The Asian Development Bank (ADB) has agreed to provide $10m loan to the Afghan Power Plant Company (APPC) for the 58.5MW Mazar gas-fired power plant located in Afghanistan.

The funding, which is part of a financing package for the power plant, aims to support Afghanistan’s efforts to achieve energy security through its own power sources.

The ADB loan will provide funding for the construction and operations of the gas-fired power plant near Mazar-i-Sharif in northern Afghanistan.

International Finance Corporation and Deutsche Investitions und Entwicklungsgesellschaft (DEG) are co-financing the project.

The Mazar project will use indigenous gas for generating electricity

The Mazar project is the first private sector gas-fired plant in Afghanistan to be funded by development finance institutions.

The project will cost $89m and will use indigenous gas for generating electricity and is expected to generate 404GWh of power per year, once it commences operations.

ADB Private Sector Operations Department Infrastructure Finance, South Asia, Central Asia, and West Asia director Shantanu Chakraborty said: “This project is definitive proof that indigenous gas-based power generation is capable of displacing electricity imports in Afghanistan and helping to deliver energy security.

“Its success will send an important signal to the market that Afghanistan’s power industry is now ready to attract more private sector investment and financing.”

The bank said that it will also administer a $10m funding for the project provided by Asia’s Private Infrastructure Fund (LEAP).

APPC is a special purpose vehicle, which is jointly owned by Ghazanfar Group and Egyptian construction company Hassan Allam Holdings.

APPC chairman Ismail Ghazanfar said: “Ghazanfar Group is honoured to have the support of international development banks including ADB for this first-of-its-kind project in Afghanistan.

“This is the first step in Ghazanfar Group’s vision of helping to develop 5,000MW of energy generation facilities in Afghanistan through partnerships with international development banks, local and international companies, and the Government of Afghanistan.”

Recently, ADB has agreed to provide $300m financing to Indonesian state-owned company PT Geo Dipa Energi (GDE), to develop 110MW geothermal power generation project in Java.