Rasad News Agency.

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2 Power Sector Master Plan April 2013

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4 Consultant s Workforce

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13 Investment optimized scenario [m$] Overview on Investment type Subtotal by project Stage A Stage B Stage C Stage D Generation development Major transmission projects Transmission development within the provinces Total

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15 Kabul region due to one single event, with it s major consequences. s Generation expansion project optimized scenario Major transmission project Network expansion forsupply within the Provinces Energy sent out Households connected Share of local generation Year [m$] [m$] [m$] [GWh] [%] [%]

16 Generation expansion project optimized scenario Major transmission project Network expansion forsupply within the Provinces Energy sent out Households connected Share of local generation Year [m$] [m$] [m$] [GWh] [%] [%] Total

17 Investment optimistic scenario [m$] Overview on Investment type Subtotal by project Stage A Stage B Stage C Stage D Generation development Major transmission projects Transmission development within the provinces Total Generation expansion project optimistic scenario Major transmission project Network expansion forsupply within the Provinces Energy sent out Households connected Share of local generation Year [m$] [m$] [m$] [GWh] [%] [%] Total

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19 6.3.3 Additional Hindu Kush crossing Study of constraints at Salang Pass For the proposed 500kV HVDC transmission line from Tajikistan to Pakistan via Afghanistan, line routing has been investigated by SNC-Lavalin and described in their Final Feasibility Update Report Central Asia-South Asia Electricity Transmission and Trade (CASA-1000), dated February Under the scope of this Power Sector Master Plan, Fichtner will study and analyze the constraints imposed by the Salang Pass, where space for additional transmission circuits is severely restricted. The optimum solution for the north-south connection will be identified, considering the possibility of adding new circuits in the Salang Pass or realizing alternatives like the Bamyan route which bypasses the Salang Pass. Brief description of SNC line routing: The line starts in Sangtuda in Tajikistan, crosses the border to Afghanistan near Shir Khan, runs south passing Kunduz, Mahajer, Baghlan and Pul-e-Chomri, and enters the mountain range of the Hindu Kush at Doshi. For this section of the line no difficulties are noted and the SNC design is considered to be suitable. After Doshi, at angle point A25, the line makes a sharp turn and follows the highway and an existing 220 kv double-circuit line through the mountain range with its highest point at the Salang Pass at 4100 masl. In this zone, routing options are very limited as the right-of-way is already occupied by the 220 kv line. SNC Lavalin suggests relocating a section of this line or replacing it by underground cables to gain sufficient space for the proposed 500 kv HVDC line. Relocation costs are estimated by SNC Lavalin as US$28 million. After the pass, on the south side, the line route heads towards Charikar and crosses a high altitude plateau up to Kabul, passing the capital city to the north near the international airport and joins the highway to Jalalabad at point A59. Finally the line continues to Jalalabad and Peshawar in Pakistan. From Charikar (A47) up to Kabul, the SNC line route is considered to be suitable except around A56 where it is very close to buildings and an industrial area. Fichtner s comments: Fichtner carefully reviewed the Final Feasibility Report for CASA 1000, gathered additional information in Afghanistan and analyzed the situation for transmission line routing as follows: The line section between A28 and A44 is where difficulties are expected and in particular where the line runs through narrow valleys and gorges. The obstacles for running a 500 kv HVDC line through the Salang Pass are quite considerable and unconventional solutions are needed. The SNC proposal of relocating a section of the existing 220 kv OHL or using underground cables cannot be recommended as this will interrupt the power supply to 4864P17/FICHT v1 6-52

20 Kabul or create weak points on the line, in addition to the difficulties of digging cable trenches there and the high associated costs. The use of multi-circuit towers to combine the two lines in the same ROW cannot be recommended as the tower height and width will increase even more and the power supply to Kabul will be completely interrupted if a tower fails. In addition, the existing 220 kv line will have to be disconnected for a longer period, which is probably not acceptable. The main problem is to reduce the corridor width while avoiding steep mountainside slopes where the ground clearance under conductor swing conditions will force an increased tower height; moreover, due to critical leg and stub extensions in such zones, the space needed for foundation works will dramatically increase. Where not otherwise possible, the line will have to run outside the valley, which will increase construction costs and expose it to even more severe climatic conditions. Access from the main road to the tower sites will certainly involve heavy construction works and the use of cable transportation. There is little space to install the winch and drum sites for stringing a quad-conductor. Due to the unfavorable weight/wind span ratio due to the large differences in elevation, the number of tension towers will be very high and can be estimated as 60% of the total number of towers for this section. Special towers are needed in such mountainous terrain to cope with the topography: short towers with «negative body extensions», extended range towers for valley crossings, short tower members to facilitate transportation, leg protection against avalanches, etc. Recommendations: To sum up, Fichtner considers that the proposed line routing over the Salang Pass, even if technically possible, is associated with such difficulties and constraints that another more convenient and safer solution has to be investigated, even if the line route becomes longer. In addition, routing over the Salang Pass would only be interesting if the proposed substation or converter station is located north or northeast of Kabul and if the line route continues to Jalalabad and the Pakistan border. Otherwise, if the concept as a whole is amended, then this routing should definitely be abandoned Alternative route Because relocation or cabling of the existing 220 kv transmission line from Pul-e-Chomri to Kabul through the Salang Pass to accommodate the proposed 500 kv line as suggested by SNC Lavalin is considered to be not feasible, new line routing for the entire Salang Pass section, in which the difficulties and constraints are too severe, should be investigated. In addition, new perspectives resulting from the present Master Plan should of course be incorporated, as these have a significant impact on the line route. A new converter station will be constructed near Pul-e-Chomri, so the line from Pul-e-Chomri to Kabul will be HVAC and no longer HVDC. This will change the tower silhouette as the line will now have three conductors per circuit instead of one, resulting in longer cross arms or 4864P17/FICHT v1 6-53

