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A Quarterly Newsletter of the Afghanistan Resident Mission August 2010 of the Asian Development Bank

ADB Allocates More Funds ADB President Meets To Reconstruct and Develop Afghanistan Afghanistan’s President, Inaugurates Major Railway he Asian Development Bank tor General, ADB Central and West Asia (ADB) will provide more grant Department. funds to Afghanistan to support ADB’s assistance in Afghanistan is T essential reconstruction work and centered on three multitranche financ- economic development. ing facilities covering transport, energy, ADB’s Board of Directors on 16 and irrigation. Along with the Ring Road, July agreed to temporarily suspend a ADB is aiming to complete the construc- planned phaseout of exceptional alloca- tion of a railway line connecting Mazar- tion of its Asian Development Fund e-Sharif to the border town of (ADF)—ADB’s concessional financing Hairatan—which handles half the facility—to Afghanistan in 2011 and country’s imports—and to make further 2012, making additional funding avail- improvement in electricity transmission VISIT TO AFGHANISTAN ADB President Haruhiko Kuroda talks to Afghanistan’s able. and distribution over the next 2 years. President at Gulkhan Palace, "A significant drop in assistance ADB will now provide $548 million Kabul from ADB has been avoided. We are one in financing for 2011–2012, as compared of the largest development partners in with $386 million under the planned phase- DB President Haruhiko Kuroda Afghanistan. This will cancel out the out. This will help Afghanistan address cost met with Afghanistan’s President potentially disruptive effects on ADB overruns linked to a national ring road, and AHamid Karzai on 25 May, and trav- operations, which are so important for some irrigation and energy projects which eled to Mazar-e-Sharif to inaugurate a the reconstruction and development of were not included when ADB prepared its major ADB railway project in Balkh Prov- the country," said Juan Miranda, Direc- operations program. ince. The new railway line will connect Mazar-e-Sharif to Hairatan, on the north- ern border with Uzbekistan, removing bottlenecks, boosting regional trade, and facilitating the flow of humanitar- ian assistance.

In this issue

ADB President Inaugurates Rail Line Linking Afghanistan to Central Asia 2 Infrastructure Projects to Improve Afghanistan’s Economy 2 ADB Buys Stake in LPG Firm to Boost Access to Safe, Reliable Energy in Afghanistan 3 ADB Vice-President Joins Conference in Kabul 3 Public-Private Partnerships Can Unlock Central Asia's Vast Potential—ADB 3 South Asia, Neighbors Hold Second RAIL LINE The rail link will connect Afghanistan to Uzbekistan's expansive rail network, and to regional High-Level Forum on Regional markets in Europe and Asia. Future links are planned, which will run across the north and to other parts of Cooperation 4 the country and region, including , Tajikistan, and Turkmenistan AFRM Staff News 4 ADB President Inaugurates Rail Line Linking Afghanistan to Central Asia DB President Haruhiko Kuroda on 25 May inaugurated a 75-kilometer stretch of railway line that connects AMazar-e-Sharif to the country's bustling northern border with Uzbekistan. "The new rail link between Mazar-e-Sharif and Hairatan will help reduce trade bottle- necks, boost commerce, and speed the flow of much-needed humanitarian assistance," Mr. Kuroda said at the opening ceremony in Hairatan. "It represents Afghanistan's emer- gence as a regional crossroad for trade and commerce and—most importantly—the as- pirations of Afghanistan's people to rede- fine their country's role in the region and in the world." The rail link is being constructed from a $165 million ADB grant and should be com- pleted by the end of this year. It will con- RAILWAY INAUGURATION (From left to right) Omar Zakhilwal, Afghanistan’s Minister of Finance; Haruhiko nect Afghanistan to Uzbekistan's expansive Kuroda, President, Asian Development Bank; Mohammed Atta Noor, Governor of Balk province; and Karl rail network, and to regional markets in Eu- Eikenberry, US Ambassador to Afghanistan rope and Asia. Future links are planned, which will run across the north and to other Central Asia Regional Economic Coopera- mately $2.1 billion in loans, grants, technical parts of the country and region, including tion Program (CAREC), in which Afghani- assistance, and cofinancing. ADB's focus on Pakistan, Tajikistan, and Turkmenistan. stan joined in 2005. infrastructure and regional cooperation is On 25 May, Mr. Kuroda met with "Afghanistan is at the heart of primarily demonstrated in the transport and Afghanistan’s President Hamid Karzai, Fi- CAREC, and ADB's projects in the energy sectors. Other major ADB projects in nance Minister and ADB Governor Omar country's road, rail, and energy sectors Afghanistan include portions of the North Zakhilwal, ADB Alternate Governor Abdul dovetail perfectly with CAREC's vision of East Power System, which last year began Qadeer Fitrat, and other senior government helping Central Asia reap the benefit of its bringing a regular supply of electricity into officials in the capital, Kabul. In his remarks strategic location," Mr. Kuroda said. Kabul from Uzbekistan, and rehabilitation and at an official luncheon, Mr. Kuroda said the From 2002 to the end of last year, ADB construction of the northern portion of the rail link is a hallmark of the eight-member has provided Afghanistan with approxi- country's Ring Road. Infrastructure Projects to Improve Afghanistan’s Economy DB President Haruhiko Kuroda “We are honored to have Asian De- of roads that link Afghanistan with and Minister of Finance Omar velopment Bank President Kuroda in neighboring countries, and is also in- AZakhilwal met in Kabul on 25 May Afghanistan to highlight ADB’s com- vesting in railways. These transport to discuss ADB support for major in- mitment to Afghanistan. We are par- connections will ultimately improve the frastructure projects in Afghanistan's ticularly grateful to have the livelihoods of Afghans and increase transport, energy, agriculture, and irri- opportunity to thank him for the part- economic growth in many sectors in gation sectors. nership of ADB, one of the largest do- the country,” Mr. Zakhilwal added. "We're committed to working nors to Afghanistan.” Mr. Kuroda and Mr. Zakhilwal dis- with the Government of Afghanistan “ADB’s funding of development cussed the extension of ADB- to facilitate economic growth and to projects in transport, energy, commu- financed electricity projects in Kabul contribute to poverty reduction. We're nications, agriculture, and natural re- and in the north and east of the coun- here for the long haul," Mr. Kuroda sources are fully aligned with the try, and the resumption of works in said. government’s priorities. ADB, a ma- the northern portion of Afghanistan's On the occasion of President jor funder of core infrastructure, has Ring Road, which will commence Kuroda’s visit, Mr. Zakhilwal stated, been instrumental in the construction soon.

