy Dr. Mohammad 
Jalil Shams regarding energy sector commitments the GOA is prepared 
to make.  The Ahady/Shams letter is in response to the Ambassador's 
March 29 letter offering USG support in installing an additional 100 
MW of electricity capacity in Kabul.  Embassy will email copy to 
SCA/A. 
 
2.  (SBU) Per ref A and B, concerned Mission elements have been 
engaged with the donor community and the GOA in preparing a proposal 
to enhance the supply of power in Kabul.  An important part of this 
proposal is USG conditionality -- a series of actions that we would 
like the GOA to take in the energy sector.  The Ahady/Shams letter 
agrees fully to the U.S. policy and financial conditions, developed 
in conjunction with Washington.  We are proceeding quickly on other 
steps that need to be taken, including technical assessment of the 
type of generators needed, the location of these generators, the 
capacity of the Kabul grid, and preparation of request for 
proposals.  We have already identified existing or pipelined 
resources for the USG contribution to the proposal: 
 
-- $26 million of the $76 million currently slated for the Kajaki 
transmission line.  This amount is not needed at this time due to 
the security environment in northern Helmand and parts of Kandahar 
province.  The $26 million would be back-filled with a portion of 
the FY 2008 $143 million base request. 
 
-- $18 million requested in the FY 2007 supplemental for "keeping 
the lights on" in Kabul. 
 
-- $66 million requested in the FY 2007 supplemental for "strategic 
provincial roads," out of the total planning level of $186 million. 
The $66 million can be redirected because the extreme security 
conditions where three of the four roads are located -- northern 
Kandahar, northern Helmand and eastern Farah provinces -- do not 
allow work to begin. 
 
3.  (SBU) Action Request:  Further to ref A, Embassy requests 
Washington agencies to commence Congressional consultations and 
notifications at the earliest.  Embassy understands the awkwardness 
of notifying/consulting on reprogramming of funds in the FY 2007 
supplemental because the measure has not yet been passed by 
Congress.  We request, however, that a way be found around this 
because of the extreme time sensitivity of the issue.  In Embassy's 
view the ability to use the $18 million in FY 2007 supplemental 
"keeping the lights on" funding and the $26 million in Kajakai 
resources should only require Congressional consultations since 
these funds were originally notified for the power sector. 
Reprogramming the $66 million from provincial roads in the FY 2007 
supplemental will require a Congressional notification.  We should 
stress to Congress that: 
 
- We are meeting a critical economic and political need and need to 
do so before the 2009 election; 
- The capacity we propose to install will be needed in any event; 
there is no duplication or wastage of resources. 
- We are insisting on major cost sharing and policy actions from the 
GOA as a condition of our assistance. 
 
4.  (U) Text of Ahady/Shams letter: 
 
KABUL 00001206  002 OF 003 
 
 
 
Islamic Republic of Afghanistan 
 
April 4, 2007 
 
Ronald E. Neumann 
Ambassador, United States Embassy 
Kabul, Afghanistan 
 
Dear Excellency: 
 
Thank you for your letter dated March 29, 2007.  The Government of 
Afghanistan shares your concerns regarding provision of power to 
Kabul and appreciates the great support that the United States of 
America is ready to extend to address these challenges. 
 
In response to your letter, we are pleases to confirm the 
following: 
 
-- In the April 2, 2007 meeting of the Cabinet, the Government 
reconfirmed its decision to increase the power generating capacity 
of Kabul, received with gratitude the offer made by the United 
States, and instructed the relevant Ministries to take the 
appropriate actions. 
 
-- The Cabinet also approved the commitment of 20 million USD as the 
Government of Afghanistan contribution towards the purchase costs of 
the 100 MW reciprocating engine generators. 
 
-- The genset package can be decided after we receive the offers, 
depending on the delivery time and the technical and financial 
evaluation of the offers. 
 
-- The Government of Afghanistan is committed to paying the fuel 
costs for the new generators.  Regarding Operations and Maintenance, 
as you are aware, all turnkey offers include the supplier's 
commitment towards O&M for the short term.  Beyond that time the 
Government will contract the O&M with either the supplier of the 
equipment or an internationally reputable O&M firm. 
-- The Government of Afghanistan is committed to the corporatization 
of DABM, and it is progressing well.  The corporatization procedures 
of state-owned enterprises, which will guide the DABM 
corporatization process, were approved on March 19, 2007. 
 
-- Outsourcing of the billing and collection process is underway. 
The bidding process will begin shortly. 
 
 
Thank you again for the generous offer of the United States to 
support the provision of power to Kabul.  We hope that the 
assurances included in the letter will facilitate approval of the 
funding by the U.S. Congress.  If so, then we await the timely 
preparation of the bidding documents by the U.S. Embassy's technical 
experts. 
 
 
Yours sincerely, 
 
/s/ 
Dr. Anwar Ul-Haq Ahady 
Minister of Finance 
 
/s/ 
Dr. Mohammad Jalil Shams 
Minister of Economy 
 
 
 
KABUL 00001206  003 OF 003 
 
 
cc: H.E. Mohamed Ismail Khan, Minister of Electricity and Water 
cc: Professor Ishaq Nadiri, Special Economic Advisor to the 
President 
 
End Text. 
 
NORLAND