21 higher towers and larger footings, and will thus be even less suitable for the restricted corridor along the Salang Pass route. The line route from the Tajikistan border to the vicinity of Pul-e-Chomri, as envisaged in the SNC Lavalin Feasibility Updated Report will remain as it is and has only to be adapted over the last few kilometers to the final location of the converter station. In addition, as the new line will not be extended up to Peshawar in Pakistan, the routing northeast of Kabul towards Jalalabad is no longer a constraint. The line will now end at the Chimtala Substation on the western side of Kabul. The planned connection between NEPS and SEPS (NEPS-Kandahar tactical tie-in) will necessitate the construction of a new substation south of Kabul in the future. In view of the above, Fichtner undertook preliminary investigations to identify a more suitable line route adapted to the new situation. Overviews showing the proposed line route for the alternative Bamyan route on satellite maps and topographic maps are given in Annex and 2. Key criteria for route selection Key criteria applied for selection of the alternative route are: The line shall avoid protected or restricted areas. The line route shall follow existing roads major or secondary such that reasonable access for construction, inspection and maintenance is provided. The line route shall avoid villages, mountain slopes running parallel to it, erosion and rubbles zones and areas where severe ice and wind loads are expected. The line shall connect the future Pul-e-Chomri 500/220 kv Substation to the existing 220 kv substation in Kabul/Chimtala. The line shall be double-circuit AC with various tower type families adapted to installation contingencies due to terrain altitude. During the construction period, outages of existing lines shall be kept to a minimum and shall comply with power supply operation constraints. The line route and the tower design shall allow for future power supply development, as free space for new lines is limited due to difficult access and topographical conditions throughout the Hindu Kush. Description of 500 kv HVAC line route proposal (termed the Bamyan Route) The existing Pul-e-Chomri substation is located 2 km east of the A76 highway on a slightly sloped hill at 690 masl. The present substation plot is too small for all installations for the converter station, so some would have to be built outside the existing boundary wall. The site is prone to water erosion and there is no permanent access. The converter station could be 4864P17/FICHT v1 6-54

22 built some 250 m to the east and linked to the new 500/220 kv substation within the boundary wall by an overhead connection crossing over the existing 220 kv lines. The SNC routing should be modified starting at AP13 and rerouted over 17.5 km up to the converter station. Thus the total line length from the Tajikistan border to the converter station would amount to 150 km. This section of the line presents no particular difficulties and all tower locations are below 1000 masl. From Pul-e-Chomri southwards, the alternative line routing as proposed by Fichtner would first run parallel to the existing 220 kv line to Kabul and then follow the valley and the highway down to the village of Doshi (former SNC AP24). The line would then turn to the southwest following the road and the valley up to the crossing with the A77 highway leading to Bamyan near the village of Bariki. Over the first 75 km, the altitude will remain between 690 and 1000 masl. The valley is tortuous, but access is good and space is sufficient for the line. Between AP30 and AP50, the line rises to 2000 masl, the valley is narrower and some side roads will probably be needed to access all tower sites. After AP50, the line will continue rising to 3000 masl as it would first follow the A77 highway for a few kilometers and then continue south to reach a maximum altitude of 3500 m near Pay Kotal Pass. After Zarkharid, the altitude would drop to 2500 masl as the line route would follow the A77 highway again, this time eastwards, and reach the A1 road near Mami Khel, south of Kabul. From this crossroad, the route would head north to finally reach the Chimtala substation at 1900 masl after 30 km while crossing some villages and agricultural land that could hardly be totally avoided. It should also be noted that the Chimtala substation is already surrounded by housing and that free corridors for future lines are very limited in the area. On the whole, construction along the proposed line route would not be an easy task as the topographical and climatic conditions in the Hindu Kush are harsh, but definitely easier than over the Salang Pass, which rises to 4500 masl. The total length of the proposed alternative route between the two substations is km, compared to km over the Salang Pass for the same connection which means an additional length of roughly 118 km. Considering a unit price of US$0.38m the additional cost would be US$44.8m for a 500 kv HVAC line, minus the relocation costs in the Salang Pass area. Alternative substation site for Kabul Considering that Chimtala Substation is already surrounded by housing, this site is not ideal for the foreseen construction, as it is congested, too small, difficult to access, with insufficient corridor space and close to housing. Furthermore, for the future NEPS-SEPS connection a new 4864P17/FICHT v1 6-55

