Source: Japan International Cooperation Agency
On June 17, the Asian Development Bank (ADB) signed a loan agreement for a gas-fired power project in Afghanistan through JICA’s “Leading Asia’s Private Infrastructure Fund” (LEAP).
Lenders provide a long-term finance to a 58.56-megawatt gas-fired power plant (total project cost of $89 million) located near Mazar-i-Sharif in northern Afghanistan, including $10 million in direct loan from ADB and $10 million from LEAP. Ghazanfar Group, an Afghanistan’s largest conglomerate, and Hassan Allam Holdings, an Egyptian construction company, will participate as sponsors in this project, along with International Finance Corporation (IFC) and Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG) participating as co-financiers
Since Afghanistan has the world’s lowest electricity penetration rate (34%), improving the power generation capacity is an urgent issue. Additionally, since 2005, energy demand has grown at nearly twice the economic growth rate. The country imports at least 75% of its power from neighboring countries.
This project utilizes the indigenous gas in Afghanistan and generates 404 gigawatt-hours power annually, thus reducing electricity imports and contributing to a stable energy supply in Afghanistan. Furthermore, this is the first private sector gas-fired power project and JICA expects Afghanistan attracts more private sector investment and financing.
The LEAP Fund is a part of the follow-up measure for the “Partnership for Quality Infrastructure,” which was announced by the Japanese government on Nov. 21, 2015. Targeting high quality private infrastructure projects in the Asia-Oceania region, the fund provides assistance for such projects organized under various arrangements, such as public-private partnerships.
In March 2016, JICA approved a $1.5 billion investment in private sector investment financing for the LEAP Fund. Since the fund’s launch, financial assistance totaling $500 million has been approved for a wide range of projects in a variety of fields that support high quality infrastructural development, such as health assurance initiatives in India and Indonesia and renewable energy projects in Mongolia and Thailand, among others. Thus far, LEAP has provided financing for 16 projects, and the ADB, on its own account and together with co-financiers, has mobilized $6.2 billion. The LEAP Fund provides support for a wide range of sustainable infrastructure projects undertaken by the private sector in ADB member countries of the Asia-Pacific region, and is directed at projects in fields such as reduction of greenhouse gas emissions, energy efficiency, and provision of medical services at reasonable prices.
JICA will continue its collaboration with countries and international organizations to promote quality infrastructure investment and contribute to social and economic development in developing countries and regions based on the Sustainable Development Goals (SDGs).