U.S. reconstruction agencies have poured millions of dollars into Afghanistan’s national power utility, but poor management and insufficient infrastructure have wasted hundreds of thousands of those dollars and hindered the utility’s goal of becoming self-sufficient, according to a new report from the Special Inspector General for Afghan Reconstruction.
Since the Afghan government created Da Afghanistan Breshna Sherkat in 2009, the U.S. has put almost $88 million into what’s know as commercialization — simply put, helping the utility become profitable.
“United States Forces Afghanistan (USAFOR-A) and United States Agency for International Development (USAID) have provided nearly $88 million to assist in the commercialization of DABS in Kabul, Kandahar, and Helmand, but poor management of commercialization projects by the agencies hindered U.S. efforts,” the SIGAR report said.
The Inspector General conducted the review between July 2012 and March 2013, focusing on DABS-Kabul. SIGAR found several examples of wasted spending and poor oversight. That poor management has also hindered DABS’ ability to become self-sufficient when its large subsidy from the Afghan government expires next year.
With all these challenges, DABS-Kabul is operating at a financial loss, according to the SIGAR report. “In general, we found that USAID assistance made improvements at DABS-Kabul, but an expiring Afghan government subsidy makes the goal of realizing self-sufficiency uncertain.
Additionally, poor management by USFOR-A and USAID hampered commercialization efforts,” the report said. In one instance, USFOR-A officials twice bought equipment without installation plans that prevented their use in Helmand Province, with the result that more than $10 million worth of equipment sits unused in storage.
“Although this equipment approved and funded by USFOR-A arrived without an installation plan and was placed in storage, USFOR-A continued to approve projects for similar equipment without an installation plan,” according to the SIGAR report. ”As a result, $10.2 million of additional equipment for Helmand remains in storage without an approved plan for installation.” USAID also wasted money on efforts to recover costs with better billing, installing incompatible systems that later had to be replaced.
Because USAID didn’t enforce a contractual requirement that systems had to be compatible, the first billing system installed in Kandahar could not be used with the system installed in Kabul. “USAID later found the billing system to be inadequate, antiquated, and incompatible with other billing systems,” the SIGAR report said.
“These actions resulted in the waste of nearly $700,000 and delayed improvements that are critical to DABS becoming a self-sufficient entity.” USFOR-A also bought starter kits that went to storage and stayed there because both USFOR-A and DABS both failed to complete an installation plan and DABS couldn’t install or manage the equipment. Even with its new billing systems in place, DABS is having trouble paying its own bulls because it has great difficulty collecting payments from Afghan warlords and other powerful customers who are often slow payers, according to a Reuters report.
DABS shut off power to 1,000 slow payers in 2012, but some simply found someone else to turn their power back on, according to Reuters. The method paid off, though. The utility collected $230 million last year, a 40 percent increase in the last three years.
SIGAR recommended DABS and U.S. organizations finalize a plan for installing unused equipment and require that billing systems are consistent across the country.