23 substation will be needed south of Kabul. It would be advisable to plan a new 500/220 kv substation near Arghandi, which would combine the following advantages: 1. shorter 500 kv HVAC line (-30 km) and associated cost savings 2. new 220 kv line to the existing Chimtala 220 kv field (30 km) with less impact and costs than a 500 kv line 3. shorter future connection to Kandahar (-30km) for 500 or 220 kv lines 4. free space around the site for future lines to the east and south. Considering the new substation Kabul South West (Arghandi) as landing point for the new Hindu Kush crossing the alternative Bamyan route will be about 88km longer than the route along the Salang Pass. Additional benefits of the alternative Bamyan route The alternative Bamyan route would pass the Afghan coal deposits in Samangan and Bamyan, and would cross the area of the Hajigak iron deposit further on. Routing the line along this resource corridor would support power evacuation from the coalfired power plants expected to be erected in this region in connection with the iron and copper mining projects. Furthermore, the line will ensure a power supply to the Hajigak iron mining project itself. This multiple use of the transmission line has to be considered in the proposal for the line design of the additional connection of the Kabul region to the import point in north Afghanistan Conclusion and staged development of additional Hindu Kush crossing The 220 kv double-circuit line currently crossing the Hindu Kush from north to south has been identified, already for the existing load conditions, as a bottleneck for power transfer from the sources in the north to Kabul. To make use of the full 300 MW available from Turkmenistan as early as possible, to enable utilization of the gas from Sheberghan and to make use of the opportunity to import additional power up to a total of 1000 MW from Turkmenistan, wheeling of the power from northwest Afghanistan to other load centers is necessary. Due to the expected required high transmission capacity and the limitation on transmission line corridors available for the crossing, it is advisable to use 500 kv lines within long-term planning. The recommendation is to use the Bamyan route for a new 500 kv line from Pul-e- Chomri to Arghandi in the south of Kabul. The line will become an essential part of the backbone and it is recommended to use a doublecircuit design for the towers with one circuit installed in the initial phase. The second circuit 4864P17/FICHT v1 6-56

24 will be installed in line with increasing transfer capacity caused by additional power sources in the north and along the Bamyan route. Development Stage A up to 2015: Due to the high priority given to this line, it is expected that project preparation works will start immediately, although the final commissioning date is expected to be early in the period from 2015 to Therefore, CAPEX for the first stage of the Hindu Kush crossing project is included in the Stage A development. Network development for the additional Hindu Kush crossing project within Stage A will comprise the following: (i) erection of a 500 kv substation at Pul-e-Chomri with two interbus transformers 500/220 kv each with a capacity of 300 MVA (ii) erection of a 500 kv substation at Arghandi with two interbus transformers 500/220 kv each with a capacity of 300 MVA (iii) construction of a 500 kv line from Pul-e-Chomri to Arghandi / Kabul South with a line length of about 296 km. The expected CAPEX required for this development stage will amount to $238.2m. With regard to the double-circuit transmission line with only one circuit installed, 80% of the costs of the double-circuit line are considered. The remaining 20% of CAPEX will be necessary when stringing the second circuit. T_02_A Measure Type No [MVA] [km] Cost new substation Pul-e-Chomri 500kV $m expansion substation Pul-e- Chomri 220kV $m transformer Pul-e-Chomri 500/220kV $m new substation Arghandi 500kV $m expansion substation Arghandi 220kV $m transformer Arghandi 500/220kV $m 500kV line Pul-e-Chomri - Arghandi first circuit 2x3x3xACSR $m Subtotal T_02_A $m Table : CAPEX details for Stage A of Hindu Kush crossing up to 2015 Development Stage B up to 2020: Network development for the additional Hindu Kush crossing considered in Stage A is likely to continue in Stage B. Additional CAPEX for development Stage B is not expected. Development Stage C up to 2025: Stage C development of the additional Hindu Kush crossing comprises: (i) installation of an additional interbus transformer 500/220 kv at Pul-e-Chomri with a capacity of 300 MVA and 4864P17/FICHT v1 6-57

25 (ii) installation of an additional interbus transformer 500/220 kv at Arghandi with a capacity of 300 MVA and will require a CAPEX of about $19.8m, as detailed in the table below. T_02_C Measure Type No [MVA] [km] Cost expansion substation Pul-e- Chomri 500kV m$ expansion substation Pul-e- Chomri 220kV m$ transformer Pul-e-Chomri 500/220kV m$ expansion substation Arghandi 500kV m$ expansion substation Arghandi 220kV m$ transformer Arghandi 500/220kV m$ Subtotal T_02_C 19.8 m$ Table : CAPEX details for Stage C of Hindu Kush crossing up to 2025 Development Stage D up to 2032: At the end of the planning horizon, the power flow at the additional Hindu Kush crossing may require the (i) installation of the second circuit of the 500 kv line. The required CAPEX is estimated at $52.1m. Stringing of the second circuit of the line is estimated at 40% of the double-circuit line. The necessity of this development stage within the planning horizon is not clearly indicated. T_02_D Measure Type No [MVA] [km] Cost expansion substation Pul-e- Chomri 500kV $m expansion substation Arghandi 500kV $m 500kV line Pul-e-Chomri - Arghandi second circuit 2x3x3xACSR $m Subtotal T_02_D 52.1 $m Table : CAPEX details for Stage D of Hindu Kush crossing up to P17/FICHT v1 6-58

