June 18, 2010 / 4:30 PM / in 7 years

INTERVIEW-Afghanistan pins hopes on dams for power and crops

* First dams to be touted to investors in July

* 13 dams to add 4,700 MW, irrigate 100,000 acres of land

* Loses about two-thirds of water to neighbours each year

By John Irish

PARIS, June 18 (Reuters) - Afghanistan will ask the international community to invest in a $12 billion dam construction programme in an attempt to raise power generation to boost irrigation, its economy minister said on Friday.

Landlocked Afghanistan has had historical disputes with its central and south Asian neighbours over the flow of water from mountain rivers which irrigate most of its crops. It loses about two-thirds of its water from rain and snow annually.

“(My priority) is the energy and irrigation sector, because energy encourages investment in industry, irrigation and agriculture,” Abdul Hadi Arghandiwal told Reuters on the sidelines of an OECD-organised investor conference in Paris.

Pakistan and Iran have both spent billions building dams and reservoirs to store water for consumption and generating power.

Afghanistan’s infrastructure has suffered after three decades of war but Arghandiwal said the first dams of a prefeasibility study will be presented to investors at an international conference in Kabul on July 20.

“The dams, for which the pre-feasibility studies have been completed, will cost around $12 billion,” the U.S.-educated economist said.

“In one area there are seven and in another six ... these will add about 4,700 MW of electricity and irrigate 100,000 acres of land.”

The international community, which has poured in billions of dollars since the Taliban’s fall in 2001, has so far done little to provide funds for such schemes.

Only 25 percent of Afghanistan’s estimated 28 million people have access to clean water. It produces just one percent of the 23,000 megawatts of the hydroelectricity it needs, and does not have enough water for agriculture.

Arghandiwal, who briefly served as finance minister in the pre-Taliban era and is a leader of the Islamic Party of Afghanistan, said progress was being made in wheat production.

“We had good wheat production over the last two years,” he said. “We will probably export wheat this year.”

Only 1.5 million hectares of agricultural land were irrigated in 2002 and an additional 300,000 hectares rehabilitated since -- less than half the area irrigated in 1979, when the war began -- said the East West Institute think tank in a report last year.

Economic growth in 2010 would be about 20 percent given the low base the country was starting from, Arghandiwal said, adding that the security situation meant investors would “still think twice” about Afghanistan.

Arghandiwal is a former ally of Gulbuddin Hekmatyar, a Soviet-era commander whose Hezb-i-Islami group is one of the main allies of the Taliban in the insurgency, but in 2008 announced his party would work to bring security by negotiating with all armed opposition groups.

“I believe that the international community participated in Afghanistan with their sons and daughters to fight terror, but fighting in the battle zones is not enough,” he said.

“We have to work on the economic side ... if we invest, we will hire people, income will rise and poverty will be reduced and psychologically it will affect the insurgency activities.”

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