1. Promoting Private Investment in Afghanistan’s Power Sector Javid Sadaat September 3, 2015

2. Afghanistan’s historical power supply(GWh) (GWh)) 78% of power supply relies imports) ImportsDomestic 916923 915 1073 1114 2455 3022 3129 3881 4169  Current domestic power supply is around 1,073GWh (operational capacity of 470MW) or 22% of total supply  Power imports from Central Asia account for 78% of total supply  Domestic power generation is crucial for Afghanistan’s future development  Uncertainty over long-term availability of imported power and the expected increase in future demand Rationale: Severe Power Shortage & Heavy Reliance on Imported Power Power Supply by Sources (2014) 30% 10% 15% 22%

3. Project Overview: Key Highlights Location Close to existing Northern Fertilizer Power Plant (NFPP) site at Kude- Berg near Mazar-e-Sharif (subject to further discussion with stakeholders) Size 50MW / c. 380GWh (phased with expansion potential) – will equate to around 30% of Afghanistan’s current indigenous power supply Fuel Natural Gas from Sheberghan via existing pipeline, need for 300,000 mcm/day Power Purchase Agreement Off-take agreement with DABS for 20 years Electricity tariff Preliminary estimate at 7.5-9.5 Usc/kWh Gas price at the Well-head US$ 110-140 per mcm (subject to further discussion) Investors Consortium of local investors including the Ghazanfar Group and Cummins Power Generation, with support from International Financial Cooperation (IFC)

4. Project Overview: Key Advantages 1Certainly of Long-term Electricity Supply Mazar IPP will add long –term year-round certainty to Afghanistan’s domestic electricity supply and hence will result in significant economic benefits for the country 2Leverages Indigenous Natural Resources Existing gas fields in Shberghan with increasing production, along with a refurbished pipeline with excess capacity will allow Mazar IPP to efficiently utilize the country’s natural resources 3Strong Economic Viability Mazar IPP will generate elctricity at less than the “true” cost of imported power in the country over the long-term 4Can Facilitate Increased Power Supply to Kabul Mazar IPP will meet a significant portion of current local demand in Mazar region, hence making available imported power which was previously utilized locally, for increased supply to Kabul 5Establishes a Template for future IPPs With support from the World Bank Group, Mazar IPP will establish a balanced, sustainable and bankable project structure for future IPPs in Afghanistan 6Will Encourage Greater Interest in Afghanistan’s Power Sector Demonstrating the success of one IPP in a relatively secure part of the country, will result in a significant increase in interest from local/international investors for future IPPs

5. Managing IPP: Key Elements Best Practices Thailand, Mexico and Egypt as “best practices” for IPP model Transparency and Regulatory Capacity Improved transparency and regulatory capacity is needed to manage the sector effectively Reforming Institutions Reforming the relevant institutions; e.g. AGE Regulatory Body Establishing an independent regulatory body to regulate the sector Engaging Relevant Institutions Engage multi-lateral institutions to identify issues and obstacles to the concept Develop a national energy plan Develop a national energy plan that prioritizes energy security and indigenous supply, and domestic manufacture

6. Thank You!