26 Dasht-e-Barchi Substation (220/110/20 kv) Dasht-e-Barchi substation will be located to the south of Kabul, about 15.9 km from Chimtala substation at GPS coordinates 34 28'25.45"N, 68 56'57.87"E. The substation will be located near the A1 road on barren land that is state property. Social impacts of the substation are mainly related to the construction phase (e.g. workers camps, health and safety, moderate pollution) and are to be addressed in the EIA/ EMP. The land is state property and normally no expropriation of land or land acquisition is needed. The in-feeding lines can access the substation site without the need for resettlement as the area is largely unpopulated. The access road to be constructed should be mounted so as not to damage cultivated fields. There are no resettlement requirements and no impacts on indigenous people. The project is assessed as Category B Thermal power plants Sheberghan 200 MW CCPP The planned gas-fired combined cycle power plant (CCPP) in Shebergan will be located in the desert area near the Shebergan substation (36 33'18.50"N, 65 42'47.50"E). The plant would be located between the city of Sheberghan and the 220 kv substation connecting Sheberghan with the Turkmenistan grid. The gas will be supplied from the Yatim Tagh gas field located about 15 km from the site. Some land acquisition will be necessary for the gas pipeline and the plant site. As the site is located in the desert, it is assumed that this problem will be modest. Health and safety issues during construction and operation related to air and water pollution will be the most important social impacts of the power plant. These are to be mitigated according to the EMP to be established and implemented. It is unlikely that any compensation for loss of land and property will have to be paid, depending on the exact location of the plant. Residential housing close to the plant should be avoided. A full EIA is required for this plant (Category A project by definition). Depending on its exact location and the alignment of the pipeline, a Land Acquisition and Resettlement Plan may be needed. It is not possible to install a 200 MWe gas-fired power plant at the present gas production rate. New wells have to be drilled for which social and environmental impacts must be assessed Ishpushta 400 MW Coal-Fired TPP A 400 MW coal fired thermal power plant is planned at Ishpushta in Bamyan Province at the coordinates 35 18'57.00"N, 68 4'33.00"E. It is intended that this plant will supply the copper mine at Aynak (34 22'60.00"N, 69 23'0.00"E) with electricity. The exact location of the coal mine is not known to the Consultant. The agreement was signed a few years ago with a Chinese contractor, providing for 50/50 power sharing between the mine and the national grid. Accordingly, 200 MW shall be fed into the Afghan grid. The planned Pul-e-Chomri-Chimtala transmission line will take the "Bamyan Route". Realization of this power plant project is not 4864P17/FICHT v1 9-28

27 expected before It will supposedly have no land acquisition resettlement component. Potential social impacts from construction and operation of the power plant are mainly related to health and safety issues that will be mitigated through the EMP. A mining plan with cost estimate for the coal is needed to prove the feasibility of the power plant fired with domestic coal. During the construction phase a workforce of about 2000 skilled workers, many of them expatriates, is needed. Huge amounts of building material and heavy special machinery have to be transported by truck. Social (and environmental) impacts from coal mining will have to be studied in the Coal Mining Plan. As a 50% share of the generated electricity is projected for use at Aynak Copper Mine, the downstream impacts of copper exploitation may have to be considered. A full EIA is required for this Category A project. A resettlement plan may not be required, depending on the exact location of the power plant and its infrastructure Dara-e-Suf 800 MW Coal-Fired TPP An 800 MW coal fired thermal power plant is planned at Dara-e-Suf in Samangan Province at the coordinates 35 39'60.00"N, 67 14'0.00"E. It is intended that this plant will supply the iron ore mine at Hajigak (34 40'4.09"N, 68 1'58.70"E with electricity. The exact location of the coal mine is not known to the Consultant. The agreement was signed a few years ago with a Chinese contractor providing for 50/50 power sharing between the mine and the national grid. It is planned to connect it to the Pul-e-Chomri - Chimtala 500 kv transmission line. The project will most likely have no land acquisition resettlement component. Potential social impacts from construction and operation of the power plant are mainly related to health and safety issues that will be mitigated through the EMP. A mining plan with cost estimate for the coal is needed to prove the feasibility of the power plant fired with domestic coal. During the construction phase a workforce of about 2000 skilled workers, many of them expatriates, is needed. Huge amounts of building material and heavy special machinery have to be transported by truck. A full EIA is required for this Category A project. A resettlement plan may not be required, depending on the exact location of the power plant and its infrastructure Hydro power plants Gulbahar / Panjshir MW HPP Gulbahar HPP (also called Panjshir 1) storage project is situated at N, E on the Panjshir River ( Upper Panjshir Gorge) with the dam site about 3 km upstream of Gulbahar town. The project catchment area is 3,565 km 2 and the mean annual inflow 56 m 3 /s. A rockfill dam of m height and a crest length of 420 m will create a reservoir about 17 km long and inundate an area of about 13 km 2. If the dam is constructed at 1660 masl at the base, the 4864P17/FICHT v1 9-29

