Energy Sector

Investing In The Energy Sector

The strategic vision of the government for the energy sector is “an energy sector that provides [the] citizens of Afghanistan and drivers of growth in the economy with long-term reliable and affordable energy access based on market-based private sector investment and public sector oversight.”

The overall energy sector goals include rehabilitation and expansion of the public power grid and attraction of private investments. Economic growth demands increased energy consumption; therefore, there is a direct relationship between per capita GDP and per capita energy consumption. T


he per capita energy consumption of Afghanistan was fourth in the region and greater than Sri Lanka and Bangladesh in 1980. At that time, Afghanistan was an exporter of natural gas to Russia but currently imports substantial amount of energy for its domestic consumption.

Historically, in Afghanistan most of the power generation has been based on hydro-power (generating over 54% of the total), and the rest from thermal sources (primarily through use of coal and natural gas).

Afghanistan currently produces around 600 million watts of hydro-power electricity, and there is huge potential of producing up to 23,000 million watts of hydro-power electricity. The demand for electricity is increasing steadily, and it is estimated that Afghanistan would require 3,000 MW of electricity to suffice its needs by 2020. Other than meeting its own demand, it can also export electricity to the neighbors and regional countries. In Afghanistan energy production can be done through any of the following resources:

Domestic Estimated Energy Production Potential

Hydro Power

  • 23,000MW* of Energy Potential
  • 125 sites been identified for MHP, with potential of over 600MW of electricity


  • 3000 MW*–4000 MW*
  • Pre-feasibility Studies
  • Sites Identification
  • 50 MW PPP in Balkh Province – MoU signed
  • 50 MW PPP in Sheberghan – RFP to be announced

Wind Energy

  • 158,500 MW* installed capacity i.e. 5MW/km2
  • 31,600km2 windy land area i.e. 5% of AFG. total land area

Solar Energy

  • 300Sunny day in one year, i.e. 3,000 Hours of Sun
  • 5 kWh/m2per day solar radiation average


  • More than85% of Afghanistan’s energy needs are met by traditional biomass, mainly wood and dung
  • 4,000* MWof Energy Potential

Geo-Thermal Energy

  • Power plants to be built in Afghanistan could range from 5 to20MWeach
  • 3,500*MW of energy Potential

Afghan Power Market Way Forward

Renewable Energy Projects Open for Investments:

NO Project Name Province Type of Energy Capacity (KW) Power Plant Est. Cost (Million USD)
1 Kandahar Solar – DG Hybrid Project Kandahar Solar 30000 90
2 Kabul Solar – Hydro Hybrid Project Kabul Solar 10000 25
3 Roof Top Solar Project Kabul Solar 5000 15
4 Kabul Waste to Energy Project Kabul Biomass 6000 23
5 Kabul Waste Water Treatment Project Kabul Biomass 1000 2
6 Bini Hisar Biogas Digester Project Kabul Biomass 500 1
7 Pul Charkhi Biogas Project Kabul Biomass 500 0.5
8 Ghor Solar Project + Backup + Distribution Network Ghor Solar 500 25
9 Helmand Solar Project Helmand Solar 3000 30
10 Herat Wind project Herat Wind 14000 36
11 Spogmee MHP Project Badakhshan MHP 2500 10
12 Kuran Wa Munjan MHGP Project Badakhshan MHP 1500 9
13 Yangi Qala MHP Project Takhar MHP 1000 6.5
14 Farkhar MHP Project Takhar MHP 500 2.5
15 Namak Ab MHP Project Takhar MHP 500 2.5
16 Mazar Waste to Energy Project Balkh biomass 6000 16
17 Zari MHP Project Balkh MHP 500 2
18 Sholgara MHP Project Balkh MHP 500 1.5
19 Kishindeh MHP Project Balkh MHP 500 2
20 Urozgan Solar Project Urozgan Solar + MHP 1500 4.5
21 Noristan Solar Project + Distribution Network Noristan Solar + MHP 1000 4
22 Daikundi Solar Project Daikundi Solar 1000 3
23 Badghis Solar Project Badghis Solar 1000 3
24 Zabul Solar Project Zabul Solar 1000 3
25 Paktia Solar Project Paktia Solar 1000 3
26 Logar Solar Project Logar Solar 1000 3
27 Khost Solar Project Khost Solar 1000 3
28 Ghazni Solar Project Ghazni Solar 1000 3
29 Paktika Solr Project + Distribution Network Paktika Solar 1000 4
30 Farah Solar Project Farah Solar 1000 3




100 MW Package of Renewable power Generation:

  • 30 projects in 20 provinces
  • Land in provided by the government
  • Tax incentivized.
  • 25% subsidy or PPP
  • Security assistance for project implementation
  • Long term Power Purchase Agreement (PPA).
  • Attractive tariff – based on the project location, type of technology and source of energy

Source: Ministry of Water and Energy-Afghanistan

Other Domestic Projects Available for Investments

Kukcha Hydro-Electric Power Station

This hydro-power station will have the capability to generate 445 Megawatts. The 2009 pre-feasibility and feasibility studies estimated an investment cost of US$1,459.28 million, with an investment period of 7 years, with annual revenue flows expected at US$263 million, based on the feasibility study. Financing for the project is required. Short-term (6-12 months) priorities include statutory clearances, preparation of DPR and its approval from the competent authority and preparation of tender documents, and awarding of the construction. Medium-Term (1-3 years) actions would include (i) construction of diversion tunnels (18 months) (ii) construction of civil and hydro-mechanical works for Qala–i-Mamay hydro-power composite dam and power house and (iii) supply and erection of all electro-mechanical equipment for five units, each (5*89) 445 MW including testing and commissioning.

