Mazar IPP Afghan The proposed project involves the development, construction, operation and maintenance of a 58.56MW green-field, indigenous gas-based power plant, near the city of Mazar-e-Sharif, in the north-western region of Afghanistan (Project or Mazar IPP project). This will be the first private sector power project to use domestically produced natural gas and is expected to boost the countrys power generation by 30% approximately and supply electricity to about one million people.   The Project has been awarded to the Ghazanfar Group (Sponsor or the Group) and is being developed on land leased from the Government of the Islamic Republic of Afghanistan (GoIRA) under a Land Lease Agreement (LLA). The entire output of the power plant will be sold on a take-or-pay basis to Da Afghanistan Breshna Sherkat (DABS or Offtaker) under a 20-year Power Purchase Agreement (PPA). DABS is the GoIRA owned, national electricity utility, which operates and manages power generation, imports, transmission and distribution throughout Afghanistan. Gas for the Project will be supplied by GoIRA, acting through Afghan Gas Enterprise (AGE) and Ministry of Mines and Petroleum (MoMP), under a Gas Supply Agreement (GSA). The most significant expected project-level impact stems from increased access to electricity resulting from the addition of 58.56MW of generation capacity in a country with significant power shortage. Beyond the Project, IFC anticipates that the Project has potential to promote greater market competitiveness by supporting the country's first IPP and improve resilience through the use of indigenous resources to supply electricity. The key impacts of the Project are summarized below. 
Project-level outcomes 
Stakeholder effects - The Project is expected to add about 58.56MW of generation capacity and help address the country's energy demand. Currently, almost two-thirds of the population does not have access to grid connected electricity. The country has one of the lowest per capita electricity consumptions in the world with most firms identifying the lack of electricity as a critical constraint to business development. IFC anticipates that the Project will boost domestic power supply by 30 percent and supply electricity to about 1 million people. 
Contribution to market creation 
IFC's investment and advisory interventions, as well as the IDA guarantee and advisory support to GoIRA will help create a new market for private participation and PPPs infrastructure in Afghanistan, not just for IPPs. This could in the first instance be extended beyond thermal IPPs to renewables projects, particularly in solar and wind, for which Afghanistan has potential. IFC's involvement in structuring of this transaction should help make this Project bankable and balanced, and also create a template for future similar IPPs in the country. The Project is also helping create a commercial market for sale and purchase of indigenous natural gas in Afghanistan, which has been non-existent to date, and can contribute to addressing the nation's fiscal and external imbalances. The Project aims to pay a reasonable commercial price for natural gas, providing MoMP with the funds to reinvest in upstream and midstream gas supply projects in the future. 
Competitiveness - IFC anticipates that the Project could lead to a significant increase in market competitiveness by introducing a pioneering market enabling framework and a bankable contractual structure for private sector participation in the infrastructure space. Currently there are no private sector players in the power sector. The Project, if successful, will demonstrate the viability of private sector participation in the infrastructure sector, which is expected to encourage other potential investors to enter this untapped market that has significant growth potential. 
Resilience - The Project is expected to contribute to the GoIRA's energy objective of diversifying the country's energy supply, particularly by harnessing indigenous resources to supply electricity. Currently, about 80 percent of power supply is imported through short-term import contracts from Central Asian neighbors. IFC anticipates that the Project will lower the country's energy import bill and reduce reliance on imports, thereby enhancing the country's energy security.