28 Coal-fired power plants Two power plants have been proposed by mining companies for the Aynak copper mine and the Hajigak iron ore mine. Typical features of the power plants are given in Table Item Unit Value Value Power plant Aynak Haji Gag Proposed capacity MW Capacity fed to Grid MW CAPEX $/kw 1,700 1,700 OPEX $/MWh Net efficiency % 32,5 32,5 Plant load factor % Operating hours h/a 6,000 6,000 Total electricity production GWh/a 2,400 4,800 Electricity Production fed to Grid GWh/a 1,200 1,200 Total coal consumption GWh/a 7,400 14,800 Coal consumption (36,000 kj/kg) mt/a 740,000 1,480,000 Table : Typical features of coal-fired power plants The coal consumption of the power plants exceeds the peak production of pre-war Afghanistan by more than ten times. New mines have to be put into operation before the power plants can be integrated into the electricity production capacity. It is unknown if the necessary coal reserves exist in Afghanistan Conclusion for coal-fired power plants The consumption of coal-fired power plants would exceed the historic peak of Afghan domestic coal production by ten times. A mining plan with cost estimate for the coal is necessary to prove the feasibility of a power plant fired with domestic coal. An alternative to domestic coal would be imported coal, which would be imported by the mine operator by the same means of transport through which his mining product is exported. In this way, the electricity price of the coal-fired power plant would be linked to international coal prices. Even if coal is not used for power generation, a functioning domestic coal market could considerably relieve the energy shortage during winter. The major drawback of coal-fired power plants is the complexity of a steam plant, both during the building phase as well as during operation. It is very unlikely that an expensive and complex project like a MW coal-fired power plant, as proposed for a mine at Bamyan, would be feasible under the prevailing conditions in Afghanistan. During construction, a workforce of about 2,000 skilled workers, many of them expatriates, would be needed. Huge amounts of building material and heavy special machinery have to be transported by truck. Grid-integration of generating capacity with a single unit capacity of 150 MWe is questionable. 4864P17/FICHT v1 6-17

29 Transmission & Distribution Division Final Report CENTRAL ASIA - SOUTH ASIA ELECTRICITY TRANSMISSION AND TRADE (CASA-1000) PROJECT FEASIBILITY STUDY UPDATE February 2011 SNC-Lavalin International Inc.

30 Final Feasibility Update Report TABLE OF CONTENTS EXECUTIVE SUMMARY 1 INTRODUCTION EXPORT POTENTIAL OF TAJIKISTAN AND KYRGYZ REPUBLIC Demand Projections Existing and Committed Supply Surplus Analysis Sensitivity Analysis IMPORT POTENTIAL OF PAKISTAN Generation Capacity Electricity Demand Evaluation of Supply-Demand Balance IMPORT AND EXPORT POTENTIAL OF AFGHANISTAN Power Generation Assessment Power Demand Situation in Kabul Region and Country Supply-Demand Balance Review of Power Purchase Agreements (PPAs) COST OF SUPPLY PROJECT SELECTION AND EXPORTABLE SURPLUS Assessment of Optimum Size of the Project Project Configurations Summary of Project Options Exportable Surplus TRANSMISSION LINE ROUTE HVDC Transmission Line Route HVAC Transmission Line (Kyr-Taj) Route TRANSMISSION NEEDS OF EXISTING NETWORKS Transmission Needs of the Existing Network in Tajikistan Transmission Needs of the Existing Network in the Kyrgyz Republic Transmission Needs of the Existing Network in Afghanistan Transmission Needs of the Existing Network in Pakistan Interconnection between the Kyrgyz Republic and Tajikistan PROJECT COST AND COUNTRY WIDE ALLOCATION Cost Estimates of the Proposed HVDC Transmission Interconnection (Tajikistan Afghanistan - Pakistan) Cost Estimates of the Proposed HVAC Transmission Interconnection (the Kyrgyz Republic - Tajikistan) Network Reinforcement Costs Environmental and Social Costs Estimation of Total Project Costs Currency Split ECONOMIC ANALYSIS Methodology CASA-1000 Update i SRP

31 Final Feasibility Update Report Interconnection Option for Economic Analysis Major Assumptions and Input Data Result Summary of Economic Analysis Levelized Cost of Transmission Sensitivity Analysis Country-Wise Benefit Allocation MAJOR RISKS WITH IMPLEMENTATION AND OPERATION Security IGC Management Technical Schedule FUNCTIONAL SPECIFICATIONS HVDC Transmission Line Converter Stations Control System Concept HVAC Transmission Line PROJECT IMPLEMENTATION SCHEDULE Typical Sequence of Milestones Typical Implementation Schedules Award of EPC-Turnkey Contracts (18 months) kV HVDC Converter Stations and Control Centre (36 months) kV HVDC Transmission Line Tajikistan-Afghanistan-Pakistan (34 months) kV HVAC Transmission Line Kyrgyz-Tajikistan (30 months) Commissioning of Overall Project (4 months) Bidder Participation OPERATION AND MAINTENANCE PLAN CONCLUSIONS AND WAY FORWARD Conclusions Way Forward APPENDICES A. SDDP Transmission Constrained Stochastic Hydro-Thermal Dispatch B. Energy Balance C. HVDC Transmission Line Route D. HVAC Transmission Line Route E. Details of Functional Specifications of HVDC Transmission Line F. Details of Functional Specifications of HVAC Transmission Line G. Details of Functional Specifications of Converter Stations and Control Scheme H. Details of Operation and Maintenance (O&M) Plan I. Notes J. Terms of Reference K. Comments to Draft Final Report CASA-1000 Update ii SRP