2 ADB Buys Stake in LPG Firm to Boost Access To Safe, Reliable Energy in Afghanistan DB is investing up to $8 million for a cially in winter," said Thomas Minnich, In- forecast to rise to 1.4 million tons by 2019. 25% stake in Sungas LLC, a recently vestment Specialist, ADB Private Sector Sungas will import its LPG from neigh- established liquefied petroleum gas Operations Department. "Greater use of liq- boring Turkmenistan and Uzbekistan and A(LPG) distributor in Afghanistan, to uefied petroleum gas will free women to work distribute it by truck to cylinder refilling sta- help it expand a nationwide storage and dis- more productively and children to go to tions, where it can be sold to consumers tribution network. ADB's Board of Directors school, reduce harmful fumes in the air, and through Sungas' distribution and retail sales approved the purchase of the preferred provide a steady fuel supply that will allow channels. The absence of a nationwide pipe- shares in the Delaware, US-registered com- businesses to thrive." line network and the expense of building such pany. Sungas aims to invest $58.2 million to a network mean that LPG distribution by road Around 70% of Afghanistan's energy build LPG distribution centers initially in the is the most cost effective and least demand- needs are met using firewood, animal dung, major cities, Kabul and Herat, followed by ing infrastructure option for Afghanistan. and vegetation brush. Access to safer, another three in Mazar-e-Sharif, Khandahar, The country has very low electricity genera- cleaner, and more reliable forms of energy and Pul-e-Qumri. It will also purchase addi- tion, and potential oil and gas reserves in the such as LPG is essential to allow tional LPG cylinders for distribution to con- north have remained unexplored because of Afghanistan’s economy to flourish and im- sumers. The company expects the network decades of conflict. prove the daily lives of the country’s 28.4 will have the capacity to distribute 190,000 "Modern energy is a prerequisite for de- million people. tons of LPG per year, allowing 230,000 house- velopment. We hope ADB's example will en- "Women and children have to spend holds to switch from using solid fuels to courage other private sector players to invest hours of their day collecting firewood for heat LPG by 2019. National demand for LPG was in Afghanistan's energy sector," said and cooking. Smoke and fumes from that fire- only 250,000 tons in 2008—accounting for Michael Barrow, Director, ADB Private Sec- wood leave cities like Kabul choking, espe- 14.4% of fuel used by households—but is tor Operations Department.

ADB Vice-President Joins Public-Private Partnerships Can Unlock Conference in Kabul Central Asia's Vast Potential—ADB DB Vice-President Xiaoyu Zhao URUMQI, PEOPLE’S REPUBLIC OF brought together more than 300 partici- joined a conference, held on 20 CHINA – Public-private partnerships can pants including CAREC and government July in Kabul, that was attended play a vital role in unlocking Central Asia’s officials, representatives from state- by delegates from around 70 vast economic potential, ADB senior of- owned industries, private sector inves- A ficials told a business forum here. tors, and members of national countries, international and regional or- ganizations, and financial institutions. The 2-day Business Development chambers of commerce. In his keynote The forum discussed the Government of Forum on Central Asia, hosted by the address, ADB Vice-President for Opera- Afghanistan’s plan to improve develop- Government of the People’s Republic of tions 1 Xiaoyu Zhao said Central Asia ment, governance, and stability in the China in July 2010, has been showcas- faces the fundamental challenge of con- country. Afghanistan’s President Hamid ing trade and investment opportunities verting its abundant resources into Karzai and UN Secretary General Ban Ki- in the region and the mechanisms higher-value goods and services, a Moon opened the conference, co-chaired needed to tap them. The forum, which is transformation he said can only be by Foreign Minister Rassoul and UN part of the Central Asia Regional Eco- achieved through genuine partnerships

