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The Regional Power Interconnection Project will address electric supply needs in Afghanistan (AFG) and electric infrastructure development and export plans in Turkmenistan (TKM). The Project will meet AFG needs as (i) development partners have advised plans for investment in transmission and distribution which will increase the low electrification rate thereby increasing demand (ii) development of new domestic generation is not expected to meet forecast demand, (iii) existing interconnections cannot fill the supply gap, and (iv) electric imports from TKM can meet new demand in a cost effective manner while increasing security by diversifying import sources. The Project will allow TKM utilize its gas reserves for electric exports by adding additional gas fired generating plant.

The project's impact will be increased regional cooperation and optimized use of regional energy resources. In TKM, the outcome will be increased overall generation efficiency through the addition of modern high efficiency power plant and improved access to export markets.In AFG, the outcome will be least-cost increase in electric supply, enhanced security of supply through diversification of import sources, and secure year-round electric supply to all customers. In both AFG and TKM, the outcome will be increased utility commercialization through the application of a long-term power purchase and sales agreement (PPSA).

The Project will increase generation capacity in TKM and interconnect the electric grid systems of TKM and the AFG thereby allowing TKM to export electric energy to AFG. In TKM, the Project includes a new gas-fired 300MW combined cycle power plant. In AFG, the project includes new transmission lines and substations in its western region including a connection from the TKM/AFG border to the existing 220kV grid. The specific components of the Project will be confirmed by a Project Preparatory Technical Assistance (PPTA).

TKM enjoys, considerable gas reserves being ranked 4th in the world with 8 trillion cubic meters (m3) of proven reserves . With a small domestic market whose energy needs are met, TKM policy is to expand its gas and electric sectors and export energy to international markets. Gas production in 2008 was 70 billion m3 of which 75% was exported. However access to export markets is constrained by the limited availability of gas pipelines and electric interconnections. TKM is addressing this constraint by (i) developing additional export pipelines, and (ii) diversifying its energy export potential by increasing electric interconnections with neighboring countries.

TKM electric production in 2008 was 14 terawatt hours (TWh) which met domestic demand while supplying 2TWh to export markets in Iran and beyond. New generation capacity is required due to increasing domestic demand, retiring obsolete power plants, and growing demand in the power export market. The power sector operates at low efficiency with approximately 50% of its 4,000 megawatt (MW) installed capacity using gas fired open cycle gas turbine power plant with the balance using gas fired conventional thermal plants built during the Soviet era. In addition, TKM transmission system, also built during the Soviet era, is largely obsolete and is in urgent need of rehabilitation. With its own funds, TKM awarded a $340 million contract in 2011 to strengthen the transmission system in its eastern region. A component of this contract covers a 500kV connection to the AFG border. TKM now wishes to build a new 300MW combined cycle gas turbine power plant grid under the Project.

Meanwhile, the Project rationale in AFG is to increase energy supply by importing electric energy from TKM in a timely and cost-effective. It will also diversify AFG import sources and increase its capacity for future energy transit services. As a net energy and power importer, AFG's power system is interconnected with the Uzbekistan's (UZB) system and is due to be interconnected with Tajikistan's (TAJ) system in 2011. Iran, TAJ, TKM and UZB supply border areas of AFG, on the other hand, has limited capacity tail-fed non-interconnected electric supply. To meet domestic power demand, AFG is yet to develop a combination of domestic fossil fuel and renewable energy generation projects complimented by diversified import solutions. To increase revenue from power transit, it is yet to strengthen its network in serving the energy-rich Central Asia and the energy-deficient South Asia.

Less than 20% of the AFG population is supplied with electricity. This low electrification rate is expected to increase once the transmission and distribution networks are expanded following ongoing ADB and other donor interventions. Meanwhile, new domestic generation projects are progressing slowly and are not forecast to meet expected load growth. Capacity of existing interconnections is also insufficient to fill the supply gap.

The Project rationale in AFG is for AFG to meet its increased energy supply needs by importing electric energy from TKM in a timely and cost-effective manner while diversifying import sources and increasing its capacity for future energy transit services.

Central Asian countries are energy rich and have surplus energy available for export. TAJ, TKM and UZB have confirmed their wish to export electricity to energy deficient PAK. Such exports have not occurred to date due to the absence of a Central Asia to South Asia transmission interconnections. The existing UZB 220kV interconnection connects to the AFG 220 kV North East Power System (NEPS) as will the new TAJ 220 kV interconnection. The proposed TKM interconnection will also connect to NEPS, making NEPS a major import consolidation point. Such consolidation point could allow for re-export to PAK of imports from Central Asia should an AFG-PAK interconnection be built at a future date.