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ADB approves $110 million grant to boost power supply to Afghanistan 

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The Asian Development Bank (ADB) on Wednesday approved a $110 million grant to boost power supply and strengthen Afghanistan’s energy sector by improving its sustainability and promoting cross-border trade in energy.   

“The project will help address Afghanistan’s chronic power shortage by immediately doubling the volume of power imports and ensuring long-term cost-competitive electricity supply,” read a statement issued by ADB. 

Once complete, the project will provide improved access to customers and facilitate 500,000 new connections to households, commercial entities, and industrial customers.

“Demand for electricity is growing rapidly in Afghanistan and is essential for the country’s economic growth,” said ADB Energy Specialist Nana Gurgenidze. 

“The project will help provide reliable and affordable electricity to households and businesses by strengthening the grid and increasing power import capacity by 900 megawatts, with year-round firm energy imports of 3,000 gigawatt-hours.”

Afghanistan relies on energy imports from neighboring countries to meet its domestic demand and despite significant progress since 2002, only about 34 percent of the population has access to grid-connected electricity.

According to the ADB, the project will finance the construction of 201km of a 500-kilovolt overhead transmission line from the Surkhan substation in Uzbekistan to the Khwaja-Alwan substation in Afghanistan – a key interconnection node to receive power from Tajikistan, Turkmenistan, and Uzbekistan. 

It will also fund the expansion of a line bay, including associated equipment, at the Khwaja-Alwan substation and the project will allow Uzbek power into the Afghan grid under a 10-year power purchase and sales agreement signed in August 2020 by the Afghanistan and Uzbekistan governments.

In addition, staff, including female engineers at the national power utility Da Afghanistan Breshna Sherkat (DABS), will be trained to manage cross-border power transfer and parallel operations, including emergency operation systems with CAPS, read the statement.

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Russia almost doubles LPG exports to Central Asia, Afghanistan this year

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Russia has almost doubled exports of liquefied petroleum gas in the January – November period to ex-Soviet republics in Central Asia and Afghanistan to 1.016 million metric tons, Reuters reported citing sources on Friday.

Moscow has had to divert supplies of LPG, or propane and butane, from Europe, which introduced restrictions on LPG imports from Russia in December 2024 over the war in Ukraine.

Traders said supplies to Afghanistan, as well as to Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan now account for around 36% of Russia’s total LPG exports, up from 19% in 2024.

Afghanistan is Russia’s largest buyer of LPG in that region. In July, Russia accepted the credentials of a new ambassador of Afghanistan, making it the first nation to recognise the country’s Islamic Emirate government.

According to the sources, supplies of Russia’s LPG to the country, including from Kazrosgaz, a joint venture with Kazakhstan, have jumped 1.5 times in the first 11 months of the year to 418,000 tons.

Traders said that Russia’s LPG supplies to Afghanistan have increased partially at the expense of declining supplies from Iran, which has been sanctioned by the United States.

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Major power projects launched in Herat

Baradar urged contracting companies and technical teams to complete the projects with high quality and within the specified timeframe.

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Mullah Abdul Ghani Baradar, Deputy Prime Minister for Economic Affairs, on Thursday announced the launch of four major electricity projects and the inauguration of five others in Herat province, with a total investment valued at 3.98 billion afghanis.

Speaking at an official ceremony, Baradar described the projects as vital for Afghanistan’s industrial and economic development. He said that once completed, the projects will provide 24/7 electricity to all industrial parks in Herat, as well as to commercial centers, rural areas, and residential neighborhoods, ensuring stable and reliable power supply.

Baradar also pledged incentives for investors in cold storage facilities, announcing a five-year tax exemption and guaranteeing uninterrupted electricity supply by Afghanistan’s power utility. He encouraged both domestic and foreign investors to take advantage of these opportunities.

Emphasizing the Islamic Emirate’s balanced foreign policy, Baradar said the government’s main focus remains economic growth, security stability, and good governance, urging the international community to pursue engagement with Afghanistan instead of restrictive policies.

Among the projects inaugurated is a 130-kilometer-long 220-kilovolt power transmission line from Turkmenistan, along with the construction of four substations in the districts of Karukh, Pashtun Zarghun, Obey, and Chesht-e-Sharif, which will supply electricity to around 40,000 households.

Newly launched projects include the construction of the Pul-e-Hashemi substation, expansion of the 24 Hoot Martyrs substation, creation of a second line at the Noor-ul-Jihad substation, and the extension of power transmission lines linking the Pul-e-Hashemi, Noor-ul-Jihad, and 24 Hoot Martyrs substations.

Baradar urged contracting companies and technical teams to complete the projects with high quality and within the specified timeframe.

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Sharp drop in exports to Afghanistan drives Pakistan’s trade deficit surge

Meanwhile, Afghanistan is actively seeking alternative trade routes and partnerships to reduce future reliance on Pakistan’s commercial channels and strengthen its economic independence.

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Pakistan trade

Recent data from Pakistan’s central bank reveals that a sharp decline in exports to Afghanistan has become a key factor behind the country’s growing trade deficit, challenging previous claims by Pakistani officials that halting trade with Afghanistan would not harm their economy.

According to the State Bank of Pakistan, the trade deficit with nine neighboring countries increased by more than 39 percent in the first five months of the 2025–2026 fiscal year, rising from $4.4 billion to $6.2 billion. The report highlights that reduced exports to countries such as China and Afghanistan played a central role in this increase.

Exports from Pakistan to Afghanistan fell dramatically by over 94 percent during this period, dropping from $408 million last year to approximately $210 million. Economic analysts note that Afghanistan has historically been one of Pakistan’s key export markets, particularly for food items, cement, medicine, and daily-use goods—products that cannot be easily replaced.

The steep decline follows the complete suspension of trade between the two countries in October 2025. Despite previous statements by Pakistani officials asserting that reduced or halted trade with Afghanistan would not negatively impact Pakistan’s economy, the latest figures suggest otherwise.

Meanwhile, Afghanistan is actively seeking alternative trade routes and partnerships to reduce future reliance on Pakistan’s commercial channels and strengthen its economic independence.

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