32 7 TRANSMISSION LINE ROUTES

33 Final Feasibility Update Report 7 TRANSMISSION LINE ROUTE In light of recent developments in the region, the route recommended in the original study was reviewed. The findings are summarized in this section, with an emphasis on the space constraints around the Salang pass and the availability of space for the proposed converter stations at Sangtuda-II and Peshawar. Figure 7-1 is a high level map of the line route for the HVDC and HVAC components of the project. Figure 7-1 Proposed Transmission Line Route for CASA Project CASA-1000 Update SRP

34 Final Feasibility Update Report 7.1 HVDC Transmission Line Route A desk top review of the route and terminal stations was carried out, with particular attention to the Kabul-Peshawar portion of the DC transmission line. Given security considerations such as demining, and operation and maintenance requirements around access to the line for repair and maintenance, the line routing recommended in the original study is deemed most suitable. The HVDC line route details are presented in Appendix C Salang Pass Space Constraints The options of routing the HVDC line in the vicinity of Salang Pass are limited. Much of the existing Right of Way has been utilized for the existing 220 kv Line. The more precise planning of the existing space will only be possible after the detailed survey of the area. This detailed survey is usually specified as part of the turn key line construction contract and is performed by a qualified overhead line surveying company. However, at this stage according to the information available from site investigations performed at the time of phase 2 works of the original study, about 7 km of 220 kv double circuit existing line constrains the routing of the proposed HVDC line in Salang Pass area. A few options to locate the proposed HVDC line are envisaged as mentioned below: Relocate the existing 220 kv line closer to the mountain on steel tubular poles with insulated arms and shorter spans to limit the conductor swing; and route the proposed HVDC line on steel tubular poles as well but closer to the tunnel. The estimated cost for converting 7 km of 220 kv double circuit line as tubular pole line having reduced average span of 275 m can be assessed as US$ 600,000 per km. A total estimated investment of US$ 4.2 million is envisaged. It is to be noted that a major outage of both the 220 kv circuits will be required during pole erection and re-stringing. The existing conductors and some other material can be re-used and the salvaged lattice steel towers can be bundled and transported to a store yard for future use as spare towers. If relocating the 220 kv line does not provide adequate corridor to place towers for the HVDC line, the spans can be shortened to limit the conductor swing and hence narrow the required minimum Right of Way for the proposed line. In this option, lattice steel towers with narrow foot print can also be utilized for the HVDC line. In case the existing corridor is too narrow at some places and the above two options cannot be employed, then converting a portion of the existing 220 kv line to underground cables can be considered.this will allow the existing 220 kv ROW to be used for the proposed HVDC line. In this case surge arresters and terminal structures will be required on both ends of the underground cable section. The required length of the existing OHL which would be needed to be converted to underground cable can only be determined after a detailed survey by a qualified overhead line surveying company. Approximately 7 km of the existing 220 kv double circuit line is envisaged to be undergrounded in order to use the existing 220 kv line ROW for the proposed HVDC line. The budget estimate for the required cable 220 kv XLPE cable is US$ 2 million per kilometre including the terminal equipment. An estimated total additional investment of US$ 28 million is envisaged for the option mentioned above. The implementation of this option will also require an outage on the 220 kv circuits. CASA-1000 Update SRP

35 Final Feasibility Update Report All existing line materials and latticed steel towers can be salvaged, suitably packed and can be used as spare material/towers Alternate Route to Bypass Salang Pass Figure 7-2 highlights in red a possible alternate route that bypasses the congestion at the Salang Pass. The alternate route is a western detour via Shibar Pass. However, this increases the transmission line by 150 to 200 km and adds significant cost, around 50 to 65 US$ million, to the overall project. Figure 7-2 Alternate Route to Bypass Salang Pass Source: Transoxiana Space Availability for the Proposed Converter Stations at Sangtuda-II and Peshawar As indicated by NTDC, the existing 500 kv substation at Sheikh Muhammadi has constraints on further extension related to right of way for additional lines. This is shown in Figure 7-3. NTDC has proposed a new substation (Peshawar New), at a suitable nearby location, near the 500 kv and 220 kv network feeding PESCO. The cost estimates have been revised to include a 500 kv, 10 km in and out connection to the location of Peshawar New from the existing 500 kv line. The Sangtuda II proposed converter location is shown in Figure 7-4. In view of encroaching private lands, it is recommended to reserve the area for the future construction of the converter station. CASA-1000 Update SRP