Kunar Hydro-Electric Power Station

Kunar hydro-electric station will have the capacity to generate up to 798 MW, potentially generating US$484.95 million USD annually. The 2009 pre-feasibility and feasibility study estimates an overall capital investment of US$1,636 million is required, invested over a period of 7-8 years. With domestic demand for electricity to increase substantially, and despite considerable new investments such as CASA-1000 and TUTAP, this considerable investment has long been overlooked. Short-term (6-15 months) actions would include infrastructure and drilling for investigation, with tendering and award of the works for the other three packages. Drilling would take nine months, and six months would be needed for tendering and making the award. Long-Term (3-6 years) actions would include (under Package II) completion of the diversion tunnel and construction of civil and hydro-mechanical works. The station could be commissioned within a period of 7-8 years, though financing has been elusive, despite the pressing need for power.

ADB North-South Power Transmission Enhancement Project:

Approved in 2013, and is currently active. At a cost of US$220 million, the project is to construct a 500 kV transmission line about 225 km long across the Hindukush mountain range between the northern town of Dashte Alwan and Kabul at the southern end. The project aims to increase the supply of power from the north of Afghanistan to the south and east.

Mazar Independent Power Producer

The IFC supported Mazar IPP is a pivotal project, potentially generating up to 50 MW by 2019 equating to around 30 % of Afghanistan’s current indigenous power supply. Fuel will come from natural gas via the Sheberghan-Mazar pipeline and the plant will be located next to the existing Northern Fertilizer Power Plant (NFPP) site at Kud-o-Barq near Mazar-e-Sharif. The Ghazanfar Group – a private local conglomerate – in partnership with leading international power developer, and support from IFC are the key stakeholders.

Mega Regional Projects

Turkmenistan-Afghanistan-Pakistan-India (TAPI) Gas Pipeline

The 1,735 km long pipeline project will transport natural gas from Turkmenistan to Afghanistan, Pakistan, and India. The Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline will run from the Daulatabad gas field in Turkmenistan to Afghanistan, and within Afghanistan TAPI will be constructed alongside the highway connecting Herat and Kandahar. The pipeline enters Pakistan through Quetta onto Multan. The final destination of this pipeline is the town of Fazilka, in the Indian Punjab near the India-Pakistan border. The multination project was estimated to cost USD 7.6 billion in 2008.

The CASA1000 is a critical component of the planned Central Asia-South Asia Regional Electricity Market (CASAREM). This project will trade electricity between Kyrgyz Republic, Tajikistan, Pakistan, and Afghanistan. The main deliverables of CASA-1000 are as following:

  • 117 km HVDC line in Tajikistan
  • 1300 megawatt AC-DC Convertor Station at Sangtuda (Tajikistan)
  • 750 kilometer High Voltage DC line from Sangtuda to Kabul to Peshawar
  • 500 kV AC line from Datka (in the Kyrgyz Republic) to Khudjand (477 kilometers away, in Tajikistan).
  • 300 megawatt Convertor Station at Kabul (with import and export capability)
  • 1300 megawatt DC-AC Convertor Station at Peshawar

In addition to the consumption benefits, the above deliverables would not only benefit in the community development on its route but CASA-1000, would help make the most efficient use of clean hydropower resources in the Central Asian countries by enabling them to transfer and sell their electricity surplus during the summer months to the deficient countries in South Asia. The CASA-1000 project would also complement the countries’ efforts to improve electricity access, integrate and expand markets to increase trade, and find sustainable solutions to water.
The CASA-1000 secretariat has been established in Kabul with Deputy Minister-level representation.

Turkmenistan-Uzbekistan-Tajikistan-Afghanistan-Pakistan Power Interconnection Project

Development of a unified Afghanistan grid is planned with asynchronous interconnection with neighboring countries to be achieved through high-voltage direct-current back-to-back convertor stations. A unified grid will allow Afghanistan to benefit from being an electricity transit country between energy-rich Central Asia and energy-poor South Asia, and be an anchor country of the regional Turkmenistan-Uzbekistan-Tajikistan-Afghanistan-Pakistan (TUTAP) interconnection concept.

The current focus is on improving the import capacity from Turkmenistan. This will involve the commissioning of a 108 km 500 kV transmission line from the Afghanistan/Turkmenistan border to Andkhoy-Sheberghan and a further 142 km of 220 kV line from Sheberghan to Mazar-e-Sharif.This will also include associated substations (220/20 kV substations at Andkhoy and Sheberghan and expansion of the 220 kV substation at Mazar-e-Sharif).


Business, Investment and Trade Desk:

Commercial and Economic Affairs 
Tel: +44 207 2250095

Office Address:
Economic and Trade Desk
Embassy of the Islamic Republic of Afghanistan
31 Prince’s Gate, SW7 1QQ
London, UK

Back to top button