Special Representative Staffan de nomic Cooperation (CAREC) program, with the private sector. Mistura. The VP also met with Afghanistan’s Minister of Finance. The International Conference on Af- ghanistan marks a new phase in Afghanistan’s engagement with the in- ternational community. A key goal of the conference is to mobilize international confidence and resources for a new gen- eration of bankable national programs, in accordance with the Afghanistan Na- tional Development Strategy and Presi- dent Karzai’s inaugural speech of November 2009.

3 South Asia, Neighbors Hold Second High-Level Forum on Regional Cooperation eading government officials from South Asia has taken many steps to employment and income,” Mr. Kuroda said. South Asia and neighboring coun- boost regional cooperation over the past 20 ADB has supported many regional in- tries met in Manila for a second years, including establishing a free trade area tegration initiatives in South Asia with di- Lround of high-level talks on regional in 2006, and reducing tariff and non-tariff rect finance, by helping to catalyze funds cooperation to take stock of progress on trade barriers. However it is lagging behind from the private sector, and through capac- work done to boost trade and develop East Asia in terms of regional integration. ity development work. It has approved a cross-border road corridors and energy in- The first high-level forum in 2009 identi- multicountry infrastructure investment frastructure. fied key focus areas of increasing physical project to give regional tourism a boost, The Second High-Level Forum on connectivity, improving trade facilitation, supported a road project for Bhutan that Emerging Vision for Shared Prosperity: and developing cross-border energy infra- will have cross-border benefits, and pro- South Asia and Beyond, hosted by ADB, structure and trade in power. This year’s vided wide-ranging technical assistance to was held from 12 to 13 August. Among event focused on strengthening implemen- regional bodies, including SAARC. those who attended were government rep- tation in these key focus areas. On a broader scale, ADB aims to in- resentatives from South, Southeast, and In his welcome remarks, Mr. Kuroda crease allocations for all regional coopera- Central Asia, and South Asian Association spoke of the connectivity, energy availabil- tion activities to 30% of its total operational for Regional Cooperation (SAARC) Secre- ity, and trade facilitation challenges that face spending by 2020. It has allocated more tary General, Sheel Kant Sharma. ADB was the region, and the need to address these than $1 billion, or 10% of the resources of led by its President, Haruhiko Kuroda, challenges in the regional context to boost its concessional Asian Development Managing Director General Rajat Nag, growth and alleviate poverty. Funds to regional projects between 2009 South Asia Department Director General “The ongoing and proposed regional and 2012. It has also expanded its regional Sultan Hafeez Rahman, and Central West projects in information and communication Trade Finance Facilitation Program from Asia Department Director General Juan technology, transport, and energy are likely $150 million to $1 billion, and is working Miranda. Humayun Hamidzad, Deputy to make substantial impact on poverty re- on an Asian Infrastructure Financing Ini- Minister, Policy, Ministry of Finance, rep- duction and inclusive growth by improv- tiative to pool resources for regional infra- resented Afghanistan in the forum. ing productivity and generating structure needs.

AFRM Staff News

Bashirullah and administration, coordination with de- Coordinator until 2009. Mr. Rahimi is re- Khpalwan joined velopment partners, and feasibility stud- sponsible for coordination and imple- ADB-AFRM as ies including safeguard issues. mentation of ADB’s policy on Project Implemen- information communication technology; tation Officer for Ahmad Shah Rahimi, administration of computers, server, and transport, focusing Associate Computer local area network systems; maintenance on construction su- System Coordinator, of VSAT; and provision of technical ad- pervision; contract joined ADB in June vice to executing agencies as necessary. administration; and project management 2005 as a contractual He is also responsible for ensuring suc- of highways, airports, and railway staff. He worked as cessful and uninterrupted functioning projects with special emphasis on project Information Commu- of computer network and communica- implementation, contract management nication Technology tion systems of AFRM.

NEWS FROM ADB Online Afghanistan www.adb.org The quarterly newsletter of the Asian Afghanistan Resident Mission For business opportunities Development Bank (ADB) Afghanistan 126, Street 2, Haji Yaquob Square with ADB, go to Resident Mission (AFRM) aims to Next to District 10 Police Department enhance communications between ADB Shahr-e- Now, Kabul, Afghanistan www.adb.org/business/ and its client groups. News from Tel + 0093 (0) 20 210 3602 opportunities Afghanistan disseminates information on [email protected] For media inquiries and the ADB activities and provides a forum on www.adb.org/AFRM latest news, go to development issues in Afghanistan. www.adb.org/media Articles in the newsletter, however, do not In this publication, $ refers to US dollar necessarily reflect the official ADB view. For publications, go to We welcome readers' comments and www.adb.org/publications suggestions.

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