36 Comparison of Right of Way for 2 GW 400~500 kv AC Lines 400~500 kv DC Line ~100 m ~50 m 1~2GW Bulk Power Transmission

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39 Line Routing - Pul-e Khumri to Kabul ± /110kV Substation Pul-e-Khumri, %a %a B11 B13 A! B14 B12 A!! B17 B16 B18 B B20 B B B44 B45 B46 B47 B48 B49 A! B50 B51 B52 B53 B40 500/220kV A! Substation Ishpushta B41, %a B43 B42 B37 B38 B24 B23 B25 B26 B28 B29 B27 B30 B31 A B33! B32 B35 B B54 B55 B56 B57 B58 B58a B59 B60 B61, %a B62 B63 B64 A! A! B66 B65 B66a B66b B66c B67 B68 B70 A! B71 B69 A! B72 B73 B74 B75 B76 B77 A! A! B78 B79 B80 B80a B81, %a B80b B83 B84 A! B85 A!, %a 220/110kV B82 Substation Chimtala Legend System of the Projection: UTM, Zone 42N, WGS Angle Points 500kV Line Routing Meter D C B A R. Neifer Draft Final Report kV Line Routing Date Name FICHTNER Note TA (AFG) POWER SECTOR MASTERPLAN ,%a existing Substations,%a proposed Substations Date Name 500kV/220kV Connection Pul-e Khumri to Kabul Drawn Checked M. Michl A. Bonnet Overview on Satellite Map Supersedes: Superseded by: Size: A3 Line Routing Project No.: 4864P17 File: System: ArcGIS 10 Annex Document No.: Scale 1 :

40 North South Power Transmission Enhancement Project (RRP AFG 46392) ECONOMIC AND FINANCIAL ANALYSIS A. Introduction 1. The economic and financial analysis was based on the Guidelines for the Economic Analysis of Projects (1997) and the Financial Management and Analysis of Projects (2005) of the Asian Development Bank (ADB). 2. The power transmission system enhancement in Afghanistan that will result from outputs of two separate proposed ADB projects was analyzed: (i) Transmission line and southern substation. The proposed North South Power Transmission Enhancement Project, a stand-alone grant-financed project, is to build a 225-kilometer, single-circuit, 500-kilovolt (kv) transmission line with a capacity of 1,000 megawatts (MW) from Pul-e-Khumri to Arghandy in southwest Kabul via the Salang Pass, and one 500-kV/220-kV substation at Arghandy to connect the 500-kV transmission line to the grid at the southern end. (ii) Northern substation. The proposed tranche 5 of ADB s Energy Sector Development Investment Program, a multitranche financing facility, is to finance construction of the 500-kV/220-kV substation at Dashte Alwan to connect the new 500-kV transmission line at the northern end Although financed by separate ADB interventions, the transmission line and the two substations are complementary and form a single, whole system whose incremental financial and economic benefits must be assessed overall and cannot be allocated to any of its individual parts. The economic and financial analysis therefore assessed the construction of the transmission line and the two substations as one project under a system approach. 4. Increasing the country s low 25% electrification rate is a top priority of Afghanistan s government. Demand for electricity already significantly exceeds supply. The commissioning of planned new generation facilities will not fully close the current gap, and power shortages may continue to inhibit economic growth and induce social unrest. It is therefore important to secure reliable interim supplies of energy. Since the majority of the power demand is in southern Afghanistan, increasing the capacity of the power transmission system through the project to move electricity from north to south is expected to increase supply in areas where the shortages are currently most severe. B. Project Context 1. Demand Analysis 5. Afghanistan s aggregated peak demand was 700 MW in Unsuppressed peak demand was estimated to be 840 MW. In 2012, a power sector master plan was prepared for Afghanistan with ADB s support. 2 The objective was to identify the least-cost options for generation and transmission system expansion projects that would allow Afghanistan to meet its growing electricity demand. The master plan projected aggregated peak demand to grow to 3,500 MW by 2032, taking into account improvements in connection rates and Afghanistan s expected economic growth. It also estimated that average annual growth rate of net demand over the same period would be 9.8% and that demand would reach 15,909 gigawatt-hours 1 ADB Report and Recommendation of the President to the Board of Directors: Proposed Multitranche Financing Facility and Administration of Grant Energy Sector Development Investment Program. Manila (MFF 0026-AFG, $570 million, approved on 2 December). 2 ADB Technical Assistance to Afghanistan for the Power Sector Master Plan. Manila (TA 7637-AFG).

41 2 (GWh) in Figure 1 shows that the demand from the Kabul area would continue to account for approximately 50% of total national demand. Figure 1: Projected Net Electricity Demand in Afghanistan, GWh 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, Total Kabul Area Total SEPS Other load centers GWh = gigawatt-hour, SEPS = south-east power system Source: ADB estimates (footnote 2). 6. Afghanistan produces most of its domestically generated electricity through 256 MW of installed hydropower capacity. Its thermal power plants generate 220 MW of electricity and are vulnerable to price rises for the imported diesel fuel they need to operate. In 2012, about 70% of Afghanistan s overall electricity demand was supplied by imported power from Iran, Tajikistan, Turkmenistan, and Uzbekistan, which was the largest supplier (57%). Given its low fossil fuel reserves and low generation capacity, power imports from neighboring countries are expected to continue to be a major source of supply. However, despite rising demand in the south, where most of the people live and most of the economic development takes place, the existing 220-kV transmission line used to transmit imported power from the north southward across the Hindukush mountains is already at full capacity. This will significantly restrict supply to the load centers in Kabul and the rest of the south (Figure 2). Figure 2: Demand in Afghanistan s Southern Region vs. Capacity of the Existing Transmission Line, GWh 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, Total Kabul Area Total SEPS Existing line capacity GWh = gigawatt-hour, kv = kilovolt, SEPS = south-east power system. Source: ADB estimates. 7. To supplement electricity imports in filling the widening demand supply gap, it is envisaged that the following new power generation plants will be constructed as part of Afghanistan s national power program: (i) the Sherberghan gas-fired power plant in northern Afghanistan, which is to be commissioned in 2017 with an initial capacity of 150 MW and to increase its capacity to 400 MW by 2023;

