Watchdog questions USAID spending on controversial Afghan dam project

A U.S. government watchdog says the costs of modernizing and expanding the Kajaki Dam's power station have far outweighed the potential benefits. The dam, a project begun by the U.S. in 1953 to bring development to southern Afghanistan, is considered important to the long-term development of Helmand and Kandahar.


By HEATH DRUZIN | STARS AND STRIPES Published: March 18, 2014

A controversial dam project in Afghanistan is now so over budget that even by the estimates of the U.S. government aid agency that continues to fund it, the cost has far surpassed its potential benefits, the top U.S. watchdog in Afghanistan said.

“This cost increase indicates that the (project) may no longer be economically viable,” Special Inspector General for Afghanistan Reconstruction John Sopko wrote in an inquiry letter to the U.S. Agency for International Development (USAID) requesting an explanation of the causes and rationale for what he says are major cost increases in the project.

INTERACTIVE TIMELINE | The Kajaki Dam project

The top USAID official for Afghanistan and Pakistan, Donald L. Larry Sampler, said the inspector general’s letter used the wrong number for his initial calculation and that the estimates derived from that are also much too high.

“The letter is rendered moot by the fact that they used the wrong number to begin with,” he said.

The project is the Kandahar Helmand Power Program, designed to spur economic growth through increased electricity production in Helmand and Kandahar provinces, the two deadliest regions of Afghanistan for international troops over the course of the 12-year war.

The project has become emblematic of all that has gone wrong with the international reconstruction effort in Afghanistan.

USAID built the Kajaki Dam in the 1950s, and subsequently installed two turbines to generate power, leaving an empty space for a third unit. Work to improve the dam started shortly after the U.S. invasion of Afghanistan in 2001. One aspect that has proven especially difficult is the installation of the third turbine that would greatly increase power production to Kandahar, Afghanistan’s second city and the spiritual heartland of the Taliban.

The original estimated cost of installing the turbine was just under $17 million, with completion expected in 2005. But the work is still unfinished even as U.S. forces are pulling out of the province as part of the withdrawal of coalition combat troops.

USAID has now pledged $75 million to install the third turbine in the dam’s power station, which will be run by Afghanistan’s national utility. With that sum, the program costs have now ballooned to $345 million, which is $32 million more than what the aid agency said could be spent before the program became unviable, according to SIGAR’s calculations.

USAID officials, though, say the $17 million estimate was just for a site survey, not meant to be an estimate of the entire turbine project. By their calculations, the KHPP program will cost $303 million.

Sampler said some of the benefits – such as the boost to national pride by putting the project in the hands of the Afghan government – are hard to quantify.

“The cost benefit analysis is a little more complicated than was presented in this letter,” he said.

Two contractors have already failed to install the turbine amid major fighting and insurgent attacks, and a third has now been hired to complete the work. The latest contractor still will have to negotiate violent conditions on the ground and daunting logistics challenges, especially as the U.S. military presence has shrunk in the area and the still fledgling Afghan security forces have taken over responsibility for protecting the dam.

USAID officials say they plan to push through, despite the challenges.

If someone someday does manage to turn on the turbine, it could be a boon to the people of Afghanistan’s south, especially Kandahar City, the country’s second-largest metropolis, which suffers chronic electricity shortages.

“Skepticism or no, work is going forward,” USAID Afghanistan Mission Director William Hammink said in an email before the latest SIGAR letter was released.

Stripes reporter Cid Standifer contributed to this story.

Twitter: @Druzin_Stripes

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