42 3 (ii) the Kunar A hydropower plant (789 MW) to be commissioned in 2026 and the Kunar B hydropower plant (300 MW) in 2024, both of which will be located east of Kabul and south of the Salang Pass; and (iii) the Bamyan coal-fired power plant planned to provide 400 MW by 2027 and 1,000 MW in 2029, which is to be connected to the town of Charikar, south of the Salang Pass. 8. Most of these plants will be commissioned only after 2023, which leaves an urgent need to enhance the power transmission capacity between the north and the south. The project being analyzed to build the 500-kV north south transmission line and two new substations is intended to address the current bottleneck. 2. Tariff Analysis 9. Until 2006 the electricity tariff in Afghanistan was linked to a direct subsidy extended by the United States Agency for International Development (USAID) to Afghanistan for diesel fuel for power generation. The subsidized electricity tariff averaged $0.042 per kilowatt-hour (kwh). The end of the subsidy funding resulted in a 100% tariff increase to $0.083 per kwh. The increase was necessary to ensure the financial sustainability of Da Afghanistan Breshna Mousasa, the predecessor of DABS as the country electricity utility. In 2010, the average tariff charged by DABS was about AF4.5 per kwh, which was equivalent to $0.098 per kwh based on the prevailing foreign exchange rate and thus up about 18% since the subsidy ended. No adjustment has been made since Based on the current foreign exchange rate, the average tariff is now about $0.088 per kwh, a decrease in US dollar terms. 10. The current tariff level is not financially sustainable for DABS. The master plan proposed a tariff increase in line with the long-run marginal cost (LRMC) of electricity supply by taking into account the cost of new investment projects planned for future expansion. LRMC was estimated to be $0.15 per kwh, comprising a generation cost of $ per kwh and transmission and distribution costs of $ per kwh. The plan also assumed that the increase would be spread across 10 years until the tariff reached the targeted cost-recovery level. The increases would vary based on customer categories and locations. C. Method and assumptions 1. Method 11. The project is considered the most efficient way to address the transmission bottleneck between the northern and southern parts of Afghanistan. The master plan identified two alternative routes across the Hindukush mountains: the Bamyan route, and the route via the Salang Pass along the existing 220-kV transmission line. The Salang Pass route chosen for the project was preferred by DABS because it was the shorter and less expensive to build of the two. 12. The with- and without-project scenario comparison considered only the incremental costs and benefits of the transmission line and two substations. Incremental costs and benefits were accounted for the analysis period and discounted to their net present value. The base year for discounting was Costs and benefits were expressed in 2013 constant prices and in US dollars. 13. A discount rate of 12% was used for the calculation of the economic internal rate of return (EIRR). For the financial analysis, the weighted average cost of capital (WACC) was estimated and applied as the discount rate for the calculation of the financial internal rate of return (FIRR). The analysis period extended over 25 years after project commissioning. The economic life of the transmission assets was set at 40 years and that of the substations at 30

43 Item Project ID Description Client Dead Line 1 DABS-93-WB-ICB-050 Procurement of Design, Supply, Construction, Erection, Testing and Commissioning of 110/20kV Sarobi Substation DABS - WB DABS-94-ICB-010 Commercialization Program Part 1b for Distribution DABS - USAID DABS-94-ICB DABS/009/ICB 5 DABS/014/ICB 6 7 DABS/015/ICB DABS/016/ICB 8 CASA/1000/01/HVDC 9 CASA1000 /03/TL Design, Supply, Erection and Commissioning of 220KV Salaang Tunnel Substation for The Procurement of Plant - Design, Supply, Installation, Testing and Commissioning of Chimtala 220 kv Switchyard Extension Procurement of Plant, Design, Supply, Installation, Testing and Commissioning of 500 kv Dasht-e- Alwan (Pul-e-Khumri) Substation. Procurement of Plant, Design, Supply and Installation of 500kV Transmission Line from Dasht-e-Alwan (Pul-e-Khumri) to Arghande (Kabul) Procurement of Plant, Design, Supply, Installation, Testing and Commissioning of 500kV Arghande (Kabul) Substation Supply & Installation of Multi Terminal HVDC Converter Stations in Pakistan, Afghanistan and Tajikistan with related O&M Services associated with CASA 1000 Package TW03 for Supply and Installation of Transmission Lines in Afghanistan associated with CASA 1000 Project DABS - USAID DABS - ADB DABS - ADB DABS - ADB DABS - ADB DABS - IDA - IsDB DABS - IDA